The non-mainland company, Golden Harvest, has been authorized to distribute the imported movie in the country's tightly controlled market, signaling the start of a reform marked by the loosening of control of state-owned China Film Group, said Fu Guochang, director of the Group Office under the China Film Group.

Fu said Shanghai Golden Harvest has been given the rights on a trial run basis but refused to say why the company was chosen or whether other companies would also win such distribution rights in the future.

"We need to experiment with new ways and accumulate experience. That is why we started with Epic Center, a small-budget film," Fu said.

Shanghai Golden Harvest will be allowed to sell Epic center to local distributors in Shanghai and other large cities in May and June, company spokeswoman Xu Fang said.

Neither company would disclose how much Shanghai Golden Harvest paid for the distribution rights.

According to the deal, Shanghai Golden Harvest can earn revenue only from fees paid by local distributors and does not get a share of the more lucrative box office sales, Xu said.

That's what Hollywood has wanted for a long time -- setting up its own distributor, said Willie Brent, a Shanghai-based entertainment and marketing consultant.

Although the move is widely seen as initial efforts to open China's film distribution industry, Zhang Pimin, vice-director of the State Administration of Radio, Film and Television, said the country has no plans to invite foreign distributors in the coming five years.

Chinese companies are competent to achieve good distribution records, said Zhang, adding that another distribution company will be established in the next few months to create a more competitive market.

The plan has been sent for final approval to the central authorities.

Currently import and distribution rights of foreign films are solely possessed by China Film Group.

The entire existing distribution system is getting an overhaul. Online ticket booking will be introduced in 700 major theatres starting from July 1, which will help reduce distribution costs and maintain accurate statistics of box office earnings.

China allows only about 10 big-budget Hollywood films to hit the big screen each year, with US studios and China Film splitting the box office earnings.

According to the country's World Trade Organization agreement though, that number will double to 20 this year and eventually rise to 40, said Zhang.

He further explained that such an agreement aims to protect domestic film studios, which lag far behind their foreign counterparts.

Zhang said what films are imported also depends on local factors since the domestic audience's tastes and interests should be considered.

China is also trying to diversify its film imports to include films from Japan, France, Sweden and Russia, so that domestic audiences can enjoy various cultures.

But imported films right now are having a hard time in China with even the best-selling Hollywood movies only netting US studios a few million US dollars, said Brent.

Zhang said this was because of the rapid development of the domestic film industry and the shifting tastes of audiences: domestic audiences do not chase imported films as they did before, but have built up their own tastes.

Besides, the domestic film market is still small given the country's large population, said Zhang.

Statistics indicate that the average Chinese visits the movie theater less than once each year. Annual box office earnings in China average US$200 million, just one-thirtieth of that in the United States.

(China Daily May 28, 2002)