BEIJING — Fan Bingbing, China's highest-paid actress and star of the 2014 blockbuster X-Men, recently received some unwanted public attention—an accusation of tax evasion. The Chinese actress was accused by Cui Yongyuan, a TV presenter and producer, of signing "Yin-Yang contracts" for the films she stars in. This allows her to pay lower tax via the public part of the contract, the "yang," while being paid several times more in the untaxed private "yin" contract. As later exposed by the Chinese press, this is a common practice in the film and TV industry, and it has prompted a probe by state tax authorities into the sector's fiscal affairs.

In mid-August, in a joint declaration, China's three major online video sites — iQiyi, Youku, and Tencent — and six major film and TV production companies declared that they will, in the future, "cooperate to block actors' unreasonable rewards and resist unhealthy trends of the industry."

A dozen associations from China's audiovisual sector followed suit to make it known that they also support the position taken by the leading film and TV platforms.

It's not news that the total remuneration of the so-called "traffic stars," China's show business idols, has been soaring, thanks to their ability to attract a mass of fans online and thus create huge commercial value. To limit the trend, the government officially issued notifications last year ordering online video platforms not to take stars' wishes as the only bargaining standard and to set a proportional ceiling of actors' pay in a film production.

China's entertainment sector has long since developed an industrial norm following its own particular laws. While in Japan, South Korea and Hollywood, actors' salaries usually account for 10-30% of the production cost of a film, it often exceeds 50%, or even over 75%, in China.

Still in search of "fresh little meat"

Yet the high rewards of these stars don’t result in any corresponding quality of work. Investment in other parts of the production and post-production process, such as the sets, costumes, and editing, is sacrificed, while pay for smaller acting parts is also quite low. Chinese audiences use such expressions as "five-cent special effects" and "junk scripts" to note the low production value.

Meanwhile, a large influx of capital into the industry has led to overcapacity, so that every year half of the films made can hardly find an outlet. This oversupply, plus the rarity of good work, has led to the situation that only when a film involves big stars and a big production can they guarantee to attract at the box office. The fact that "fresh little meat," Chinese slang referring to handsome young male idols, are so sought after, also makes it difficult for them to dedicate themselves to their craft and improve their acting.

But the ills in China's film industry go far beyond this. Plagiarism rages out of control, while rampant use is made of faking of audience ratings through internet ghost writers, who are paid to post online comments. The artists, in turn, use these illusory data to raise their pay. The vicious circle is hence created.

A new market trend is, however, taking shape. Recently, more and more low-budget TV dramas and online productions have found favor in the market. Some of these high-quality films use good, if less famous, actors and have received a successful response both by word-of-mouth and at the box office. The trend where films count on traffic for popularity is moving toward a model that relies on an authentic grapevine.

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At the 14th Changchun Film Festival — Photo: Xu Chang/Xinhua

Online video platforms used to be frequented only by film buyers and didn’t participate in production. Traffic and ratings were determined by the market. Now, more and more video platforms are engaged in co-production with production companies. In addition, video platforms are increasingly inclined to produce series or entertainment programs themselves. The cost of actors' astronomical rewards has thus passed onto video platforms. This change explains why those major online video platforms declared their determination to unite to resist stars' unreasonable pay.

It is yet to be seen how effective the declarations of media service providers and governmental guidance will be. As one report by CCTV, the state TV broadcaster, explained, many stars now own their own production companies and studios. Their compensation can be attributed to various names and go via their studios' accounts without falling directly into their pockets. The stars can also use titles such as producer and adviser to fill in the gap of their original salaries.

It takes more than a day to freeze three feet of ice.

As one industry insider pointed out, if the authorities adopt administrative means to restrict stars' pay, production firms may compensate them with shares or property of equivalent value to get around the regulations.

In effect, the large media companies that issued these statements contributed to the chaos in China's film industry. Their advocacy is not a move by the whole industry, but a self-interested move by a few powerful companies that has no legal binding. It takes more than a day to freeze three feet of ice, as the Chinese saying goes, and the troubled state of China's entertainment industry will not melt away anytime soon.


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