Published in China Daily 04/17/2012 page9

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At a time when all countries are paying attention to the development of their soft power, the film industry is regarded as an important cultural force. 

A successful film can have a worldwide impact, and even shape the image of a country. With this in mind, the Chinese government has put forward the goal of "going out" for Chinese film industry. 

To achieve this, besides strengthening the film industry itself, the government needs to provide appropriate support. Film production and distribution is an industry with high investment and high risks. The ability to gain sufficient funds will determine the fate of a film project and the prosperity of the film market. In this respect, China can learn from the tactics the US government uses to support Hollywood. History shows that even Hollywood would not be so powerful without the US government's support during its global expansion process. 

In the United States, since the 1980s, most of the film projects are planned and produced by independent film companies, which usually pre-sell a film's distribution rights to overseas distribution corporations, and then use these distribution agreements as collateral for acquiring loans form financial institutions. But financial institutions usually are reluctant to advance funding predicated on distribution agreements, especially those signed in Asia or Latin America, partly due to concerns about regional economic crises and political risks there, which might generate defaults. 

To solve this problem, in 2000 the Export-Import Bank of the United States put forward a Film Production Guarantee Program to provide guarantees to bank loans for independent film projects, accounting for 60 to 90 percent of the loan amount. 

The US Small Business Administration also launched a support program to help fund independent films. Guarantees from government agencies enhanced the confidence of the financial sector in the development of the independent film industry, thus contributing to the prosperity of the film industry. 

In China, with the encouragement of the government, the Bank of Beijing, China Merchants Bank, Minsheng Bank and other financial institutions began to provide loans for film projects. But in consideration of potential risks, banks usually choose to fund blockbusters, such as Assembly, Thirteen Beauties and Flying Swords of Dragon Gate, while small and medium-sized film projects and small film companies, even those with great potential, find it difficult to obtain loans. 

In view of this situation, the Chinese government may be able to learn from the US experience and develop a loan guarantee scheme for small film projects to obtain loans with distribution agreements as collateral. This would not only be conducive to the prosperity and diversification of the domestic film market and the cultivation of film talents, but also the promotion of Chinese films overseas as film companies will spare no efforts to gain overseas distribution contracts in order to get loans. 

In order to give full play to the role of the Hollywood in stimulating employment, promoting economic development and spreading American culture and values to the world, the US government has put forward many preferential policies to support the industry. 

Even more noteworthy, many US government agencies serve Hollywood film projects hand and foot. The Federal Bureau of Investigation, the Central Intelligence Agency, the Department of Defense, the National Aeronautics and Space Administration and many other government agencies are equipped with officials in charge of liaising with Hollywood and providing support such as script consultation, equipment and personnel. Most local governments have also set up film agencies to promote and support filming in their areas. 

These measures are undoubtedly of great benefit to film production in the US, enhancing quality and improving its competitiveness in the world market. 

Compared with Hollywood, China's film industry has to bear a heavier tax burden. Although the government provides certain preferential tax policies, these only cover some State-owned companies, newly-opened cinemas and rural film companies. Corporate income tax for ordinary film companies is as high as 25 percent, their box office earnings are taxed 3 percent and they have to pay 5 percent to the Film Fund. 

China also lacks clear norms and guidelines for film production companies to apply to use public facilities and services. 

The Chinese government should learn from the American experience and use tax and services to promote the development of China's film industry. 

Film exports usually face many obstacles, such as quota systems imposed to protect national film industries. In order to help the overseas expansion of Hollywood films, the US government has been employing various legal and diplomatic tactics and international cooperation. 

In concluding international trade treaties, the US often takes advantage of its economic and technical strength to exert pressure on other countries to import Hollywood movies trussed up with capital and technology. 

China has established diplomatic relations with 172 countries, and has a broad consulate network, if these are given full play to help Chinese film companies collect overseas market information and organize film exchanges, they are bound to promote exports of Chinese films. 

If major domestic film companies can jointly set up an organization similar to the Motion Picture Export Association of America to help Chinese companies explore overseas markets and cooperate with foreign governments to combat copyright violations, it will be of great advantage to the "going out" of Chinese film.