Chinese Foreign Investments In Hollywood

Author:Mr Christopher Spicer, Vanessa F. Roman and Christopher M. Maddox
Profession:Akin Gump Strauss Hauer & Feld LLP

After a record-breaking 2016 for Chinese companies' investments in the film industry, changes to Chinese foreign investment policy have created uncertainty for the future of Hollywood's relationship with the Middle Kingdom. Late last year, the Chinese government began reviewing "irrational" investment activities in a number of sectors, including the entertainment industry. As a result of this review, China began scrutinizing large investments in foreign companies that are outside the investor's core business. Additionally, China's concerns regarding the outflow of cash overseas led to increased capital controls. The State Administrator of Foreign Exchange issued a directive requiring the regulator's approval before companies can transfer more than $5 million, in dollars or renminbi, out of China.

Since the start of 2017, this heightened scrutiny and the stricter controls over money leaving China have had a direct impact on a number of Hollywood deals. In part due to China's restrictions on money leaving the mainland, Paramount Pictures has not received any payments due from the billion-dollar financing deal with its Chinese partnersShanghai Film Group and Huahua Media. In early March, the current owners of Dick Clark Productions, the producer of American Idol and the Golden Globes, terminated their $1 billion deal with Dalian...

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