Markets and Business Management at the British Film Industry - Assignment Example

Firms, Markets and Business Management Case study: British Film Industry (BFI) Student Name Lecturer name Assignment Word Count Question 1 The film industries and markets in both Britain and China differ is social-cultural, technological and political aspects. In-deed, the decision on whether the British Film Industry (BFI) should expand to the market in China would be made based on favourability of these environmental factors. First, let’s consider the social-cultural differences in film industries and markets between and China. Film and moving image in Britain are considered essential as they are a reflection of the British culture both within the British society and across the globe. A part from being one of the world’s leaders in making and selling films, Britain films allows the people in the country to reflect on and change their thinking of a national identity (House of Commons 2003). Film industry and markets have brought people in British together and this is the reason why the British government has invested in culture to promote cultural identity through making films. Unlike Britain, China has witnessed a sharp increase in the number of people who attend cinema, not only due to increase in the standard of living and growth in economy, but also due to strong social and cultural identity of the Chinese and this has led to increase market share for films (Wetherly 2014). Many Chinese enjoy watching cinema together and this prompted continuous and rapid construction of theatres (UNESCO 2013). Despite, increase in ticket prices, Chinese spectators has continued to fill theatres and this is a sign of social cohesiveness, which is also an opportunity to film companies, such as BFI which should increase export of humorous films to the Chinese market (Cain 2013). On technology, the film industry and market in Britain uses digital technology to make, distribute, and exhibit films. Since the development of this technology, several commercial digital cinema screens have been established and it is well-entrenched in the process of film-making in the UK (Lobato 2012). Nevertheless, digital technology is mainly applied in photography and exhibition after the production processes that involve editing special effects, visual, and sound (House of Commons 2003). The development is technology has increased competition in film-making and marketing of the same, thus BFI has to keep pace with changes in the technology to maintain its position in the market, both locally and internationally (Wetherly and Otter 2011). Film industry in China has also embraced digital technology (Zhang 2004). The only difference is that they use of cinema circuits which comprise of various cinemas and they provide schedule screening, films prints, and manage all films under the circuits. Cinema circuits are normally used to schedule screenings of productions that are major (Entgroup International Consulting 2010). A part from the digital film, the industry also uses digital prints in film-making. There are also various digital screens used to show films in different regions in China, which has increased the market for films in the country. Politicians in Britain passed legislations that allow films certified as ‘British’ to benefit from tax treatment advantages (House of Commons 2003). Tax advantages are used as incentives to encourage the local film industry to make films and to attract foreign investment to perform overseas production of film (House of Commons 2003). These incentives have seen film industry and market in Britain grow drastically to international level. This is also an opportunity for BFI to increase it production of films that will appeal to the international market, especially China (Oxford Economics 2011). However, unlike in Britain, the political will towards film-making and marketing is encouraging in China. Unlike Britain, China created a regulation meant to liberalize the film industries and markets (Schechter, Chen and Lai 2012). Since the enactment of the regulation, the production and distribution of film in the country was removed from the ‘prohibited’ category and now foreign investors are free to own at most 49% equity in strategic alliances (Montgomery 2004). In addition, the regulation prohibits co-ownership by the state. BFI can take advantage of this opportunity to invest in China’s domestic film market. Question 2 China has continued to protect its film industry from competition and influences from foreign countries by creating relevant legislations meant to restrict entry of foreign films (U.S. Commercial Services 2012). In 1992, the government of China acceded to Universal Copyright Convention and the Berne Convention, and later in 1993 joined the Phonograms Convention in Geneva. After acceding to the Berne Convention, it granted fifty years of protection to all computer programs (U.S. Commercial Services 2012). This was pursued without compulsory the foreign rights holders having to meet registration requirements. In addition, the China’s Copyright Law has been amended to address copyright issues that are digital and internet-based (Oxford Economics 2011). Still, in 2007, China acceded to the WIPO Performance and Phonograms, as well as WIPO Copyright Treaty. Nevertheless, there is widespread internet piracy, more so as the internet continues to penetrate in China (Oxford Economics 2011). It is reported that there is increase in piracy on university campuses where students illegally download foreign movies (U.S. Commercial Services 2012). This increases competition for domestic film companies in the country. The government has made significant efforts to address these problems. In effort to fight foreign competition and influences, the government of China divided Copyright enforcement among various agencies, which include the Ministry of Culture, National Copyright Administration of China, the General Administration of Press and Publication, the National Pornography and Anti-Piracy Office, as well as the State Administration for Radio, Television, and Film (U.S. Commercial Services 2012). Despite existence of multi-judicial challenges because of such a structure, the agencies have tried to fight piracy and copyright leading to growth of domestic film industry. However, limited access to market by foreign films has resulted to widespread black market for films made in China (Wang 2004). In-deed, the government of China has restricted the number of films that enter the country at any given time. Early in 2003, China gave Huaxia Company the right to distribute foreign films to the local market which helped to reduce monopoly in the film industry (U.S. Commercial Services 2012). This was a deliberate move by the government to reduce foreign influences in China’s film industry and market. In addition, through well defined intellectual property rights, the government of China has tried to promote long-term profitability of domestic film industry and Chinese economy as a whole (Lobato 2012). Protection laws on intellectual property have helped reduce negative externalities, which have allowed local film companies to enjoy the benefits of the effort (Drahos and Braithwaite 2002). China has tried to efficient intellectual property rights by balancing between rules of diffusion ands rules of appropriation. This is due to the realization that having very strong intellectual property protections may lead to market that is excessively monopolistic, while having very weak protection may create room for more ‘free trading’ which is unhealthy for investment and innovation in film industry (Cullen and Parboteeah 2008). According to Zhang (2004) film industry in China is still the subject of increased censorship and regulation of production than other industries. There is a strong relationship that exists between producers and the film market in respect to popularity, production, and consumption is heavily mediated by the government, to an extent that many filmmakers are less worried about their work being pirated (Kraus 2004). Therefore, the relationship between regulations created by the government and development of film industry in China in cannot be underestimated. China is more concerned to seeing that its film industry develops on commercial terms (Kraus 2004). Ideally, the attitude of the government to the role of film industry and the reasons for regulation has significant implications to prosperity of the sector in the future. Question 3 British Film Industry prospects China to be a leader of the film market in future. Over the past decades, China’s economy has experienced enormous economic growth compared to most economies countries that are developed (Schechter et al 2012). This growth is also applicable in the film market. In fact, is 2012 alone, China was ranked the second largest consumer of films, especially box office across the world which is really encouraging to BFI who is willing to expand in this market to (UNESCO 2013). Compared to the USA market which is also known to perform well in terms of box office, China’s market experienced more increase in regard to admissions in the same period. It is projected that China will replace the USA to become the leading film market in the world by 2020 (U.S. Commercial Services 2012). This means that BFI should carry on with its plans to expand its market position in China by distributing films that appeal to Chinese consumers. According to UNESCO (2013) China’s film market has expanded more than four times faster compared to the country’s GDP over the past decades. Although, the GDP for China is among the fastest growing GDPs across the continent, the growth in film market has been exceptionally good (Oxford Economics 2011). It appears that box office is doing really well in China and any business enterprise would think of going this direction. Between 2005 and 2011, the average growth in box office in China was 43% every year (UNESCO 2013). This is an indication that the future for film market in China is encouraging. Despite reports that Asian audiences are not finding fun in British films, with proper marketing strategies and improved production of films that match the needs of film market in China, BFI is likely to perform well in this market (UNESCO 2013). A part from economic growth, increase in disposable income among the middle class and rise in the standard of living contributed to increase in film market in China. Also, Chinese spectators continue to show more interest in watching foreign movies, even those from Britain and BFI expects this trend to continue in future (Cain 2013). British Film Industry would face some threats when it decides to change the Chinese market. First, it will face more competition from Chinese movie makers who intend to form cooperation relationship with movie makers in America (Schechter et al 2012). The desire for Chinese companies to collaborate with Hollywood has increased and if this happens, it would be challenging for BFI to meet their standards (Commercial Service Guangzhou 2014). Second, China is determined to being the center of global entertainment industry and changing this market would mean that BFI will lose the projected opportunities in China (Commercial Service Guangzhou 2014). In addition, BFI would lose the opportunity to transfer best practices to the film market in China, creating an avenue for growth in future. Thus, changing Chinese market would make BFI reduce its overall market share in the film industry and this may affect its operations (Wetherly and Otter 2011). However, changing the Chinese market will allow BFI time to re-organize and think of other options, even it means investing in exporting films that are highly selling in this market. Generally, BFI should consider how to produce films that are suitable and appealing not only to domestic market, but also to the Chinese market so as maximize the existing opportunities. Reference List Cain, R. 2013, ‘The Increasingly Astonishing Rise of China’s Film Business’, Viewed 17 October 2014, http://chinafilmbiz.com/2013/04/06/the-increasingly-astonishing-rise-of-chinas-film-business/ Commercial Service 2014, China’s Movie Market Snapshot: Astounding Achievement in 2013, Guangzhou: China. Cullen, J. B. and Parboteeah, K P. 2008, Multinational management: a strategic approach, 6th ed., Thompson/South-Western Pub., Mason. Drahos, P., and Braithwaite, J. 2002. Information Feudalism: Who Owns the Knowledge Economy? London: Earthscan. Entgroup International Consulting 2010 ‘China Film Industry Report 2009-2010, Beijing: China. House of Commons 2003 ‘The British Film Industry’, Sixth Report of Session 2002-03: Vol 1. Kraus, R. 2004. The Chinese Censorship Game: New Rules for the Prevention of Art, In R. Kraus (Ed.), The Party and the Arty in China: The New Politics of Culture (pp. 249). Lanham: Rowman & Littlefield Publishers. Lobato, R. 2012, Shadow Economies of Cinema: Mapping Informal Film Distribution, London: British Film Institute. Montgomery, L. 2004. ‘Troubled waters for the development of China’s film industry.’ In Proceedings : Media Technology, Creative Industry and Cultural Significance, Taipei, Taiwan. Oxford Economics 2011, The Economic Contribution of the Film and Television Industries in China, London: Oxford Economics. Schechter, D, Chen, K. and Lai, J. 2012, ‘Talking points: Showtime for China.’ China Economic Review. U.S. Commercial Services 2012 ‘Doing Business in China: 2012 Country Commercial Guide for U.S. Companies.’ UNESCO (United Nations Educational, Scientific and Cultural Organization) 2013, ‘Emerging markets and the digitalization of the film industry’, A analysis of the 2012 UIS International Survey of feature film statistics. ISBN: 978-92-9189-136-8. Wang, S. 2004, ‘Chinese Culture Protection Society.’ Wetherly, P. and Otter, D. 2011, Introduction: ‘business’ and its ‘environment, in P. Wetherly and D. Otter (eds.), The business environment: themes and issues, 1st ed., Oxford University Press, Oxford, pp. 1-31. Wetherly, P. 2014, ‘The social and cultural environment’, in P. Wetherly and D. Otter (eds.), The business environment: themes and issues, 3rd ed., Oxford University Press, Oxford, pp. 143-172. Zhang, Y. 2004, ‘Chinese National Cinema.’ New York: Routledge. Read More