The Rise of the Distribution Business in China

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Chapter  3:  From  “Parrot”  to  “Butterfly”:  China’s  Response  to Hollywood in Distribution Systems in the 1920s and 1930s

This chapter explores the dynamic relations between Hollywood and the Chinese film industry by examining the evolution of China’s distribution system in the 1920s and 1930s. Chinese cinema of two decades has attracted intensive attention from scholars, in particular the 1930s, the period regarded as “the Golden Age of the Chinese film”.1 However, serious study of distribution systems has not occurred yet. The literature has only focused on some aspects of detailed information about the operation of distributing Hollywood and Chinese films. This chapter intends to examine the distribution system of China in the 1920s and 1930s by employing various primary sources including studio archives and newspaper commercials. I will explore the relations between Hollywood and the Chinese film industry in the distribution domain and examine the influence of those elements on China’s response of Hollywood in the distribution system. My argument is that the analysis of power relations is a key to understanding China’s response of Hollywood in its film industry.
With regard to the response of national culture to foreign cultures, Paul Lee has suggested four patterns of responses based on the transformation of form and content, namely, “Parrot, Amoeba, Carol and Butterfly”.2 The “parrot” pattern refers to a given culture imitating foreign cultures from forms to content, like a parrot’s mimicry. The “amoeba” pattern names a condition in which form is changed while the substantial content remains. The “carol” pattern describes a modified form whose substantial content is changed while the form remains. The “butterfly” pattern describes a cultural product whose form and content are both changed.3 In this chapter instead of form and content, the rationale for classification is the growth of distribution system, with respect to film system. The development of China’s distribution system can be regarded as undertaking a shift from the “parrot” pattern to the “butterfly” pattern with regard to responding to the Hollywood system. In the early 1920s, China’s distribution system could be viewed as a naive parrot, mimicking Hollywood’s system. A decade later, the distribution system grew up into a “butterfly”, from which emerged a uniqueness. The “butterfly” pattern is more appropriate in the context of the film market in China.
This chapter starts with a brief introduction of the emergence of the Chinese distribution business in early Chinese film history from its beginnings into the early decades of the twentieth-century. As an examination of the response process in the distribution system, I first analyse how the Chinese film industry learned from and imitated Hollywood within the distribution system in the 1920s. Specifically, a “run-clearance-zone” system is highlighted to characterise the distribution system. In the wake of the evolution of the distribution business, Chinese film practitioners gradually developed their own distribution system by responding to the Hollywood model within the context of China. This chapter then traces the development of the distribution system in 1930s China. Through a comparison of the distribution systems between Hollywood in China and Chinese film itself, my conclusion is that the Chinese distribution system, by the 1930s, had grown into a sophisticated and flexible institution, which was more appropriate in the context of the Chinese film market. This chapter concludes with an analysis of power relations in the process of the formation of the Chinese distribution system. Power relations stand as the rationale for identifying different patterns, stages, and types of mixing in the process of response. Therefore, I suggest power relations as a key to understanding the response process of the Chinese film industry.

The Rise of the Distribution Business in China

Film distribution in China began with the business of screening foreign films in treaty ports like Shanghai. Prior to the emergence of professional distribution corporation, exhibitors screening foreign films in some ways functioned as distributors as well. For instance, Galen Bocca, one of the first pioneers in film exhibition business in Shanghai, started his screening business using a shabby film projector and several used film reels.4 Bocca sold his showing business together with those film reels to A. Romas, who subsequently built up a screening empire.5 In the wake of an upsurge of film screenings, personal and private importation could not satisfy the exhibition demand. As a result, professional distribution corporations emerged. In the 1900s and early 1910s, French films dominated China’s screens by virtue of the distribution of Pathe-Phono-Cinema-Chine. American films were obtained “mostly through European exchanges”.6 For instance, a British corporation M.P. Sales Company of London was responsible for distributing American films to the Arcade theatre in Tianjin.7 Gradually, professional American exchange corporations emerged in 1910s China. An instance is Benjamin Brodsky’s Variety Film Exchange. It set up branches  in Hong Kong and Shanghai, responsible for distributing American films to China. In addition, major Hollywood studios invaded the Chinese film market through corporations in China and Singapore. For instance, Lu Gen’s Hongkong Amusements Corporation was reported to monopolize distributing business of Hollywood films in China in 1922-1923. 8 In addition, Fox pictures in the early 1920s in China was distributed by a Singapore film exchange named Middle East Films Ltd.9 Apart from official film distribution, pirated films were rampant in the early 1920s. Ramos Amusement Company and the Oriental Film Company are two major criminals in circulating illegal American film prints to China. 10 Along with the growth of the Chinese film market, Hollywood started to set up branch offices in China to “coordinate the distribution of their films in the country”, spearheaded by Universal in 1921.11 By the early of 1930s, major studios in Hollywood had set up their branch offices or exclusive agencies in China, with their head-offices in Shanghai and branch offices in the larger cities such as Tianjin.12 “In cities where the distributors ha[d] no branches or representatives, checkers [were] usually maintained to oversee arrivals and return shipments of films to verify box office receipts”.13 In addition, Hollywood distributors in some cases entrusted their “silent films and supply distant interior cities through Chinese film exchanges”, a distribution method somewhat like “farm out” nowadays.
Regular film production in China dated from the early 1920s. In the early days, film production corporations were responsible for their own distribution business. At that time, communication and connection were very rare among distribution branches in the studios of China.15 Large studios like Mingxing and Commercial Press gradually became involved in business of distributing other productions, apart from their own direct distribution business. For instance, most of the Chinese films shown in Xiamen (Amoy) in 1927 were distributed by Mingxing.16 Additionally, another source shows that Mingxing in 1925 had obtained the distribution rights to Shanghai of Victory (战 Xu  Xinfu,  1925),  a  Great  China  Lilium  production. 17   By  the  1920s,
professional corporations which were responsible for distributing Chinese films had emerged as well. The first cartel formed by Chinese distributors—The United Film Exchange Corporation commenced in 1926. However, it dissolved in a short time. In the 1930s, two film exchanges dominated the distribution market of the Chinese film industry, that is, Huawei and Lianhua. They signed long-term contracts with studios and with theatres exhibiting Chinese pictures. One source shows that at least 65 theatres all over China signed distribution contracts with Huawei in 1931.18 Like their American counterparts, Chinese distributors usually employed a revenue sharing system. Large distributors like Huawei divided the country into districts, “each district being under the control of an agent”.19 The distributors charged “a commission of ten per cent” on the net revenue producers obtained and “allot[ed] five per cent to district agents”.20 In its prosperous period, the total sales of Huawei amounted to 700,000 yuan with a net profit of 30,000 yuan in 1934.21
With respect to the details of distribution operations in China, many characteristics were shared by Hollywood and the Chinese film industry. Both Hollywood and Chinese film engaged in two methods of distribution. A film was “either leased to the theatre at a certain sum for a definite number of showings or it [was] released on a profit-sharing basis”.22 The profit-sharing basis was more popular for both Hollywood and Chinese film. E.I. Way documented the detailed operation of the profit-sharing system in 1930s China:
First and second run theatres usually exhibit film on a percentage basis of approximately 35 per cent of the box-office receipts, with deductions for advertising and minor expenses. All subsequent-run theatres pay anything from $40 to $150 Mex. ($14 to $50 U.S.) per program of nine reels. No legitimate distributor sells outright, since films are usually the perpetual property of the producer.23Geographically speaking,the circuit of distribution for  Hollywood and Chinese film was similar in the 1920s—a broken line with a starting point of Shanghai or Hong Kong from which films went one by one from city to city. Shanghai and Hong Kong were the “real distributing centres for China” in the 1920s and 1930s.24 Hong Kong stood as a centre for distributing foreign films in South China, while most Hollywood films and Chinese films screened in China were obtained from Shanghai. It is understood that Hollywood and Chinese films usually premiered at the first-run theatres in Shanghai. Distributors then sent film prints in parcels by means of freight or shipment to other big cities including Fuzhou (Foochow), Hankou, Tianjin (Tientsin) and Nanjing (Nanking). After the showing in these big cities, films were distributed into mid-size cities nearby, such as Beijing (Peking), Qingdao (Tsingtao), Hangzhou (Hangchow), Wuxi (Wusih) and Xiamen. The film prints were finally shipped back to Shanghai for a third and subsequent run show. Therefore, in the 1920s patrons in mid-size cities like Qingdao had to wait for a rather long period to watch a new film, either a Chinese or Hollywood film.

China’s Distribution System in the 1920s, A “Parrot” Pattern

It is fair to say that the establishment of China’s distribution system was mainly based on imitating and learning from Hollywood. As a matter of fact, Chinese film distributors did not conceal their attitude towards Hollywood. In 1926, when the United Film Exchange Corporation, the first cartel created by Chinese distributors, was organised, the advertisement in its opening ceremony admitted, “the united distribution of our American counterparts is our example”.25 This attitude of imitating and learning is also visible through a close examination at the institution of the distribution system. This section looks at the film market in 1925 in Shanghai as a means of investigating the distribution systems of Hollywood and Chinese film. One can find a similarity existing in 1925 between Hollywood and Chinese films in their distribution systems. The attitude of imitation for Chinese film was attributed to the condition of the Chinese film industry and in its very initial stages, the rationale of the Chinese film industry was to seek to imitate and learn from its distribution systems from sophisticated Hollywood. Both Hollywood and Chinese film followed the rule of “run-clearance-zone”.
The “run-clearance-zone” was seen as a regular and basic distribution system in the classic Hollywood period. It was invented and firstly engaged in the American film industry. According to Richard Abel, American film companies in the 1910s such as General Film Company “innovated a number of distribution practices: a pricing strategy based on each film’s age, an early form of block booking, and a run-clearance-zone system”.²⁶ In the 1920s, the run-clearance-zone distribution system was generally employed by other industries. “Run” refers to “the successive exhibitions of a motion picture in a given area, first-run being the first exhibition in that area, second-run being the next subsequent and so on”. 27 The criteria for a dividing run for a given theatre include its location, decoration, equipment and other facilities. “Clearance” means “a period of time, usually stipulated in license contracts, which must elapse between runs of the same feature within a particular area or in specified theatres”.28 A major aim for setting clearance is to channel audiences to watch films from early run theatres. Therefore, this method could guarantee the optimisation of the box office, since the major studios owned 80 per cent of the first-run houses and the most profitable subsequent-run houses in the United States. 29 “Zone” is a term referring to “the areas into which a city is divided for purposes of granting exclusive rights to runs”.30 Generally speaking, both Hollywood and Chinese film basically followed the rule of a “run-clearance-zone” mode of distribution in 1925. I have analysed the screening records published in the newspaper Xinwen Bao (Shanghai) from 1 January to 1 July 1925. In the period of these 172 days, Shanghai had 1,935 screening of 256 films, 219 of which were foreign films and 37 Chinese. The first perspective is the “run” operation and theatre runs for screening foreign films were clearly visible in 1925. Carlton 卡尔登戏院, Embassy and Isis 上海大戏院 theatres were the first run houses. Empire 恩派亚影戏院, Republic 共和影戏院, Universal 万国影戏院, Hongkew 虹口活动影戏园 , Victoria, New Allen 新爱伦影戏园 and French Concession Theatres 法租界大影戏院 were the second run houses. Other cinemas including Chapei 闸北影戏院, British 大英影戏院 and Freedom 自由影戏院 were seen as third run theatres. Theatres screening Chinese films also showed some character of “run”, although the theatre chain system for Chinese film was in general far from being mature. The Palace Theatre 中央大戏院 can be seen as the first run house for Chinese films. However, other subsequent runs remain ambiguous. In addition, it is hard to find a fixed sequence for the showing of Chinese films. Taking Awareness (觉悟, dir. Ling Lianying, 1925) for example, its showing at Empire (17 April to 18 April) was earlier than that at Olympia (the predecessor of Embassy) (23April to 25 April). However, in the screening of After Separation (别后, dir. Qin Zhengru, 1925), Embassy (4 January to 7 January) was earlier than that at Empire (16 January to 18 January).
A similarity can also be found in terms of the factor of “clearance”. In all 49 out of 219 foreign films, one can observe the presence of “clearance”.31 Forty-four of them (90 per cent) have the character of “clearance”. Helen’s Babies (dir. William A. Seiter, 1924) is a case in point. As Table 4 illustrates, this film was released at Olympia from 8 February. Twelve days of “clearance” had been set until it reappeared in the second-run house Empire. Moreover, this film had another two days clearance from 24 to 26 February.

Table of Contents
Dedication 
Abstract 
Acknowledgements 
Table of Contents 
List of Tables 
List of Figures 
List of Illustrations 
Chapter 1: Introduction 
1.1 Theoretical Framework
1.2 Literature Review
1.3 Research Questions
1.4 Periodisation
1.5 An Industrial Overview
1.6 The Organisation
1.7 Methodology
Chapter 2: Technology and the Trans/National: The Contribution of Hollywood to China’s Transition to Sound, 1931-1936 
2.1 The Coming of Hollywood Talkies
2.2 The Gap in the Market and Inspiration: Two Contributions of Hollywood in Economy in the Early 1930s
2.3 Supplier and Model: Hollywood’s Contribution in Technology in the Mid-1930s
2.4 Thinking “Trans/National” in the Domain of Technology
2.5 Conclusion
Chapter 3: From “Parrot” to “Butterfly”: China’s Response to Hollywood in Distribution Systems in the 1920s and 1930s 
3.1 The Rise of the Distribution Business in China
3.2 China’s Distribution System in the 1920s, A “Parrot” Pattern
3.3 The Distribution System in the 1930s
3.3 Power Relations in China’s Response
3.4 Conclusion
Chapter 4: Capitalism with Chinese Characteristics: The Mode of Production in Chinese Films Prior to 1937 
4.1 The Mode of Production: Perception, Practice and Its Evolution in Chinese Cinema
4.2 The Central Producer System in Lianhua
4.3 The Powerful Position of Directors in Lianhua’s Producer System
4.4 The Financing System of the Chinese Film Industry
4.5 Conclusion
Chapter 5: Film Matchmakers: The Intermediaries between Hollywood and China in the Early Twentieth Century 
5.1 Nationalism in Chinese Film Studies
5.2 American Film Practitioners in China
5.3 Chinese Merchants Straddling the Divide between Hollywood and China 14
5.4 The Film Practitioners Who Studied Abroad
5.5 Conclusion
Chapter 6: Growth through Competition: The Outcome of China’s Response to Hollywood in the 1930s 
6.1 Aggressive Hollywood and Limited Government Interference: The Context
6.2 Hujiang Theatre in October 1933: A Microeconomic Case
6.3 Echoing Hujiang: The Receipts of Film and Geographical Variations in the 1930s
6.4 The Diachronic Macroeconomic Perspectives
6.5 Competition: China’s Efforts to Success
6.6 Conclusion
Chapter 7: Conclusion 
Filmography
Bibliography
Glossary
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China’s Industrial Response to Hollywood: A Transnational History, 1923-1937