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Corporate America spent two decades selling out the middle class in the hopes of making money off of China’s massive market. The plan is failing.
Unless you have been channeling your inner Aaron Rodgers at a darkness retreat over the past few days, you probably have seen that this past weekend was huge for the box office. Barbenheimer — the name given to the debut of the long-anticipated films Barbie and Oppenheimer — drove massive crowds to the local cinemas, the best weekend for theaters since the COVID-19 pandemic.
Barbie came out on top, making $162 million domestically in its opening weekend. Overseas, the film generated $182 million. It’s an absolute smash hit.
Well, except in China.
Barbie, one of a handful of Western films to screen in China this year, pulled in only $8 million. It placed fifth at China’s box office, with audiences choosing Chinese and Japanese movies instead.
What makes this all the more noteworthy is that the movie went out of its way to please Chinese censors, including a background map in the film that depicts the “nine-dash line” that is used in Chinese maps to mark China’s claim over much of the South China Sea. That decision wasn’t without fallout, as it angered officials in Vietnam enough that they ended up banning the movie.
And it was all for nothing!
Still, it’s tough to blame the flop on Barbie itself, as the movie is just the latest Hollywood production to struggle to find an audience in China.
Summer 2023 “has been a bloodbath for the U.S. entertainment industry in the world’s second-largest market, cementing a yearslong gravitation among Chinese consumers toward movies made at home,” the Wall Street Journal recently reported. Here’s more from Erich Schwartzel:
“The shifting tastes of 1.4 billion people in China have considerable ramifications for Hollywood studios that had grown to rely on their ticket sales—and for Chinese leaders, who have long seen the multiplex as a venue for influencing their people through cultural messaging.
“The box-office tallies of some summer releases have been disastrous, compared with what such high-profile movies could once gross in China. Walt Disney’s ‘Indiana Jones and the Dial of Destiny‘ had made $3.3 million as of July 18, according to the Chinese ticketing firm Maoyan, about the same haul as in Denmark. The animated parable ‘Elemental’ has collected $15.6 million in China, trailing Mexico.”
Now, we don’t normally cover the film industry in-depth here at the Alliance for American Manufacturing.
What is striking to us about Barbie’s failure is that it mirrors what is happening to other American industries operating in China.
The auto industry is a good example. American companies like Tesla, General Motors, and Ford have bent over backwards over the years to please Chinese Communist Party (CCP) officials in order to sell vehicles to the 1.4 billion people living in China. Ford and General Motors have both entered into joint ventures with Chinese companies in order to operate in China, handing over intellectual property and manufacturing autos locally in order to sell to Chinese consumers.
Tesla’s Elon Musk has gone even further. Tesla opened a showroom in China’s Xinjiang region immediately after the U.S. passed the Uyghur Forced Labor Prevention Act, a despicable rebuff of American efforts to address very legitimate allegations of human rights violations. Carrying the CCP’s torch is a common practice for Musk, whose company operates a massive factory in Shanghai.
All told, the auto industry’s constant groveling to the CCP makes Barbie’s little map seem somewhat silly. But just like with Barbie, it is starting to look like a flop.
There are growing signs that Chinese consumers are losing their taste for American brands, as residents opt to buy cars from Chinese automakers instead. Chinese auto companies now account for half of the sales in China, the first time that’s happened. It’s likely that Chinese brands will continue to take market share, as Business Insider reported earlier this year:
“‘It’s pretty much the consensus belief that the US automakers are increasingly irrelevant'” in China, one analyst told recently told Insider. Plus, Chinese automakers are rapidly filling in the market share that US automakers are losing.
“Other than Tesla, popular US auto brands lost major ground in China last year. Ford’s CEO even acknowledged that the most successful luxury car companies there only sell EVs.”
But now even Tesla is showing signs of struggling in China, as the automaker laid off workers at its Shanghai Gigafactory earlier this month.
None of this should come as a surprise. Chinese leaders previously laid out a five-year plan for their own auto industry that centered on dominating electric vehicle production, an area in which the U.S. had lagged. The goal was to not only take over its own market, but eventually seize global market share.
The problem was that for a long time, China struggled to build reliable automobiles. Much of China’s early auto industry was built with help from the Soviets, and not known for its quality or appeal.
Then came the joint ventures. The CCP never intended on allowing American brands to control the market indefinitely; the goal was to catch up technologically to Western rivals. Once they had the know-how, they could begin to take over market share and ditch their former partners.
And American corporations totally fell for it, willingly handing over hard-earned technological advances in the hopes of selling cars in a new market. But it was a market that was never going to stay open to them.
The most unfortunate thing about all this is that for decades, it was official U.S. policy to encourage such ill-fated investment.
The United States voluntarily gave up a whole lot when it opened up trade with China. The U.S. decimated its own manufacturing industry, leading to 3.7 million lost jobs and tens of thousands of factory closures. The U.S. also handed China significant technological expertise, something we are desperately now trying to claw back. All that lost industry weakened U.S. national and economic security, as we can no longer manufacture many of the things we need.
And it was all for nothing.