The impact of protectionism on cultural industries: the effect of China’s film policies on imported films

ABSTRACT Hollywood studios have actively sought to export more films to China in order to benefit from its huge film market. Facing this expansion, the Chinese government has introduced quotas in order to restrict the market access of foreign films while protecting its domestic film industry and preserving Chinese values. Nonetheless, this protectionism has brought about an unexpected effect; a limited number of Hollywood films in China have been able to attract large audiences and even exert a strong influence upon society. This paper examines how this paradox has been possible. First, it compares the level of China’s overall protectionism with other countries. Second, China’s two main policy instruments in the domestic market are scrutinized: import quota (buy-out and revenue-sharing models) and screen quota. In revealing their true effects, this paper demonstrates that these instruments of protection have produced unexpected negative business practices that foster rather favorable conditions for US films in China which is contrary to what the Chinese government is seeking to achieve.