China’s crackdown on showbiz pay could change branding focus
BEIJING: China’s top actress Fan Bingbing has gone into hiding for weeks after being accused of tax evasion.
One least one media report has indicated that she has been banned from showbiz for three years.
Fan was accused of underreporting millions in income.
And at a time when fashion houses and other global luxury brands fervently tap into the influence of Chinese celebrities, often employing them as brand ambassadors or social media spokespeople to sell to consumers, this ongoing movement is likely to have a substantial implication on the brand-celebrity relationship. Some experts predict China’s superstars will opt for a lower profile to avoid government scrutiny. Based on regulations that have been announced so far, Chinese celebrities will see an immense reduction in their entertainment industry salaries.
Right after the report of Fan’s scandal in June, China’s media regulators rolled out a new rule stipulating that a movie cast’s combined salary should not exceed 40 per cent of the film’s budget and that individual actors cannot take home more than 70 per cent of the total cast pay.
On Aug 10, a slew of players in the entertainment industry from major video-streaming sites iQiyi, Youku and Tencent Video, TV production firms Ciwen Media and Huace Media and top production studios Huayi Brothers Media, Bona Film Group, and Jackie Chan’s Talent International Le Vision, all publicly pledged that they would strictly follow the government’s guidance.
Meanwhile, several Chinese media outlets have reported that a more thorough income taxation reform for celebrities has started: from Aug 1, the new income tax rate will rise to 42 per cent from previous rates ranging from 6.7 per cent to 10 per cent. It is also said that preferential tax policies for celebrities will be eliminated at the local government level.
Experts believe the government’s attempt to regulate celebrity incomes is likely to change the luxury landscape.
“In the short term, the talent pool may shrink as local celebrities digest the impact of this financial change to them, and certain campaigns that are currently under negotiation may get postponed,” said Jonathan Schenker, CEO of the Shanghai-based celebrity talent management firm Bookmark Entertainment. “Overall costs (of working with celebrities) may go up.”