An early still of the Shaw Brother’s big studio.

Leo Goodstadt, former head of the HKSAR Central Policy Unit from 1989–1997. He has since written extensively about the governance and policy-making of colonial Hong Kong.

With Deng's promise that Hong Kong's prosperity will be guaranteed after the 1997 Handover, much of the former colony's structural injustices have continued.

Comrade Xiaoping looking right: the specter of Deng’s “reform and liberation” (Gaige kaifang) has persisted even after the leader’s death, marking the neoliberalization of China’s various industries.

The end of Martial Law in Taiwan meant that Hong Kong’s film industry would begin to face tougher regional competition.

Henry Tang, then Secretary for Commerce, Industry and Technology, signing the first ever Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) in 2003.

Hong Kong-China co-productions like Peter Chan’s The Warlords enjoy a higher bargain power over the distribution process, allowing them to negotiate for a higher percentage of profit share in the Mainland market.


Decline of the Hong Kong film market
in the 1990s

When the return of Hong Kong to Chinese sovereignty was announced in 1984, the industry rushed to cash in before 1997, and at first production increased significantly. However, gradually, increased diversification of platforms (VHS, VCD, DVD, satellite and cable television) allowed distributors to make a lot more from rights than before, pushing up demand and prices for regional video presales (Curtin, 2007: 68-70). Frenzied opportunism encouraged companies to hyper-produce at the expense of quality, and to tailor casting and content to distributors’ formulaic preferences rather than to audience and artistic satisfaction. Profits attracted intensified triad involvement (Interview 2, 2009) [2] [open endnotes in new window] leading to poor production quality and conditions (Curtin, 2007: 70-4). Initial increase in production intensified competition for screens. The usual 120-130 film runs per year shot up to over 200, clogging the market with abundant poor quality films. The shorter runs made it hard for any good film to build reputation through word of mouth, and made it difficult for the audience to tell the good films from the bad. Frustrated theatergoers were pushed from cinemas and pulled by home distribution and rampant piracy, leading to box-office slumps for Hong Kong films—both local and regional (Curtin, 2007: 74-5, 79). The 1997 Asian economic crisis merely intensified and prolonged the decimation of regional markets (Curtin, 1999). Consequently, Hong Kong film production declined from an average of over 200 to 250 films per year in the 1980s and early 1990s to 50 per year in 2007 (HKMPIA, 2010). In fact, the actual figure, as an experienced producer and director told us, was only thirty-five (Interview 2, 2009).[3] According to available figures, the numbers remain approximately fifty to sixty films per year up until 2012 (HKTDC, 2012).

This sustained downturn has serious impact on the film labor market. With limited opportunities, most film workers change career and move to television and advertising. Those who stay in the film industry try to concentrate on post-production and distribution and stay away from pre-production and production, because of the relative job security at the back of the production chain. According to both above-the-line and below-the-line interviewees, the survivors among film labors are often more hirable and tend to maintain greater a passion for film, meaning they are willing to take wage cuts. They also tend to be team players (they can work with diverse groups of flexible laborers), and they have a good personality (bad temper and irresponsible behavior will guarantee no repeat hiring from producers in this declining market).[4] Thus, from the individual worker’s perspective only such “survivors” can get a job. And from a craft or organizing perspective, the majority of crews, especially below-the-line workers, have no bargaining power in joining any type of production team.

Although Hong Kong film history can be read as a constant process of restructuring in face of regional and global cultural, political and economic challenges, this wave of structural adjustments has happened in a specific political-economy and geo-historical context.

The contribution of neoliberalization and
coloniality to the decline of the
Hong Kong Film market

Global neoliberalization of governance has also occured in Hong Kong and China, leading to the “lionization of free market,” “deregulation” of capital and labor protection, outsourcing, state withdrawal from providing welfare, “privatization of social resources,” and “private property” ownership buoyed by credit financing (Smith 2011; Harvey 2005), resulting in greater disparity here as it has everywhere else. However, neoliberalization in China and Hong Kong has taken extra colonial/postcolonial and Chinese turns, resulting in specific impacts on the film industry.

Neoliberalization as an important issue for the Hong Kong film industry is, however, not recognized as such locally. This is because Hong Kong’s colonial legacy has made recognizing neoliberalism as a problem more difficult. Colonial Hong Kong operated on a logic similar to neoliberalism after WWII. The Hong Kong colonial administration embraced “laissez faire” to give a non-democratic political system based in fact on “the partnership between colonialism and capitalism” a semblance of free competition and transparent market conditions necessary to attract global investments. The colonial “laissez faire” economic policy, then, allowed a “principle of non-intervention” to create a semblance of “boundaries between public and private interests” (Goodstadt, 2005:119, 13). Thus, while most Western democracies moved towards welfare-state policies after WWII, Hong Kong avoided Western welfare-state interventions and developmental state protectionism (Szeto and Chen, 2011: 241; Chen & Pun: 71). As a consequence, neoliberalization in postcolonial Hong Kong does not have many welfare-state policies to “roll-back.” It simply intensifies and rolls-forward pre-existing neoliberal-like policies. What is new in postcolonial neoliberalization is the “roll-out” (Peck and Tickell, 2002) of policies that actively assist in capital accumulation, which Mark Purcell candidly calls “aidez-faire” (Purcell 2008: 15).[5] Thus, a transition to neoliberal governance is less easily recognizable to Hong Kong people.

Moreover, so “successful was the colonial administration in making laissez faire and minimal economic and social intervention an integral part of the Hong Kong outlook,” no “political party in Hong Kong sought to challenge the legitimacy” of this set of doctrines before or after 1997 (Goodstadt, 2005: 122, 13). Thus, the legalization and institutionalization of monopolies and procedural injustices that are trademarks of euphemized colonial governance trickily continue in large measure after 1997, allowing a rather seamless transition from “colonial” to “global” neoliberal exploitation on discursive and practical levels. This allows institutional and business elite more clout to localize neoliberalism through already existing institutions and discourses. Thus neoliberalism, instead of being recognized as a structural consequence of the 1997 Asian economic crisis, ironically has been misrecognized as a cause for further intensification of market deregulation, state divestment, and fiscal austerity in Hong Kong, leading to heightened social polarization and market monopolization. Similarly, the increasing dominance of Hollywood and the Chinese film market has to do with the neoliberalization of their enormous local markets (Szeto and Chen, 2011; Kapur and Wagner, 2012).[6] But in Hong Kong this is misrecognized merely as resulting from greater Hollywood and Chinese business clout rather than from long-term policies.

We see a different picture. Hong Kong’s combined situation of coloniality and neoliberal governance actually intensified the decline of its film industry in the 1990s. Colonial cultural policy prioritized the interest of the departing colonial bureaucracy at the expense of local culture and cultural industries. The non-democratic colonial government insisted on laissez-faire non-intervention to protect itself from charges of state-business collusion. As a result it allowed Hong Kong’s most important cultural industry to dwindle unaided in the 1990s, forcing the industry to develop culturally unsustainable strategies for survival.

Moreover, since Deng Xiaoping, neoliberalism has become the steering ideology of Chinese market “reform and liberation” (Gaige kaifang) (Harvey 2005). The end of Martial Law in Taiwan was also due to pressures of neoliberalization and democratization. Since the 1980s, neoliberalization of the film market in China and Taiwan has unleashed regional competition that Hong Kong had so far been sheltered from. Severe censorship and state-controlled market conditions protecting Hong Kong film from regional competition were eroded. Moreover, neoliberal deregulation of the global film market allows increasing mergers and monopolization of film distribution and exhibition and the withdrawal of government protection for small national cinemas, causing bifurcation of the global film market into global blockbusters and small/medium productions from national cinemas. This has led to the collapse of art-house cinemas globally, making it difficult for Hong Kong’s type of independent, small filmmaking companies to access mainstream film screens, even with much critical/festival acclaim (Interview 1, 2008). As one young regional producer explains,

“Our market used to be twenty percent Korea, forty percent Taiwan, the seven million people in Malaysia was a steady base, Singapore too. Now Taiwan does not watch Hong Kong films anymore. … The other markets are all dwindling, except Malaysia” (Interview 3, 2010).

While other Asian national cinemas with sizeable local populations like Korea and India can rely on the national market to survive, Hong Kong’s small population makes foreign market appeal a necessity (Szeto and Chen, 2011: 254-5).

Mainlandization or co-production

Under such dire conditions, the Hong Kong film industry became desperate for ways to keep the industry alive. The Hong Kong–China co-production model is considered by most as a panacea.

The Hong Kong SAR government is prevented from exercising more effective protectionist policies on behalf of the film industry due to its laissez-faire, free market ideology. The solution is to defer this role to the national government in Beijing, which has such policies in place and can extend its jurisdiction to Hong Kong businesses in the form of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), effective since January 2004. The target of China’s policy is to assist Hong Kong and Macau exclusively to access the widely expanding market in mainland China. Such a policy pertains to several industries.

With specific reference to film, CEPA offers a spectrum of preferential market liberalization measures extended only to Hong Kong and Macau but not to foreign countries:

  • Foreign films face a twenty-films-per-year quota (with an added 14 enhanced-format films since 2012) while Hong Kong films face no quota.
  • Foreign films pay a 5 percent import tax and get a lower 25 percent box-office share (up from 13 percent since 2012), while Hong Kong–China co-productions, regarded as local, enjoy a 30–40 percent box-office share and waiver of import tax.
  • Only Hong Kong companies are permitted to establish wholly owned film distribution companies in China (The Telegraph, 2012; Szeto and Chen, 2011: 244-5; HKTDC, 2010).

These policies privileging cross-border co-productions, act as pull factors. The declining local and Asian markets act as push factors. Together, they resulted in the accelerated restructuring of the Hong Kong film industry towards mainlandization.

A new era of cross-border co-production between mainland China and Hong Kong film companies has ensued. This is what we call mainlandization, meaning that all film production segments, from pre-production, production, post-production to distribution, increasingly take place in mainland China. Hong Kong-China co-productions certainly have increased production opportunities, due to their ability to tap into the increasing number of deep-pocketed Chinese investors, who have made their first barrel of gold in other sectors of the booming Chinese economy and are now becoming interested in the glamour of film investment.

Cross-border co-production also involves co-financing and profit-sharing. According to CEPA, co-production faces no cap on the proportion of principal creative personnel from Hong Kong, so long as at least one-third of the main cast comes from China. This is extremely easy to achieve. By categorizing only three stars as principle leads, having one star from China already qualifies a film as a co-production. Listing one more executive producer or executive director from China in the crew list also works. Thus, since 2006, almost half of the 50 “Hong Kong” films made every year have been co-produced. However, this neoliberal policy with Chinese characteristics is defined by a paradoxical coupling of selective market liberalization with tight ideological censorship (Szeto and Chen, 2011). Thus, although CEPA co-production deregulates the film market to allow a flexible flow of capital between Hong Kong and China, it continues to regulate the flow of ideas and of labor.

Incentive is high for Hong Kong film investors and above-the-line film laborers to pursue Hong Kong-China co-production as a way out for the crumbling industry. A top corporate executive from Media Asia explains that before CEPA, Hong Kong film companies entering China “must go through state assigned distributors” and “cannot choose our own distributor.” Now with Hong Kong-China co-production status, a film gets “local treatment.” He says,

“We also have the right to distribute ourselves or choose our own local distribution partners. …This allows a company room to negotiate between a thirty percent to forty percent profit share, and the ten percent difference can be extremely significant for big budget films like Peter Chan’s The Warlords, which took in twenty million box-office in China … and … Lau Wai-Keung, Mak Siu-Fai’s Initial D and Confession of Pain … which numerically pulled in close to twenty million. Compared to the thirteen percent to fifteen percent profit share of import films, industry leaders increasing opt for co-production with China” (Interview 4, 2008).

The increasing significance of Hong Kong film having access to the formidable Chinese market is crystal clear. Moreover, China offers cheap locations and labor, along with a diversity of geographical locations for the selection of scenes and sites. Thus, big budgets pour into film-making in China and major talents all start exploring the possibility of mainlandization. Hong Kong investors and filmmakers suddenly find it imperative to capture the Chinese market. Ways in which the mainlandization of Hong Kong film production impacts on local film labor will be explored in detail in the following section.

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