In the escalating U.S.-China trade war, the American film industry, so far, has remained unscathed. The Meg, the Warner Bros.-backed shark movie starring Jason Statham and Li Bing Bing, illustrates how Hollywood is learning to collaborate with Chinese counterparts—even as Washington and Beijing bicker.
| Clay Chandler | |
| @claychandler | |
| clay.chandler@timeinc.com |
In the U.S., The Meg has inspired a feeding frenzy among film critics. “As dumb as a bucket of sand!” declared the Houston Chronicle. Ars Technica‘s verdict: “We’re going to need a stupider boat.”
But the film has fared better than expected in American theaters. It took in $32 million in the U.S. its opening weekend, outperforming Skyscraper and Mission Impossible: Fallout. In China, where The Meg opened Friday, it “thrashed to a third-place finish,” according to Variety, taking in about $15 million, or 22% of total box office. Not bad for a CGI fish story that expects audiences to swallow the idea that a 75-foot megalodon (a species of giant shark scientists say has been extinct for 2.6 million years) lurks at the bottom of the Mariana Trench.
What’s interesting about The Meg is that it wasn’t made solely for U.S. audiences. Rather, it’s one of a growing number of Hollywood blockbusters—including The Great Wall, the Pacific Rim series, Transformers: The Last Knight, and Skyscraper—expressly produced to hook moviegoers in China. Statham and Li, who attended a gala premier for the movie at Beijing’s Water Cube last week, are huge draws in China. Much of the movie’s storyline is set in Chinese waters. And the entire production was bankrolled by a trans-Pacific consortium that includes Warner Bros., Hong Kong-based Flagship Entertainment, and China’s Gravity Pictures.
Producers have invoked The Meg’s potential for cross-over appeal in the world’s two largest film markets to justify its monster-sized budget (reportedly more than $150 million). It’s too early to say whether they’ll break even. Variety notes, though, that the fact The Meg is a U.S.-China co-production means it didn’t need to be imported under China’s revenue-sharing quota system, which currently limits the number of foreign films shown in China to 34 a year. Another advantage: Warner and Flagship can earn 45% of gross revenues, rather than the 25% foreign studios receive under revenue-sharing terms. And co-production status allowed Gravity Pictures, which is owned by China Media Capital, to manage the firm’s release in China, bypassing the two state-owned enterprises that usually handle quota films.
The Meg’s China opening was marred by controversy over iPartment, a local comedy and China’s current top grosser with box office of $45 million. Industry insiders allege iPartment’s distributors of artificially manipulated its ranking by buying more than $15 million in tickets to their own movie. That happens a lot in China. But it may also be that Chinese moviegoers just aren’t biting. So far no U.S.-China co-production team has figured out how to make blockbusters that are equally successful in both markets.
While Statham and Li chase the megalodon across China’s silver screens, the nation’s editorial writers have their harpoons out for MAGA Don in pages of the state-owned media. For months, China’s press has been under strict orders to not to attack President Trump directly in criticisms of U.S. trade policy. But on Monday, an editorial in the official China Daily denounced the U.S. leader for starring in his own “street fighter-style deceitful drama of extortion and intimidation.” Sounds like somebody’s working on a screenplay!
Innovation and Tech
Saddle up. China’s largest bike share provider, Mobike, has suspended a manager after an engineer accused him of sexually harassing herself and two other employees. The manager allegedly hired staff he sought to have relationships with and withheld promotion opportunities if his desires weren’t met. Earlier this year, sexism at China’s major tech companies was highlighted when a series of sexist recruitment ads went viral. Meanwhile China’s "MeToo” movement has been building momentum more broadly. To avoid censors, the movement is often renamed "Rice Bunny”, because the Mandarin (mitu) sounds similar. Sixth Tone
Bytedance billions. Beijing Bytedance, the parent of news aggregator Toutiao and short video app Tik Tok, is seeking to raise $3 billion in funding, primarily from American investors. The funding would value Bytedance at $75 billion, making it the world’s most valuable start-up according to CB Insights, surpassing Uber’s $68 billion valuation. Bloomberg
Superapp battle. Alibaba is reportedly seeking to merge its food delivery and services units, Ele.me and Koubei, as it continues to battle Tencent for dominance in the arena. After merging the unit with Koubei, which provides various lifestyle services, the single entity will be more akin to Tencent-backed Meituan, which is a multi-service platform that holds second place in China’s food delivery market. The Ele.me-Koubei merger could be valued at $25 billion, a little shy of Meituan’s $30 billion valuation. Reuters
Hypersonic rocket. China successfully tested a hypersonic aircraft that could be used to deliver multiple nuclear warheads. The Starry Sky 2 vehicle is a so-called “waverider”, because it rides the shockwaves created during hypersonic flight. The aircraft was launched into the stratosphere on top of a conventional rocket before separating and returning to earth, reaching speeds of 7,344 km/h with high maneuverability. The rocket would easily evade America’s current missile defense systems. The U.S. Missile Defense Agency has asked for an increase in its budget next year. Quartz
Economy and Trade
Round two. President Trump has claimed that the trade war with China is "working big time” as Chinese stocks slumped. On Tuesday, his administration unveiled a $16 billion list of imports that will be hit with 25% tariffs, including motorbikes, speedometers and antennas. China retaliated, but it doesn’t import enough American products to continue matching tariffs tit-for-tat. China has flexed its economic might in other ways. Last month it allowed a multi-billion dollar Qualcomm deal to lapse by failing to approve it. This week, an opinion piece in the People’s Daily said that companies like Apple could be used as a “bargaining chip”, hinting the brand might be spontaneously boycotted. China has utilized boycotts in previous disputes with Korea and Japan. CNN
Global recall. The U.S. and the E.U. have both recalled heart medicine containing valsartan over fears that the drugs are contaminated with carcinogens from China, the world’s largest supplier of active pharmaceutical ingredients (APIs). A scandal over faulty vaccinations erupted in China last month, highlighting the inadequacy of domestic regulators. Regulators are not required to inspect companies that produce APIs solely for export. Financial Times
Slow IPOs. Shares in China Tower remained flat during their first day of trading on Wednesday despite the mobile tower operator achieving the world’s largest IPO for two years, raising $6.9 billion. It was another disappointing launch for Hong Kong, where Xiaomi made an underwhelming debut just last month. Their offerings come at a time when the Hong Kong stock market is in a slump, with the Hang Seng Index dropping 14.5% since its January peak.The chairman of the HKEX has warned that China-U.S. trade tensions are casting a “dark cloud” over global markets. South China Morning Post
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Politics and Policy
Seaside secrets. China’s yearly secretive meeting of top government officials appears to be underway, or perhaps it has already concluded. The annual summit is held in the coastal town of Beidaihe, but details of the event – including when it will convene, who will attend, and what is discussed – aren’t disclosed. Observers look for clues that the meeting is on, such as brief reports of officials welcoming foreign diplomats at the seaside resort, or state media coverage of Xi Jinping’s daily activities suddenly dropping off. Reuters
Courting the Taliban. Chinese officials have met with the Taliban several times over the past year, on occasion even arranging for Taliban leaders to visit China. According to a source, the meetings are partially designed to demonstrate China’s tolerance for Muslims, despite its continued persecution of Muslim minorities in Xinjiang (an issue officials supposedly discussed with the Taliban). The U.S. has held unofficial meetings with the Taliban too, but apparently China has made greater inroads. Financial Times
Democracy inaction. The Foreign Correspondents Club in Hong Kong has come under fire for its decision to host a talk with Andy Chan, the leader of Hong Kong’s pro-independence party. Opposition to the talk has come primarily from C.Y. Leung, Hong Kong’s former chief executive, who compared Chan to “criminals and terrorists”. Meanwhile current chief executive Carrie Lam called the FCC’s decision to host Chan “regrettable and inappropriate”. China’s Ministry of Foreign Affairs also requested the talk be cancelled, as Beijing has taken an increasingly hard line against separatist ideas in Hong Kong. New York Times
This edition of CEO Daily was edited by Eamon Barrett. Find previous editions here, and sign up for other Fortune newsletters here.
