Hollywood’s New China Deal a Goldmine for Product Placement

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“This agreement with China will make it easier than ever before for U.S. studios and independent filmmakers to reach the fast-growing Chinese audience, supporting thousands of American jobs in and around the film industry.”

That’s U.S. Vice President Joe Biden’s summary of a groundbreaking new deal between the two nations that will relax the controls on China’s movie market. The agreement came at the end of leader-in-waiting Xi Jinping’s visit to the US, an image-polishing visit for China at a time when worker conditions and Apple dominated U.S. headlines.

The agreement included a deal with the Dreamworks Animation studio for a filmmaking joint-venture based in Shanghai. But it’s also good news for one of the few industries America still excels at, while easing access to China’s billion-strong audience for the product placement industry.[more]

The deal opens China to an additional 14 U.S.-produced films on top of the 20 non-Chinese movies okayed for the market. Per the agreement, the films must be produced in 3D or IMAX formats, which calls into question how much the new agreement will, in Biden’s words, help “independent filmmakers.” China now has just over 2,500 screens capable of handling 3D films and will soon have around 50 IMAX-capable screens.

Sweetening the deal for the US is a provision of the deal that increases the percentage of Hollywood’s distribution take.

A case study in the kinds of films that will benefit is last summer’s blockbuster (and 2012 Brandcameo Product Placement Award winner) Transformers: Dark of the Moon. The latest installment in the Transformers movie franchise premiered in Shanghai and was one of a limited number of 2012 US films to be screen in China, where it became a huge hit.

China was Transformers 3‘s most profitable market after the US, and its opening weekend set the all-time China record of a $46.8 million box office. It went on to become the second-highest grossing film ever in China ($168 million) of all time, second to James Cameron’s Avatar.

The (not totally) secret silver lining for China in Transformers 3 was all the Chinese product placement that made it into the film. 

China homegrown brands Lenovo, Meters/Bonwe, TCL and Yili Milk all scored major roles in the film. The upshot: record numbers of Chinese filmgoers watching an American film featuring Chinese products. Gotta love Hollywood, baby!

The agency that set up all of those placements was the legendary branded entertainment group Norm Marshall Associates. Marshall, who has an office in Beijing, had tested the waters of placing Chinese brands in US films a few years before when it worked with Meters/Bonwe in Transformers: Revenge of the Fallen, the second in the series. Marshall told brandchannel that the partnership was a bonanza of both brand building and profitability and has opened the door to Chinese brands seeking to land product in Hollywood blockbusters.

But it wasn’t just the Chinese brands that benefited. Thanks to the Transformers franchise, the Chevrolet Camaro is the muscle car of choice in China. The Transformers Camaro is so popular in fact that GM released the special bumblebee-yellow, Autobot-decaled edition Camaro model to the China market via last year’s Guangzhou Auto Show. It retails for about 475.800 yuan ($75,000).

While the U.S./China trade deal creates an opening for 20 more US films, it also represents a secondary opportunity for 20 more multiples of product placement for brands looking to piggyback on blockbusters to reach a huge, hungry consumer group.

Finally, the deal was negotiated at the tail end of China’s soon-to-be leader Xi Jinping’s visit to the US. Perhaps it was Xi’s time spent in Iowa in 1985 and his exposure to American movies and entertainment that made the deal possible. News reports have already noted that one of the sons of the Iowan family Xi stayed with was a big Star Trek fan.

What movies were playing in theaters that Xi might have seen during the first two weeks of May 1985, when he visited Iowa? Police Academy 2, Porky’s 3 and more:

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