China’s cinema industry is under scrutiny as the Motion Picture Association of America (MPAA) has hired an accounting firm to audit data.
It marks the first time Hollywood and China have worked together to combat fraud, as China previously has not allowed the MPAA lobbying group to dig around and look at its figures, Bloomberg reports.
Fraud in China has been suspected for years in the film industry, but the country has only just begun cracking down on companies attempting to fudge the numbers.
China’s legislature recently implemented a system in which companies found misreporting box office sales are fined. Rogue reports range from between $7,000 (£5,464/€6,153) to $74,000, according to VOA News.
It was discovered that in 2015, the makers of the Chinese film ‘Monster Hunt’ admitted to giving away 40 million free tickets in an attempt to hike its numbers and beat Universal Pictures’ ‘Furious 7’ for the distinction of highest-grossing title in mainland China.
The Indie Wire website notes that while handing out free tickets to help set a new record may not add up to actual fraud, other illegal practices that can have a significant negative impact on Hollywood have been documented in recent years.
In 2016, martial arts movie ‘Ip Man 3’ reported $72m in sales in its first three days, which raised suspicion among Chinese regulators. The film’s distributors inflated its ticket sales by almost $4.7m through so-called ghost screenings, as well as sold-out shows with higher ticket prices that never actually took place — and by an additional $8.3m by buying up tickets in bulk, VOA News reported.
These inflated numbers can negatively impact US titles, as strong box office performances can motivate people to see certain films.
The MPAA’s audit results of China’s box office are set to be announced in the third quarter of 2017. However, Zhang Hongsen, the head of China’s film bureau, told the LA Times last year that an estimated 10 per cent of box office sales, equalling $680m, could have been stolen in 2015.