Fri, Sep 14, 2018 - Page 5 News List

Star’s tax woes could alter show business in China

Bloomberg

Chinese actress, singer and producer Fan Bingbing attends the Viscap fashion show with other celebrities at China Fashion Week in Beijing on March 26, 2013.

Photo: AFP

Up until a few months ago, the future looked bright for Fan Bingbing (范冰冰). As one of China’s biggest movie stars, she had featured in a couple of Hollywood superhero blockbusters and scores of local films, with many other projects in the pipeline.

Then in June, she became embroiled in a scandal about movie stars under-reporting their earnings, resulting in Chinese tax authorities investigating the industry — including Fan — for possible evasion.

The 36-year-old actress, who has 63 million followers on Sina Weibo, has since vanished from public view — no more social media updates, no more paparazzi photographs and no more public appearances.

Fan has denied wrongdoing and a representative for her studio could not be reached for comment.

For film executives, Fan’s disappearance is a reminder of the perils of show business in the most-regulated major entertainment market in the world, where the Chinese Communist Party weighs in on everything from the appropriateness of costumes to the salaries of movie stars.

The episode is also prompting Chinese studios to wean off a reliance on A-list stars to drive big hits, a shift Hollywood made years ago.

“The crackdown will force studios to focus on making quality content rather than simply relying on the star-driven formula,” said Leiger Yang (楊永民), founding partner at Beijing-based Landmark Capital, which invests in entertainment start-ups and studios.

A shift away from star-driven fare would come just as China’s movie boom is regaining momentum, fueled by local hits steadily displacing Hollywood blockbusters.

However, underneath that healthy gloss, top Chinese studios including Huayi Brothers Media Corp and Zhejiang Huace Film & TV Co said in annual reports that higher celebrity pay is threatening profit margins.

Fan vanished from public view one day before the Chinese State Administration of Taxation on June 3 announced a probe into her tax filings after a former China Central Television host posted what appeared to be partially redacted contracts that allegedly disguised compensation Fan received from a studio for a film.

Weeks later, the host said the contracts were not related to the star.

Fan’s silence and the crackdown are also intended to make a political point, said Stanley Rosen, a University of Southern California political science professor who studies China and its film industry.

“Social media and public opinion, as you know, are important drivers of policies in this area, particularly when it comes to perceived inequalities, the super-rich, and cheating,” Rosen said.

Still, he predicts the government would not deepen its crackdown in a way that harms the industry longer term.

Authorities still want the industry to grow fast enough to surpass North American box office, he said.

While authorities may not directly undermine bankable stars, industry trends show stellar casts are no longer sure bets.

Just before Hello, Mr. Billionaire (西虹市首富), a low-budget Chinese comedy-drama without big stars became a summer hit, Asura (阿修羅), the big-budget, star-studded epic on mythology bombed at the box office and was withdrawn immediately after its opening weekend.

Trade magazine Variety called it “the most expensive flop in Chinese history.”

Television streaming is also drawing fans to dramas without big stars.

Story of Yanxi Palace (延禧攻略), a 70-episode drama coproduced by and streamed on iQiyi, emerged as a surprising summer hit with a mostly young, lesser-known cast.

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