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For many foreign filmmakers eyeing China, their greatest interest is in the chance to co-produce Chinese-themed films (employing local cast and crew) and getting an even greater share of the box office and a guaranteed release. But there's a drawback: They give up creative control as Chinese regulators retain the right of final cut. DreamWorks's other partners are China Media Capital (an equity fund backed by SMG, the state-owned China Development Bank, and an information-technology fund set up by entrepreneur Edward Tian) and Shanghai Alliance Investment (an investment arm of Shanghai's municipal government).
DreamWorks is following a path other Hollywood studios have explored with mixed results. Whereas Sony, Disney, and Fox have co-produced films in China as one-offs, some with independent studios, and Fox and Disney continue to do so (with a few modest successes, though none in animation), it is Warner Bros.' joint venture with the state-run China Film Group that the DreamWorks-SMG deal most resembles at first glance. That entity, created in 2005, is now all but defunct and produced no animation that made a splash. It had but one live action film, the caper "Crazy Stone," that had substantial success in China.
"Government subsidies will never drive market development, because they're disconnected from the quality of one's work," says Ms. Wu of Vasoon, the independent animation company. "The government's made the right noises, but its animation propaganda hasn't changed."
Last year, Vasoon debuted its own $7 million feature, the anime-esque adventure "Kuiba," – about a boy discovering his powers to fight evil – without subsidies. Though "Kuiba" grossed less than $1 million in the brief release allotted it by wary exhibitors, Wu is encouraged by the film's 30 million unique Internet downloads. The company now has cut it for television and developed related comics, T-shirts, and toys. It's also developing a sequel due later this year.
"With international studios arriving, China's industry will speed up," she says. "We're doing what DreamWorks does, only with fewer people." [Editor's note: This paragraph was changed because Wu clarified her statement after this article was translated back into Chinese.]