Why Marvel's 'Shang-Chi' may not be released in China and what it means for Hollywood's future

• Disney's "Shang-Chi and the Legend of the Ten Rings" may not get a China release date.
• It could signal that fewer Hollywood movies will be approved in the country in the future.
• China is now the world's biggest theatrical market, driven largely by local films during the pandemic.

Disney's "Shang-Chi and the Legend of the Ten Rings" is a box-office hit after opening with $94 million over the four-day Labor Day weekend.

But the movie, which is the first Marvel Cinematic Universe entry headlined by an Asian character, still doesn't have a release date in the world's largest theatrical market: China, where foreign releases must be approved by the local government.

Deadline reported on Friday that a date may be out of reach after 2017 comments made by star Simu Liu resurfaced this week on Chinese social media, in which Liu called China a "third world" country.

The movie had already faced controversy over the title character's comic-book history. When first introduced in 1973, Shang-Chi's father was Fu Manchu, a character now considered to have perpetuated racist Asian stereotypes. Marvel Studios president Kevin Feige has addressed Shang-Chi's comic history, which has been rewritten multiple times over the years.

"Definitively, Fu Manchu is not in this movie, is not Shang-Chi's father, and again, is not even a Marvel character, and hasn't been for decades," Feige told Variety last month.

But beyond any concerns about the movie itself, "Shang-Chi's" China release, or lack thereof, reflects the country's media crackdown and the changing nature of its relationship with Hollywood, which has relied on the China box office to boost big-budget tentpoles.

Disney did not return a request for comment for this story.

China's crackdown is hurting Disney

Aynne Kokas, a media studies professor at the University of Virginia and the author of the book "Hollywood Made in China," told Insider that the "Shang-Chi" controversy is happening "in parallel with widespread tightening" of China media and its film market.

The country's regulations have particularly impacted Disney over the past year.

"Mulan" faced calls from outside China for a boycott because parts of the movie were filmed in Xinjiang, where officials have been implicated in human-rights violations against Muslim Uighurs. Following the foreign criticism, China ordered a media blackout of "Mulan" ahead of its release in the region. It ended up flopping with just $40 million over its entire theatrical run there.

A China release for Disney's next Marvel movie, "Eternals," is also uncertain. The movie's director Chloé Zhao, who was born in China, has faced backlash from Chinese nationalists over a 2013 interview in which she said "there are lies everywhere" in China. Chinese censors blocked mentions of her Oscar win on social media earlier this year after she won best director and her film "Nomadland" won best picture.

"I would be surprised if 'Eternals' got released in China," Kokas said. "The controversy has gotten a lot of attention and has been a rallying cry for Chinese netizens."

It could be a major loss for Disney, as Marvel films have performed well in China. "Avengers: Endgame" is the country's highest grossing foreign film with $614 million.

"'Shang-Chi's' global performance would benefit immensely from a release in China, both because of the clear cultural appeal and the fact that Marvel movies are usually top tier box-office performers in the Middle Kingdom," said Shawn Robbins, the Box Office Pro chief analyst.

Local movies are dominating China's box office

Since the release of "Endgame," China has passed the US as the biggest theatrical market in the world, due largely to how China's cinemas have rebounded during the coronavirus pandemic while the US's theatrical industry has struggled.

The rebound has been driven by Chinese films like "Hi, Mom" and "Detective Chinatown 3," which were released this year and quickly cracked the top five of China's biggest movies ever.

Only two Hollywood releases are currently in the top 10 highest grossing movies at the China box office this year: "F9" and "Godzilla vs. Kong."

More and more local productions are accounting for China's box office.

"There are Chinese blockbusters that Chinese filmmakers are making that people want to watch, and they feel less derivative than those made in Hollywood," Kokas said.

China has a 34-film quota on the number of foreign films released in the country per year on a revenue-sharing basis.

But Kokas predicted that fewer Hollywood titles will be approved in China in the coming years. Those that are approved will face a "much tighter regulatory environment," she said.

Robbins is more bullish about the future of Hollywood and China's relationship, though.

"China has an excellent catalog of locally produced content to drive theatrical business, but there's no doubt that Hollywood releases have also proven important to the market's overall box office year in and year out," he said.