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Why China (and Its Brands) Fell For 'Transformers 4'

Plus: Opportunities and Risks for Chinese Product Placements in Hollywood Movies and Shows

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"Transformers: Age of Extinction" features eye-popping explosions, giant alien robots and a spaceship unleashing mass destruction. Yet a surprising amount of buzz has focused on a scene of an ATM transaction in Texas.

A shot from 'Transformers 4' star Li Bingbing's Weibo microblog
A shot from 'Transformers 4' star Li Bingbing's Weibo microblog

It's a product placement for China Construction Bank, one of many Chinese brands scattered throughout the film, and one way producers tailored the film for Chinese viewers. Other tactics: a long sequence set in Hong Kong, a Chinese star (Li Bingbing) in a big role and a reality show to scout local actors for small roles.

Those efforts paid off: Despite being panned by critics, the film just beat out "Avatar" to become the highest-ever grossing film at the Chinese box office, bringing in $219.2 million in just 11 days, according to Box Office Mojo. That's more than it earned in the United States.

China, the No. 2 film market after the U.S., is building screens at an astonishing pace (estimates range from 12 to 18 a day), and its annual box office revenues rose 27.5% in 2013 to reach $3.57 billion.

Sensing big opportunity, many companies have rushed into the space where Hollywood meets China (see below.) Product placement is one area of interest.

Product Placements

Filmworks China negotiated some of the product placements in "Transformers 4," for China Construction Bank, Yili milk and Nutrilite protein powder. Founded in 2010, Filmworks (which also brokered deals for Chinese brands featured in the film franchise's second and third editions) has been majority-owned by WPP since 2012.

The placements – like the one for a Chinese bank, featured in a scene set in Texas -- sparked a ream of quizzical comments on Weibo, China's Twitter.

"It's so unexpected, and people want to discuss it and talk about it, I think it's understandable," said Sirena Liu, the company's founder. (Ms. Liu was one of Ad Age's Women to Watch China honorees in 2012).

But there were so many product placements – Chinese and Western - in the blockbuster that some questioned whether things got out of hand. (In China, The People's Daily joked that audiences felt they were "watching a good ad and then someone stuck a movie in it.")

"Personally, I think for the placements in "Transformers 4," it definitely kind of reached the limit of what a film can do … beyond that I don't know whether the audience can handle it," Ms. Liu said. But she felt the movie worked because director Michael Bay "kept the movie's integrity and also kept clients happy."

Ms. Liu, who also worked on deals for the forthcoming "Expendables 3," was a pioneer in connecting Chinese companies to Hollywood, but she said three or four competitors have popped up in recent years.

Pitfalls

While the deals Filmworks negotiated for the movie have gone smoothly, others ran into trouble, with several brands complaining they weren't featured as planned. Wulong Scenic Area, a Chinese nature park, plans to sue producers for failing to show its logo on screen, according to the China Daily. A deal with Pangu Plaza, a Beijing property featured in the film, led to a dispute, and a Chinese duck meat company also complained.

Ms. Liu said she flew to Los Angeles to monitor filming for every scene featuring the brands she worked with. She also said she is careful that contracts protect all parties (ensuring, for example, that brands don't have to pay if their scene is cut.)

Even for the best-prepared companies, the sector has some uncertainties. Since China only allows 34 foreign movies to screen in its theaters a year, Ms. Liu said "you never know for sure, though you can make an educated guess" about which ones will make it. (A brand would pay less if it doesn't show in theaters.)

In another case, Ms. Liu negotiated a deal to feature Yili's Shuhua milk on "The Big Bang Theory," one of the most popular foreign shows in China. (That was a clever inside joke for Chinese viewers – it's a low-lactose milk, and one of the characters is lactose-intolerant.)

Until recently, the episode was available on Chinese streaming platforms. But in April, Chinese regulators – giving no explanation -- ordered the streaming sites to stop airing "Big Bang" and three other shows. That's just another risk of the trade in China.

Other Companies Linking China and Hollywood

Many companies have found opportunities in the space where Hollywood and China meet. Beijing-based DMG got its start in the 1990s making ads; today it's in the movie business as well. It co-produced "Iron Man 3," "Looper" and "Transcendence," for which it brought star Johnny Depp to China for a massive PR tour including visits to cultural sites and a 90-minute primetime TV special.

In a country where most foreign social media is blocked, FansTang saw an opening to manage the Chinese social media accounts for Western stars (it's worked with people from Nicole Kidman to Robert Downey Jr. to Taylor Swift). A division of China Branding Group, it's grown quickly in less than three years, and it does endorsement deals and content creation too.

China's wealthiest man, Wang Jianlin, heads Dalian Wanda Group, which owns everything from real estate to karaoke parlors to the AMC Entertainment movie theater chain. In September, Mr. Wang brought stars including Ms. Kidman, Leonardo DiCaprio and John Travolta to Qingdao, China, to announce work on a massive theme park/film studio there. The goal is to bring global stars here to film in a "Chinese Hollywood."

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