Importance of Comprehensive Cost Control in Chinese Film Industry

Importance of Comprehensive Cost Control in Chinese Film Industry

Introduction

The developed nations identify with films as part and parcel of their cultural industry due to the experienced mature operational management of the film industry. The nations’ film industry is considered mature after years of innovative development and reconstruction of production cost management. The Chinese film industry picked in early 2000. However, the local industry has remained relatively incompetent compared to leading global film production companies like Hollywood because of the series of production challenges faced in the management of the films’ production. The management of film production is a challenge in china due to the low development of the industry, insufficient funds, and mismanagement of the available resources catalyzed by inexperienced managers and lack of effective cost management tools. As a result, the Chinese film industry has suffered from inconsistent growth due to the wider shortage of developmental resources, unlike its global peers in the west. Most of the film productions have been micromanaged using smaller units and budgets. The low budgets and production results in uncompetitive products that lead to losses that recreate the limited production cycle in the industry. Not only in China but such kind of production has led to massive losses in the global film industry where stakeholders count losses instead of profits that should sustain the industry. The effect is also hardly felt on the consumption effect where consumers prefer other global competitively produced films over the local films. The case has been the cause of the stalemate experienced in the local film industry. Moreover, for an industry that is heavily reliant on human capital and talents, technological development experienced in the nation cannot do much to turn tables around. A good film production management must replicate the profit realized through effective reduction of the current high-cost of production that makes many films released on deficits instead of sustainable revenues. Only a small fraction of the local films are profitable which hurts the cultural sector by making untameable losses and pushing many investors out of business. However, this research takes a positive view into changing this mode of operation through suggestive managerial reform that would ensure that resources are effectively used in a positive way to the industry. Thus, the study proposes a new cost management method that would turn the industry’s failures into sustainable success.

The current development of the economy and the improvement of people’s material living standard have created a consumptive upgrade from pursuing material consumption to pursuing cultural consumption. This recent transformation has led to a steady increase of Chinese film production. The continuous growth of the industry is shown by various studies like the Time media Research that reports production of 970 domestic films in China in 2017. The growth remained consistent at a considerable rate above the previous development that saw the nation only record a two percent increase in film production from the previous year. In 2018, the production of domestic films increased to 1082, which was an eleven percent increase from the previous years. Out of the total number of films produced that year, 83.3% of them were based on the national features. The score gave another feature of the film industry as a worthy representation of national values and trends. In 2019, the value of the local film industry the annual total box office successfully netted above 60 billion yuan, another indicator of the industry’s growth. Besides, According to the National Bureau of Statistics, China’s cultural industry revenue in 2019 was 7% higher than that of 2018. As such, in comparison to the global film industry, the Chinese film industry has become an important part of the development of the cultural industry (Espejo, 2009). The film sector holds a crucial part of the nation’s culture and history since it poses itself as the best representation of the Chinese culture to the global nation. However, if the film industry wants to stand firm in the rapid development, it must enhance the overall competitiveness of the industry as a way of boosting the local quality and quantity of films produced at any given time. The cost input and cost-effectiveness of the film is the most important part of the film production system that must be emphasized by the stakeholders (Russell, 2009). Without good clarity on the cost factors of the film industry, then the industry is meant to suffer another self-defeat in the production of competitive films that keeps it, producers, afloat. Thus, it is very important to understand the cost-factor effect on the Chinese film producer as a spectrum of driving sustainable futuristic growth in the industry just like persuaded in this study.

The challenges faced in the cost of film production have recently been found to connect to the rising price of raw materials and the increase of enterprises’ investment in the labour market, the cost structure, and formation process of enterprises that are gradually changing. The factors also bring a new perspective to the cost management project. The traditional cost management method has been unable to defend the needs of enterprise development, which will also affect the development of the film industry (Pushkar, 2019). Most of the films produced under the framework have created an unfavourable environment for the producers to make a business out of their work. Unlike their global peers, the film’s makers lose right from the beginning of the release thereby rendering their purpose worthless. For instance, the movie Asura that was released in 2019 at a total investment of 750 million yuan only managed to give 50 million yuan at the box office soon after it is released. Such an experience has undoubtedly brought huge losses to the producers. The loss is associated with the current production and cost management method used across the industry. Suppose one existed, a reasonable cost control system should undoubtedly be very important in assigning the right resources required against their right cost that would not burden the production. Comprehensive cost management is a brand-new modern enterprise management method and means that would support the production of the local film at a sustainable cost that would benefit the stakeholders (Thompson, 2009). This method can effectively help enterprises avoid cost risk by using the basic cost analysis method, principles, and system of cost management. The model works under the operational law of modern enterprises in cost management, constantly optimizing the cost input, and improves the cost structure of the company (Banker et al, 2018). Based on these facts, the film industry stands a better chance of effective products on the foundation of comprehensive cost control by introducing the management mode of comprehensive cost control and using its advanced technology to undertake productive innovation (Moll and Yigitbasioglu, 2019). The process ensures an effective reduction of film cost investment through the promotion of cost-effective operation guided by the new management system. Compared to the previous unguided management system used in the industry, the comprehensive management of the cost method allows the filmmakers to make profits at the box office by prioritizing the enterprise’s benefits. The analysis of the enterprise’s cost management mode is important to explore the most effective strategies of cost reduction during film production (Evans, 1964). The perceptual development of this theory is supported by various scholars who believe it stands to give better performance and results for the developing film industry in china than before. The theoretical development of the model defines the underlying cause and impact of using the theory by film producers, having been used in other product management sectors. This research adopts the need to examine the conceptual and theoretical foundation of the model to best test its importance and impact in reducing the cost of film production that is entirely suffocating the Chinese film industry (Wegmann, 2019). Thus, the purpose of this paper is to study the advantages of this new cost-control mode based on the current cost situation of the Chinese film industry and the extensive use of the theory on total cost control.

Study Objective

The main objective of this research was to discuss the application and importance of the comprehensive cost control method on film production management. The study used the ongoing cost of film production in China as an example to analyze the theory of Comprehensive cost control. After studying the current cost management problem in the Chinese film market, the study unearthed the underlying facts and causes of the effectiveness of the film cost investment and the uncertainty that comes with the return expectations. To achieve this key objective, the study targeted to collect responsive data on financial knowledge that provided the basis for an argument for the research. The study also targeted to gain a base understanding of the market problem by collecting relevant data and using them to assess the cost management method used in the film industry (Henri et al, 2016). The objectives aimed to give a better understanding of the production cost problem experienced by producers in the industry. Besides, the study targeted to give definite corresponding control measures in the suggestion of the comprehensive cost control that tested its ability to reduce production cost while increasing the profit margin. As a result, the objective focused on examining the new methods’ ability to address the high wastage, slipover effect in the market, insolvent purge in the market, and compared the new method’s effective against the traditional cost managed method used in the local industry. The study also used the comprehensive cost control method to test the feasibility of the method in the industry by assessing its advantages and how individual producers would benefit from implementation in the film sector. Thus, the study objectives helped shape the scope of the research to assess the current film production method and the feasibility of the suggested new method to better understand its positive effect in rescuing the ailing film production market.

Research Questions

The study was based on three study questions that helped understand the scope and main objectives of the study. The key study questions discussed are:

  1. What is the current cost of film production?
  2. What factors contribute to the high cost of film production in the country?
  3. What is the impact of comprehensive cost control method in film production?

Literature Review

The literature section gives a broader understanding of the research by giving the foundational information that best described the position of the paper and helped understand the study questions. The review of the Chinese film industry and the cost control, and the proposed method used existing scholarly work to explore the underlying information about the topic. The literature review also helped develop the scope of the study.

Aranburu (2017) gives an ideal review of the historical and current reflection of the Chinese film industry. The author suggests that the basis of the market is built on different forces that have consistently pushed the industry towards the realization of the growth opportunities hidden over the years. The study notes the current boom in the industry as a factorial element that is driven by the growth of population and not regulatory intervention by the government. The regulations issued are often passive and derived from the economic policies instead of genuine reforms to change the industry. The position is a contrast of interest and situation around the operations of the industry and the economy. According to the author, it is definite of the government’s objective to liberate the national economy yet at the same time also wants to control the cultural development of the economy. The film industry is cultural and its control in anyway undermines the natural growth desired under the various factors of the economy. Thus, the intertwined relationship between the government and the industry’s independent growth undermines the effective changes and future growth of the participating companies.

Aranburu (2017) also argues that even though the demographical change in the nation is the current propeller for the industry, it is still a growing concept. The study also projects a long term change in the national policies that may affect the ultimate demographical pattern of the country. For instance, the past national policy on one-child set the precedence of the current population which set the gaining of the society that may twist the growth pattern towards a more unfavourable demographical structure which will only hurt the market (Lu, 2019). Other factors like income that directly affect the purchase decision of consumers also affect the industry. The author also acknowledges the national income factors that are measured in the total individual consumption as a determinant of the film’s consumption and growth. Thus, for a population is that is higher than other global competitors, it is estimated that the nation’s national income would overcome its peers it like the UK and the USA (Su, 2017). Nonetheless, none of these factors seem to influence the creation of direct film production policies that would lead to any further substantial growth. The author further finds this ideology to suit the Maslow pyramid that has supported many people to clime their pyramids of needs. The theory supports the individual demand of consumers that are driven by the growth in need as opposed to direct government facilitation of the film industry. The growth factors realized are hence caused by self-participation of stakeholders and investors in the film industry and private cinemas across the nation. The private initiatives are driving the demand for local films very high by increasing the rate of habitants per screen across the nation. Thus, if given the necessary support, the industry can immensely grow beyond the current status and expectations.

Aranburu (2017) also terms the Chinese film industry as unique and differential based on regulation and market-driven development. Even though the government has provided no direct policies to boost the growth of the industry, local film production has interestingly increased due to the independent forces of the market. For a nationwide a huge population and high technological development, the industry’s regulatory structure is Avast to the expectation of the market. The position is different from other populations previously taken by the government to protect local production. In other areas, the government has applied a protectionist move to bar the importation of necessary goods to favor the local products. However, the study reports that the government is applying censorship as an economic tool but not the supposed ideological instrument. Global institutions like the World Trade Organization have placed several demands for the nation to relax its restrictions on international movies in the local economy. For instance, if an international movie supersedes certain revenue levels in the box-office, the government can ban its viewership in the local theatres. The movies are not primarily meant to promote local movies but rather an economic move to limit the sale of foreign film in its market. Besides, the study holds that no matter the number of such quotas issued by the Chinese government, the achievements of the local film industry are purely reliant on the efforts of private producers. The study shows that the government is not monetarily or legally investing to boost the market by creating a favourable production environment that would help producers reduce the cost of production. Thus, the Chinese film industry is exposed to the high-cost problem because the market is neither regulated by the government to favor it nor financially supported through incentives to lower their production thereby creating an uncontrollable cost problem for the film producers in the market.

The self-reliant and development feature of the Chinese film market is not only a measure of its struggles but also a reflection of the high private cost embedded in the production of the films. Another study by Peng et al (2019) on star power and box office revenues shows several costs of production which the producers are forced to bear with to produce a competitive film in the market. The authors argue that the involvement of renowned stars in movies has become an inseparable fact in China film industry. Using data collected by 2009 and 2016, the study examined the impact of the start power on the box office income. To further prove the validity of its findings, the study used continuous data when collecting information on the film stars and their registered fans on the box office. The study further looks at the revenue contribution of the stars from the box office films by considering their influence on the industry contribution, internet media buzz, and the internet media contributions. Alongside the star power contribution to the film’s success in the market, the study used log-linear specifications to test the argument that film directors also played a crucial role in the financial success of the films in the market. The view resonates with the expertise and celebrity of the directors to attract a higher following for the film produced and how the following is converted into revenue. However, on staging the analysis and role of star power and directors against the films’ return, the study found both the impact of the star power and directors to be negative, particularly concerning the internet media evaluation. As a result, the indirect quality effect of the stars on the film production was found to be positive even though it’s insignificant in cost management. Similarly, the industry recognition influence of the stars would only be considered as significant if its contribution to the films’ revenue surpassed the second quartile, which remained a struggle for many movies produced in China. Nonetheless, in a rare case, the study found the indirect media evaluation effect of the stars to be negative to the cause of action but substantially proved a point in the public influence to determining the trend of the films. That is, if the films would have not incurred huge costs during the production, then the viewership given by the media evaluation factors would have generated substantial revenue and profit for the producing companies (Xiaoli et al, 2019). The same position is supported by the impact of the media buzz that also should a positive correlation to the star power in initiating a strong viewership following to the desired threshold level that is enough to create substantial revenue and profit if the primary cost of production is aligned in the similar direction. The study shows a positive impact of the star power on the film industry even though the effect cannot be translated into profit for the filmmakers. The inability of the influence of the factors into profit is caused by the huge primary cost incurred by the production of the films. As much as the directors and stars positively influence the market, the market is yet to acquire a more responsive cost management system that would allow for positive revenue at the box office. Moreover, it considerable as suggested by the study that the movies register very high following that should give positive financial returns but seem to be overburdened by the high cost. Thus, the study findings show the great need to control the production cost of the films as the only feasible way to turn the investors’ losses into profit. Already the market enjoys sufficiency of expertise and accessibility to production factors thereby a responsive redevelopment of its cost management would give it a competitive advantage not only for the local market but also in the global arena.

The major challenge of the Chinese film industry is the high cost of production that is undermining the profitability of the entire industry. An understanding of this failure requires an effective examination of cost control and its importance on the industry’s profitability. A study by Sofia et al (2020) looks at the accounting responsibility of cost control in business management. The study ties the responsibility purpose of management to accounting to understand how the two factors relate and how they influence the performance of businesses (Horngren, 2009). This type of accounting can often be referred to as responsibility accounting since it accounts for the effective use of resources to achieve a certain desired goal of the company. The authors acknowledge the increase in competition in the market that relies on a more sophisticated accounting style that ensures that every concept of the market and production is taken into account. As a result, the cost control under the responsibility accounting is important in planning and controlling activity costs (Kajüter, and Schröder, 2017). The cost control concept builds its analyses on the emphasis of the relationship between the information and the respective managers who are in charge of planning, controlling, and realizing the effect of the changes that comes in form of the information provided. The study further suggests that cost management could be more effective when managers are assigned full control of the planning of income and costs that they are directly in charge of (Grytz and Krohn-Grimberghe, 2018). The planning must incorporate the presentation of information on their distinct realization of the effect of the revenues and costs on the overrun turnover of the production process. The view exhibits the responsibility account as a concept of the comprehensive cost control as the right to control costs because it collects information at different points of production but reports them to a liability center that helps identify the needed costs and those that are a mere burden to the process.

Sofia et al (2020) also acknowledges the complexity of cost control due to the many factors that influence production operations particularly in the case where production is entirely reliant on market mechanisms of the economic forces, like the case of the Chinese film industry where there is no direct regulatory action by the government. The cost of production also depends on technological development, which is the greatest bearer of incurred cost for the film industry. As such, effective analysis of cost and intention to control it will be reliant on the probable comparison of the actual performance and standard performance. The realization of the difference is the ability to control costs based on what is needed and what can be done away with. Moreover, the controllability of the cost would also look at the actions need and additional cost of action in fixing the market deficiencies consistent with the performance of individual players and the development of the industry. For instance, taking the step to control cist by cutting out some activities or functions where the industry level requires the functions would put a producer worse off and incompetent in the industry due to the production of low-quality films. Thus, according to Sofia et al (2020), producers match their cost control needs with the growing market/industry performance and development to remain relevant in the market.

Sofia et al (2020) also note that cost control is reliant on the size of the company. In their analysis, the scholars note that the bigger the company the more complex it is to control its costs. However, that problem can be solved by a delegation of responsibility to ensure that every element of the production is chartered for. There is also the need for shared responsibility and a common platform for accessing the entire operations. If managers take the responsibility to build a continuous assessment of the production process, then they stand a chance of realizing the occurrence of unnecessary costs that can be reduced. The study also notes that time-lagged factors are also important elements of cost control that must be monitored although the process of operations. Since the Chinese film industry is reliant on the participation of the private producers, their actions are important to the cost effect unlike the situation in regulated markets. The quotas system used by the authority also denies the producers the opportunity to partner with foreign partners thereby limiting their ability to introduce shared cost liners.

The cost control perception given by Sofia et al (2020) is also supported by Uyar and Kuzey (2016) in their study on the mediation role of management accounting in the connection between cost systems and firm performance. According to scholars, firm performance is not a factor of cost alone. The scholars believed that the performance of a company is far much beyond the cost control measures and therefore there is an imminent need to incorporate the other factors that influence the companies and industries returns (Chalmers et al, 2019). As a result, the study investigates the conciliation effect of management accounting practices witnessed in the interaction between cost system designs and performances. The study further acknowledges that the various dissimilarities in management accounting sophisticates the essentials of cost management coupled with other environmental uncertainties in business practices. Like the case of Sofia et al (2020), Uyar and Kuzey, (2016) acknowledge decentralization, company size, and time-based input changes in the market. The performance level is measured in terms of relative profitability, relative size, growth rate, and market share. The study also considered consumer evolution as a reflection of the company’s performance. The wider the scope of factors, the wider the companies are expected to review their cost in understanding the necessities and contribution to the performance. Besides, the method suggested best resonated with multiple factors thereby making it easy to access the various factors that affect cost in the market.

A study by Li et al (2011) gives a definitive view of cost control. Even though the study takes a communication model, the concept of cost control resonates with the essence of the comprehensive cost control pursued in the study. The scholars look at a guaranteed cost control for a multi-input and out (MIMO) as used in the networked control system that serves many channels (Li et al, 2011). The study includes the concept of time-varying that is bound in the film market thereby bringing the period differential factor in the image of network transmissions that creates delays witnessed by the authors in the packet drop and packet disordering (Li et al, 2011). The connectivity of the MIMO system allows for an appropriate receipt, collection, analysis, and sending of feedback to the actuators in real-time. The concept used develops a dependable connection between the actuators and controllers. The basis of the function of such a system is the ability to share and analyze information within the shortest time possible. The choice to connect or communicate between more than two points and convert them in desired responses meets the ability of the control system to analyze data within the inbuilt levels of time. The main purpose of the system’s ability to transmit and remit responses in time is the consumable communication which the authors refer to as the control performance (Wu et al, 2011). The system is also proven capable of handling multi-input and multi-output factors for several channels. As a result, the authors’ ideology shows that such a unique multipurpose cost control system is more effective for many inputs and outputs factors as opposed to being used in single-unit controls (Li et al, 2011). The practicality of the system is also supported by the ability to send on-time drops to all the connected controllers in the shortest time possible. The use follows the technique of looping information along the line that are concurrently supported. According to research, this integrated system that uses signals to execute functions along its chain is supported by the Markovian theory. The Markovian theory combines the looped cost functions and other non-looped cost function to create deterministic direction for their problem-solving. In most cases, the network-based method brings together the various function fed best understand the nature of interrelation between the inputs to give the most befitting output as a result. Thus, the ultimate result is a better performing system that supports the joining of inputs, their transmission, and analysis to define and translate its transmissions.

The network model used by Li (2011) is an example of an effective cost control system. According to research, a responsive cons control system should be able to efficiently input units as when provided without creating a delay to wait for the previous inputs to be translated and output developed. Instead of independently running the functions as single units for each controller and plant, the model described the dynamics of networks’ operation and ability to guarantee a dependable cost control for the inputs the outputs. The assumptions of the MIMO cost control system put to check all factors for production and their impact in the production and utility applications (Wang et al, 2009). Moreover, the system ensures that all inputs are factored in per time and their execution in real-time. The study notes the similarity in the systemic asymmetry offered by the authors in the study of the guaranteed cost management that is networked on control systems with packet disordering. The same manner to which the arithmetic explanation of the concept analyses the value change per input, the study gives the broader picture of the sectorial inputs that influence the film industry. Assuming that the market is affected by various factors, the output of the films should be a reflection of the factors laid in. thus, it is as important to control the time-based cost of all factors involved in movie production as a way of controlling the total cost of the final film production.

The sources give an image of the market performance against the cost factors. The studies collectively define the cost practices and impact in the market. However, neither of the sources directly explains the concept of comprehensive cost control. The lack of a definitive review of the topic creates a gap that the research responded to. Rather than the existing cost control method discussed, comprehensive cost control will help give a better understanding of the problem faced in the Chinese film industry. Thus, each of the study concepts helped examine the study objectives and questions as designed in the study.

Research Methodology

The study on the implication of the comprehensive cost control of the Chinese film industry required a multi-purpose approach that assessed various implications of cost management in the industry. The lack of confirmation on the use of the proposed method in the industry demands a multilateral study that assesses the current management method used, cost factors, and the feasibility of the new method. Therefore, the study relied on three data collection/analysis methods; namely literature analysis, field investigation methods, qualitative and quantitative methods to assess the feasible impact of a comprehensive cost control method in the industry’s cost management.

a)      Literature Analysis

The literature analysis method offered the base approach to the study by giving the foundational understanding of cost management in the film industry. The method helped build a stronger argument on the topic and other referential cases that helped explain various concepts in the paper. The literature review supplemented the meaning of the study by making the cost management theory more intuitive. As a result, the paper combined a large number of network data with the relevant content of literature to accurately elaborate and provide a substantial argument for the scope and content of the study topic. The literature review also gave a historical perspective of film production as a factor of its cost management, which more relevant to the understanding of film production and cost management. Besides, the literature analysis involved the study of books on comprehensive cost control knowledge, which deepened understanding of the cost management system. The method involved Induction that connoted systemization of specific and individual exploration of various sources on the same topic differently to get general conclusions. Therefore, in logic, the thinking form from individual to general is always called induction. The method allowed analysis of informational differences and similarities as portrayed by the authors to best understand the underneath scope of the study. With a topic as wide as management, the use of different sources in the literature review helped understand the topic about the author’s point of view and experiences thereby helping the design the study on the right and most relevant approach. Thus, the comprehensive application of the inductive contrast method as used helped systematize and theorize the scattered and unsystematic knowledge on comprehensive cost management to help understand the similarities and differences in the study topic as discussed by the authors.

b)     Field Investigation Method

The field investigation method considered an interactive information collection by either assessing authors’ interviews with local film producers or gathering direct information on some local small film studios or their managers and teachers on their cost experiences. The method adopted a more objective and in-depth real analysis of the details of film production through the description of words and the display of corresponding charts. The field investigation carried out discovered various cost-related factors that have affected the industry over the years. The importance of the method was to help build a closer understanding of the production factors that undermine the industry and how their persistence would affect the proposed method. Moreover, the view that the cost of bigger actors has undermined the small scale film production was best explained by the investigation and gave a good referential element to the study (Hill, 2014). Therefore, the review of the method facilitated the integration of the cost management factors into the comprehensive cost management method and theory as desired by the study objective.

 

 

c)      Qualitative and Quantitative Analysis

The qualitative and quantitative analysis helped assessed the intersectional relationship between the cost of production experienced by the filmmakers and the cost management method applied. The method assessed the qualitative and quantitative theoretical analysis of cost management in the fil industry. As a result, the qualitative concept of the theory and the actual quantitative data of the cost in the project were combined under the analysis of cost prediction and accounting based on unreconciled reports (Horngren et al, 2015). The method also acknowledged the importance to address the cost indifference factors in the market through remuneration factors involving the cost of production, revenues, timeline, and other factors. In the cost management of enterprises, the quantitative analysis method process and sort out financial statements of the enterprises as the main data source based on the selected analytical method. Quantitative analysis also helped assess production companies’ cost and investment analysis (Drury, 2013). Thus, the quantitative and qualitative analysis focused on giving arithmetic and summative explanation of the cost management experience and impact on local small film production in China.

Research Techniques

The research used to review and analyze data technique to examine the implication of cost efficiency in the local Chinese film production. The method used movies’ data released between 2010 and March 2019 to examine movies’ production cost, length, release time, cumulative box office score, director, and actors’ cost effect. The technique proved efficient because it facilitated satisfactory data collection, sorting, processing, and interpretation. The method involved a collective use of qualitative and quantitative research techniques thereby building a stronger study based on evidence as opposed to assumptions. As a result, the study made use of the comparability of the qualitative and quantitative techniques to assess the cost reference and management effect on the film industry by using the movie box revenue analysis. Moreover, the mixed technique best faced the public concern on the irreconcilable low revenue effect on investment in the industry while its global competitors are making huge profits. The accountability of the industry’s investment required an all-rounded research technique that made use of public interest in the production cost of films in the industry. Thus, the study used an integrated research technique that took into consideration both the qualitative and quantitative variables in the study.

Information/Data Description

The study focused on relational information of the film industry between early 2000 to late last year. The data was supported by relevant literature to develop a theoretical front used in data collection, analysis, and interpretation (Drury, 2013). The data/information description for the study was founded on the latest situation analysis of the film industry and development as an emblem of understanding the managerial gap in the film production. The study applied basic theoretical knowledge of economics and cost management, combined with the current situation of the film industry and cost investment, this paper studies the convergence point of cost management and film industry. The study further used empirical analysis to describe and explore practical cost management problems (DiMarsico et al, 2003). The description followed the impact of cost factors based on qualitative characteristics of research variables, virtual variables processing, and empirical research carried out using the method of order regression (Kishore, 2008). The move helped use the data to describe representative data as in the use of box office movies to show economic, social benefits, and the most important index to measure movie economic benefits as shown in the movie box office. Therefore, this paper used the movie box office as a platform for describing movie revenue. A similar descriptive method is also used in the cost-benefit analysis where different data analysis methods are used in two stages of film production and film projection according to the different cost and benefit variables found in the research results. The information analysis was based on referential information on quality management system (Drury, 2013). The study also considered quest of information provided for decision-making based on sufficiency and credibility, which conforms to problematic approach to better help understand the decision-making error due to insufficient, inaccurate and delayed information; whether the purpose of data collection is clear, or whether the collected data is true and sufficient, whether the information channel is smooth; whether the data analysis method is reasonable, whether it is within the scope of the research topic.

Validity and Reliability

Validity and reliability are two very important factors in data collection and analysis, and they are one of the most important links in this paper. The validity of data requires that the data collected in research must be accurate and in place, and must conform to the subject because the tiny error often causes huge loss (Ansari, 2010). Identifying information requirements is the first condition to ensure the effectiveness of the data analysis process, which can provide clear objectives for data collection and analysis. (Russell, 2009). The reliability of data requires that the data we collect must be official and authoritative (EISEN, 2019). Thus, the study used varied information collected through extensive research and analysis of the study topic using only scholarly references.

Difficulties

The lack of professional information and scholarly work on comprehensive cost control posed the greatest difficulty in the study. The current global health pandemic that limits the mobility of people and production also undermined the accessibility of potential interviewees thereby limiting the study to secondary data method. Besides, there are also limited verifiable information on revenue and cost of films that could be referenced in the study.

Timescale

The research and collection period of thesis materials lasted for several months. The study was carried out between February 2020 and July 2020. The collection of information was done between February and May while the paper composition was undertaken in June and July. The time frame though limited, allowed for completion of the study and reassessment upon completion.

Budgeting

Since the research project is not financially supported, the data collection process was limited to the literature review and internet research. However, the study sorts assistance from colleagues studying film production for their views on the study topic. The moves highlight a limitation of the study by restricting the research to internet surveys (Chen et al, 2019). However, the study is open to external financing to support a future practical survey study with industry stakeholders particularly directors and actors, after the COVID-19 pandemic.

Discussion

Cost of Personnel

The small budget and producer’s in-depth interview presented the quantitative definition of the cost-effectiveness that undermines the success of the local film industry. The data collected showed that personal or characters contributed to the larger amounts of film investment with local small-name personnel accounting to about 35% of the production cost (Lu, 2019). The position is different when the production used famous or big-name actors where personnel attracted about 60% of the production cost to be spent on personal accounts (Lu, 2019). The personnel were made up of both actors and production staffs who also experience different wage levels. The majority of the person used in the movie production has inflexible wages due to their professional drives and career specialization that sees them yarn for more as their expertise develops. The attraction towards payment among the personnel also varies based on employment or role played in the production. For instance, the technical personals at the bottom of the strata tend to focus on their income levels since the technical works are based on manual labour to create value for their professions. Since their work has no professional or managerial skills, their duty is defined by how much they can earn per production. As a result, this group of personnel tends to shift from one production company to another based on how much they can earn for the production labour given. The shifts and lack of professionally transferable skills make them the lowest earners. The group is also contracted on fixed wages with rare instances of productive allowances. The senior technical officers and management personnel are forced into having career prospects and interpersonal development alongside receiving payment for their services. This category of employees has a higher propensity to skill development with some receiving bonuses and favour price gratitude for their responsibilities.

The contrast in high salary payment for the fil personnel is captured at a favourable price. The favour price is widely considered to the personal and interest relationship between the investors and the film production crew. The differential in personality, expertise, and availability attracts a highly flexible favour price that ranges between 20% and 50% in own party pricing (Lu, 2019). The variation in favour pricing also follows after the personnel’s professional ability and working experience. The high experience is caused by professional expertise and rich skills. As a result, new personnel with low experience would attract lover favour prices due to their experimental ability. Thus, production companies that have used the expertise modality method would experience a fluctuating personnel cost due to the varied experience and ability of the personnel involved in the production.

The research shows that the selection of film personnel by the crew is guided by their cost in investment and social networks. The cost of investment in the personnel is relatively fixed with no excessive cost saving. However, the variation in personnel skills gives room for remuneration income option, which is the variable factor of risk management in the industry. Moreover, the classification of the actors gives production managers avenues of assessing their investment and making the right choices that would not overburden production on types of actors (Lu, 2019). The study acknowledges the classification of actors into a lead and supporting actors as the main actors while the guest actors and extra formed the non-main actors. The guest actors and extra also face a fixed remuneration in most of the film assessed. The lead actors tend to have a higher position in the remuneration bargain since most of the film producers use the lead actors and their remunerations to set payment for the extras. The group’s prices range between ¥80 and ¥120 per day. The best actors or famous actors that appear in films as guests are paid about ¥300 per day. The modality of personality makes the guest artists focus on their appearance role and move to other tasks in the film production. However, the film directors enjoy the limited right to choose the lead actors and guest actors that allows them to make certain decisions by choosing the lead actors, the directors can indirectly choose the extra thereby creating some avenues to control the cost of personnel used in the film.

The right to choose lead actors by directors is also associated with misappropriation and corruption that increases the cost of movie production. The directors use their role and authority to unduly influence the production process and personnel procurement that is cited as an avenue of corruption in the industry. Any right to choose action taken by the directors were also witnessed to inversely affect the motivational action of the actors. The correlation affected the quality of the films and enthusiasm of the actors. On the other hand, an increase in remuneration resulted to increase in the cost of production that thinned the chances of investment turnover considering the competitiveness of the industry. Besides, some of the casting crew remunerations are also based on the extra actors’ income implying that for the main actors and crew to earn higher, the extra actors must be paid higher income. That, the casting crew head will earn ¥20 for every ¥80 earned by the extra actors per day (Lu, 2019). The value if calculated in a recurring percentile would increase the cost of remunerations thereby making it expensive for the production of local films. For instance, assuming that the casting crew is paid 20% for every hundredth investment on the extra actors, the total amount spent will be 20*80*5days to give ¥8000 (Lu, 2019). The total remuneration expenditure equates the income earned by the casting crew within a short duration. The figure simulates the previously suggested values of low enumeration for the casting crew which creates referential values that range between ¥5000 and ¥8000 as low-income values (Lu, 2019). The value can at times be unsustainable for many small fil producers who rely on external funding to cast their films. The fat pay slips only drain the potentiality of the films since it possesses as a competitive edge between the income interest of the personnel and the management effect of the study concerning sustainable production that would see a growth in the industry. In other words, the result shows an unsustainable casting management system that puts the decision on various cost factors on casting directors who may influence the decisions in favour of their earners of lead stars. The strategy is a testimony of a lack of substantial cost management, a method that would effectively manage the cost of personnel based on accountable and proven expenditures (Lu, 2019). Otherwise, the system as it remains is a recurring selection of cost management ideas based on the decision of the directors and lead actors whose choice of extras greatly influences the cost of production and the liability of eliminating unnecessary expenditures and cost deterrents like corruption and favouritism. Besides, the casting crew is also trading in income for the quality of film produced thereby putting the directors at the edge of unprecedented losses that may come as a result of choices that may demoralize the actors. Therefore, the existing crew management method used puts the industry at more risks than protection since the management has to unprofessionally make contrasted choices between cost reduction and cast qualities thereby forcing many film producers in the industry to rely on unpopular actors to save more and hoard more decisional authorities.

The evident failure of the directory-based management style recounts this research objective to assess the importance of a more proactive comprehensive cost management strategy, which could bring the desired positive results. The introduction of big starts and guest actors in the small budget films even demands a more accountable cost management strategy since the artists are often perceived to cost more for their appearances in the films (Sela et al, 2015). The big star appearances also charge higher personnel cost than the ordinary professional stars. The inclusion of the professional actors should increase box office revenue of the films hence many traditional film directors tend to incorporate the star actors to market and enhance the impressive profitability of the films. The stars’ inclusion is balanced against the film crews and the general staff. While the non-casting film crew is attracted by pay, the professional actors are more attracted by the features of the film that would build their profession and ability (Lu, 2019). As a result, the inclusion of the stars exerts a new pressure of performance that necessitates non-negotiable standards in the films performing. The high performance translates a high-value investment to have everything perfect as desired by the directors. Like the previous case of tangled interest, the professional actors are driven by their ambitions of one day being famous hence tend to focus on their appearances over the monetary gain that is prioritized by the non-performing crew. Some actors even chose not to give definite remunerations but rather pegged it on the box office revenues that further put the management on contrasted grounds to the interest of the actors and investors’ interest. Therefore, with time, the more the actors grow the higher the remunerations they attract and demand which adds to the cost of film production.

The expansion of the personnel liability to cost factors also continues to undermine the orthodox cost management that affects the industry’s sustainability. The competition for good artists has forced film directors to introduce compensatory adjustments amidst increasing attitude and pay interest among actors (Lu, 2019). The directors are also faced with a contrasting experience of an influx in young professional actors who are ready to take lower wages or even work for no remuneration to build their acting profile. The view is further contrasted with unfamiliar instances where some of the upcoming actors are paid higher. The category affects the child actors who are recruited on recommendations and talent recognition through second or third parties.

Cost of Materials

The cost of materials used in film production also amounts to substantial weight in the production cost. Material costs include the cost incurred in scene settings, clothing, props, makeups, and scenery. Many producers have also tried to control their production cost using the material expense since it’s easier to vary and change due to its low elasticity to personnel cost (Christ and Burritt, 2015). The increased investment in the film industry has also introduced permanent material investments including props and scenes that are ready-built for use hence preventing many film directors of the same genre from creating more scenes. The industrial changes have forced many film crews into making use of the new connection in the industry to waive certain amounts of material cost as opposed to creating new scenes. The arrangements are entirely reliant on the crew management and mutual agreement between industrial partners. The foundation of such a management style is focused on using the variation in material cost as an instrument of change management to ensure that the producers only spend where they cannot avoid it. The push is created by the unresponsiveness and inflexibility of professional cost thereby giving the crew managements the last hope in the material cost management. Moreover, the method has been successful for many small-budget films because the outreach producers are mostly local people who are very accessible.

However, the locality of the outreach producers also levies an extra threat to the industry’s cost management. Over the past years, scene development has become another investible sector that has witnessed individuals invest in the scene to help the filmmakers access already set scenes as opposed to creating their own. The development has more negative effects than previous advantage thought by other stakeholders. The outreach producers are accused of colluding with scene party owners to raise the prices of the scenes. Some of the previously free scenes, particularly heritage scenes are also charged highly. Even though some of the amount charged is shared with the film crew, the experience jeopardizes the need to have a foundationally referential management method for the filmmakers. The fluctuations in scene charges make it even harder to access and understand the revenue pattern of the industry since all charges since to be on a floating basis that is largely unpredictable. Therefore, as the industry grows into adopting more responsive cost control methods, it continues to be exposed to more behavioural factors that cripple the intended benefit of the responsive approaches.

The clothing is another contestable factor that undermines proper cost management in the industry. With the surge of trends and fashions across cultures, the clothing elements are the epitome of prop development thereby carrying a bigger weight on the material cost of films. Many filmmakers agree that the high volatility of clothing fashions imposes a high cost on the films. The film crew spends a lot in the cloths to suit the desired theme of the play, which agreeably changes with time and season. Moreover, the cost is even heavies due to the choices of the actors. The choice of the clothing to be used for each film is at the discretion of the actors who are also much concerned about their appearances. The professional actors tend to have their designers who develop more expensive cloths payable by the filmmakers thereby increasing the cost of clothes. The choice of attire denies the film production managers an opportunity to control or influence the cost of the clothing. While many managers are familiar with or prefer tailored or rented attires during production, the crew are opposed to the action due to their appeals and choices. The crew prefers to have tailored costumes that suit their personality and market themselves in the market. For a competitive industry like the film industry costumes and clothing matters, a lot to the influential development of professional actors hence tend to influence their creation and cost to suit their needs. The move undermines the desire by the crew managed to cut down on material cost as it increases the cost of material as opposed to reducing. Besides, the uncontrollability of the crew’s interest against the financial incentives of the film production cripples substantial cost management methods that would save the industry.

The industry’s cost management is also affected by the unreconciled cost of make-up arts and cosmetics. The differences in film cosmetics from ordinary cosmetics make them more expensive. The cosmetics are produced by international brands whose input in the industry can also not be replaced with domestic manufacturers. The identity of the cosmetic manufacturers gives the artists and films potential leverage in the industry since it signifies style, class, and professionalism in the industry. However, the use of specialized cosmetics does not negate negative attributes on the users and cost management. Some actors have in recent times reported an irrelative reaction to the cosmetics forcing the film directors into an extra cost in the treatment of the artists. The cosmetics are tailored for each unique artist thereby widening the gap of the cost differential between the crew cosmetics and market rates. The risks of film destruction lured by any other effect on the actors are detrimental to the industry because it attracts further compensation to the actors. As a result, the production managers are divided between the need to effectively reduce cost and the independent demands of the crew which can be shortchanged. Hence, even though the cost of the tailored cosmetics that suits the actors’ skin system is very expensive, the managers can merely do nothing to reduce the cost or substitute the big brand producers who manufacture the film industry cosmetics. Besides, the factors ignite the emphasis of the artists’ choice to use designer clothing and special cosmetics to meet their personality desires and enhance their artistic professionalism because the materials are of great importance to the professional actors’ careers.

The market is also exposed to unreconciled equipment costs. The main equipment used in film productions includes production units, lighting units, recording units, and vehicles. The equipment is either rented or bought. The rented equipment is issued daily, weekly, monthly, or even annually depending on the duration of the production. The equipment is either rented as single-piece or multi-package units. The use of rented equipment gives the film producers alternatives to low-cost equipment needed for film productions. The theme specification of the films at times makes it hard for the film producers to use the same equipment. The purchase of new equipment in every film’s production is expensive for many producers. As a result, the availability of rental equipment offers a better option to produce conveniently. Besides, the cost of renting is also cheaper compared to the cost of purchasing the equipment to use in every film production. However, some of the film producers argue that rentals could be expensive for domestic production where all shootings are done locally. Suppose a production company would rent equipment s for all its local shootings within a year, the cost could be higher compared to owned equipment. Besides, both the small-budget and large budget production companies lack a proper cost management scheme for the equipment. Like other production factors in the industry, there is no summative technique for the management of the differential but integrated elements of cost in film production. The lack of framework sets precedence for unresponsive management unites based on individual producers’ experience and gauze. The industry ought to have a unifying cost management technique that allows for a collective approach to cost factors. The method should simulate other industries like the logistics and supply chain that have commonly used cost management methods to allow the participants and understand the effective management of the cost of inputs to remain sustainable in the industry. Therefore, neither personnel nor non-personnel cost management methods in the industry show effective cost management methods.

Call for an Effective Cost Management System

The study results show that the lack of an effective cost management system is the underlying problem that causes the losses incurred in the film industry. With more resources to invest in the industry, producers are faced with an ever-increasing pressure of global standardization thereby increasing investment in local productions without considering their profitability. Though the increased investment is needed to produce high-quality movies, the producers need a more responsive cost management technique that will help in conscious investment to ensure that their inputs give worthy results. Moreover, the ultimate goal of increased in to increase on profit margin, which the current cost management methods cannot ascertain. Therefore, it is inevitable that the industry adopts a new cost management method that would ensure existing costs are substantially cut where necessary to give a positive turnover to the local films produced.

The literature review gives an expanded view of cost management as presumed in the industry. The method ascertains that the industry’s high cost of production is affected by various factors thereby making the production cost override the revenue experience through the movie box office and other revenue measurement platforms. Thus, the method gives a discrete understanding of the explanatory view of the study as guided by the study questions.

Current Cost of Film Production

The current cost of film production in China is characterized by high production cost that has continuously made it hard for films to turnover profits. Though the other elements of traditional production cost are shared across industries and greatly influenced by technological advancements, the cost of personnel including production crew and professional actors remains uncontrolled. The high cost of professional actors contributes to the greater cost of production (Navarro, 2006). The shift in cost followed the industry’s transformation into film idols and celebrities with many actors working hard to be the best in the industry. The competition though initially perceived as a positive move that reflected the growth of the industry has turned to haunt the film producers who are forced to high wages and remuneration for the professional actors in the industry. Moreover, the film producers cannot risk substituting the developed celebrity and professional actors with upcoming actors due to their high affinity to movie popularities. To the film consumers, as the film are as good as the lead actors in it. The industry also takes advantage of current growth experienced by development in the film industry. More expectations have seen the industry grow from a basic traditional film production to futuristic style characterised by full entertainment scope, internet entertainment, location-based entertainment, derivative projects, and brand licensing as upcoming segments of the industry (Figure 1). Therefore, the producers are forced to keep up with the high cost of the professional actors to remain relevant and attract as much viewership as possible as a measure of its success.

Figure 1: Expected Diversification of the Chinese Film Industry

Source: Deloitte China, (2007).

The professional actors’ high pay problem reflects the domestic workforce problem experienced in china. Like other industries, China is faced with a high supply of labour that has made its labour cost every low compared with other global competitors. The high supply of labour in the market attracts low prices that translate to low wages. However, the film industry has experienced an inverse correlation to the high labour supply in the economy. There are many upcoming actors and crew members thereby flooding the small-size firm production in the market. This explains why small-size film production interviewed used very little capital to produce their films. The junior actors require very little remuneration to actor lead characters. Some of the junior actors used in the extra category even act for free (Navarro, 2006). Nonetheless, the case is different from the larger film production. The junior actors take up roles as extras and supportive positions thereby leaving the top cream of lead actors to just a few professional and guest actors. The few guests and senior professional actors charge very highly for their lead roles in films because they have a higher power to bargain with the film producers who are in dare need of their appearances in the films. Some of them who take the short role in films appear as guest artists thereby paid for their appearance than their delivery efforts in the films. The high bargaining power is catalyzed by the demand for big artists in the industry. The higher the number of senior professional actors and guest actors in movies, the high the revenues chances the film will realize in ticket and audience positions like the box office. As a result, the high prices charged by the films set a heavy cost on the film producers. The move shows a lack of developmental strategy in the industry that would usurp the power carried by the professional actors who demand high wages. The problem is caused by a lack of proper cost management and wage regulations in the industry as it is in the industry’s global competitors. The industrial inefficiency has caused the national industry to lag behind global competitors with local sales and box office contribution indices prioritising other nations. By 2015, the box office contribution indices was still dominated by Hong Kong, UK, US, France, and South Korean that collectively gave 54% of the global box office film contributions (Figure 2).thus, the industry has more than just managerial reasons to revamp its position in the local and global film space.

Figure 2: Box Office Contributions Nations (2015)

Source: Deloitte China, (2007).

The industry is disintegrated with each producer using his/her orthodox cost management without any referential framework that would protect them against exploitation by the greedy actors. The experience shows a missing link in the industry in terms if proper cost management framework that is to be consulted by all players in the industry (Navarro, 2006). The new comprehensive cost management system should even restrict personnel costs with a certain percentage of the film investment to prevent unnecessary losses to the industry’s investors. Therefore, the existing management structure of the industry exposes the greater need to have a cost management system that would overhaul the entire production system by lowering the unnecessary costs through legally and ethically binding techniques agreeable to all, which would double as a regulatory measure.

The introduction of Comprehensive Cost Management: Coproduction

The introduction of the coproduction in the Chinese film industry following the sudden rise in film production and investment from the 2000s marked the beginning of a new phase of film production management to keep up with an increase in domestic demand. Though the market receives no direct government incentives, the restrictions of foreign films by the government set a developmental pressure on the film producers to increase their production to meet local demand. The move implied an increased investment to ensure films produced meets the quality of foreign competitors. However, attaining this goal proved difficult under the scattered traditional production management where producers ran losses instead of making profits in the already deficient market. As a result, the introduction of the new coproduction cost management strategy has revamped the efforts of the producers to cut down on the cost of production while enhancing the companies’ profitability.

The increased production and introduction of the annual film quotas increased the cost of production for many domestic films. However, the introduction of the coproduction as an element of comprehensive cost management has lessened the production weight, particularly among the larger production companies. The strategy allowed the companies to search for other local companies willing to co-produce with them (Aranburu, 2017). The benefit of the method is that is increased expertise and professional film production to the advantage of the Chinese film producers. The method has also been a leeway for foreign expertise to merge with local companies in producing high-quality films in the industry. The typicality of the merger filmmaking reduced high expenditures particularly among the production crews whose expenses were shared among the partners. Moreover, the entrance of the comprehensive coproduction re-emerged many big names in the global industry who found an avenue into the “red dragon” local industry (Aranburu, 2017). The greatest beneficiary of the method remain increased investment in the industry. Prior to the industry’s liquidation in 2015, the industry experienced a surged increase in local film production’s acquisition above the local investments. In 2013, the industry hit an acquisition peak of about ¥300 million against a trade volume of above 40% (Figure 3). Thus, the method was and still a turning point for managing the high cost of production that previously undermined the local industry’s growth against global competitors like Hollywood and Bollywood.

Figure 3: Investment and Acquisition Trend of Chinese Film Industry between 2009 and 2015

Source: Deloitte China, (2007).

The success of the cost management method has been realized in the number of films produced and total revenue realized in the last ten years. The method recreated the China Film Coproduction Corporation that was created in the late 1970s but went underground due to the perennial failure of the film productions (Aranburu, 2017). The corporation oversaw productive arrangement between local producers and foreign producers from various government-aligned states, more so those companies from Hong Kong, that celebrated supremacy production having been the third global after Hollywood and Bollywood (Aranburu, 2017). Though the previous partnership failed for various reasons, the current method is positively impacting the industry due to independent investments in the industry that allows the producers to a strict corporation with other partners at discretion of available resources, material, and human skills included. Therefore, the coproduction has come to the rescue of many local film producers as a reliable comprehensive cost control strategy.

Unlike the other cost control initiatives like foreign production that has been opposed by the government. The coproduction is legally supported by the law. The Chinese legislation accepts a collaboration of two or more producers involving at least one domestic producers and other foreign producers. The legitimacy of the local investor is based on foundation local legal recognition including the state itself. Moreover, the 25% capping in movie production through International Corporation is sufficient for the industry considering the high volume of films produced in the country (Aranburu, 2017). As a result, the coproduction method ensures sufficient utility of resources to support the production of films in a cost-controlled environment alongside increasing on quality of films produced in the industry. Besides, the introduction of the Cultural Industries Division as a ministerial department formalized coproduction as long as it is within the cultural theme as a promoter of Chinese culture and the government political agendas.

The official government signing of co-production agreements has also created an accountability threshold in the film production by requiring that all partners to the deal adhere to certain specified terms of engagement concerning resource collection and utilization (Soh, 2019). The Closer Economic Partnership Arrangement introduced in June of 2003 was developed to strengthen the trade and investment agreement between Hong Kong and China. The agreement exempted Hong Kong producers from the coproduction terms and allowing them to freely make movies in China without any restriction (Aranburu, 2017). The benefited the local filmmakers by widening the coproduction threshold and the 25% cap to foreign producers who would give better expertise required in the industry (Aranburu, 2017). The position implied that Hong Kong producers could no longer be countered within the restriction level thereby increasing the number or production partnerships achievable by the local producers. Besides, the initiative transferred the high profiled Hong Kong producers and stars into the Chinese cap. The Chinese filmmakers could now use the Hong Kong stars as their own thereby increasing their image in the global arena (Aranburu, 2017). Hong Kong-based directors like John Woo and Ange Lee became the targets of many China-based film producers to build their domestic profiles and match that of Hollywood. Therefore, the coproduction exemption by the Chinese government has only proved a strategy to use regional stars and celebrities to uplift their profiles and skill development.

The comprehensive cost control method also received a boost from the introduction of the China Film Coproduction that oversees the sale of tickets. The state-owned corporation watchdog is supervised by the SAPRFT and is believed to be behind the increase in film production and revenue in the company. The coproduction institution has individually produced 37 films between 2002 and 2012 (Aranburu, 2017). The increase in its production is witnessed amidst the many challenges that continue to undermine cost management in privately owned corporations. Moreover, being a government organization, it has been easier for the corporation to oversee the achievements of various minimum requirements set for coproduction in the company. Not based on favouritism by the proximity to government information sets precedence for efficient compliance with the regulations (Aranburu, 2017). It is also easier for the state-affiliated institution to complement the national culture theme as required in the coproduction regulations. The reduction of the cast and actor requirement to minimum one has also eased the transactional mobility and operation of partners under the coproduction. The method allows the partners to manage their cost in a cost-shared approach and accountable manner thereby not exhausting their resources on one film as in the past.

The ease of management under the cost control method has also proved effective by enhancing innovation and technological productivity. The coproduction allows more developed actors and directors to work closely with the upcoming directors and actors. The interaction creates training and coaching of young artists and crew directors through the sharing of information and ideas (Aranburu, 2017). The high increase in film production and directing by local films has adopted more innovative ways of passing information and representing the national culture in different ways. For instance, the partnership between the Cameron Pace Group and Tianjin NorthFilm Group and others introduced the 3D effects into the front screen films that changed the industry (Aranburu, 2017). The partnership offered unprecedented assistance to various young actors and directors through innovative film creation to the benefit of the local industry. Therefore, the coproduction technique has effectively been used as a comprehensive cost control to help local film directors and actors to cost-share the cost of film production alongside benefiting from skill development from the foreign high profile partners.

However, this method is faced with several oppositions regardless of its monetary and professional advantage to the film industry in China (Soh, 2019). The criticism of the technique is levied on its cultural restriction of the national themes to be pegged on local customs and political agendas. The move contradicts the authentic purpose of movies as arts and voices of representing the society (Aranburu, 2017). The restriction is also linked to the limited audience of Chinese films locally and abroad. Many studies have shown that local citizens prefer foreign movies due to the freedom of speech and representation inculcated in their themes than the local films that are based on local government preferences. Therefore, the culture promoters expect the method to be more effective when the limitation on the topic is lifted and the artists allowed to represent the popular voice of the society.

Conclusion

The increase in the cost of film production is associated with the past layman approach to film production in the country. The industry faced an unprecedented increase in the cost of personnel that undermined its progress since most of the local directors used a substantial amount of their investment in paying actors and crews. The cost of personnel also increased and fluctuated over time due to favouritisms, hike in the cost of guest actors, procedural recruiting, and other unprofessional conduct of the managers. The setup also proved resistance to any changes like fixing or capping of personnel remunerations. The high profile actors acted more hesitantly to the capping of remunerations thereby leading to more losses in the industry. However, the introduction of the coproduction revamped a comprehensive cost control by introducing high skills and resources to the many struggling Chinese film companies. The strategy allowed producers to form production partnerships by investing in local agendas on reduced monetary resources and an increase in expertise from foreign developed skills. Hong Kong offered the first base for the cost control method since its directors and actors were more experienced and had a good profile that could propel the locally produced films to the global standards. The foreign film companies also had substantial resources that boosted domestic film companies that faced financial restrictions. As a result, the coproduction method has been able to train and cash local partners into developing high-quality movies and reducing the wastages in the industry. Therefore, the coproduction strategy is the most comprehensive cost control method currently used by the local film producers in support by the foreign experts and investors to increase the quality of films produced and promotion of local profiles to the global standards.

 

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