For years, Hollywood has blamed its shrinking presence in China on tightening censorship, rising nationalism, and government protectionism. Studios argue that political forces—not creative shortcomings—are why Marvel movies no longer dominate, why Fast & Furious has lost steam, and why Hollywood’s overall market share in China has plummeted. While it is true that Beijing’s regulatory grip on film approvals, its quota system limiting foreign releases, and a preference for domestically produced content all shape the playing field, relying on this explanation alone is too convenient. Hollywood’s struggles in China are not just about politics. They reflect a deeper failure: a refusal to take Chinese audiences seriously.
The runaway success of Ne Zha 2, which has broken box office records in China and is now the 6th highest grossing IMAX film of all time worldwide, should be a wake-up call. At the heart of this success is Ne Zha himself, one of the most enduring figures in Chinese folklore. Traditionally depicted as a fierce, youthful warrior wielding a fire-tipped spear and flaming wheels, Ne Zha is known for defying fate and challenging authority.
For years, Hollywood has blamed its shrinking presence in China on tightening censorship, rising nationalism, and government protectionism. Studios argue that political forces—not creative shortcomings—are why Marvel movies no longer dominate, why Fast & Furious has lost steam, and why Hollywood’s overall market share in China has plummeted. While it is true that Beijing’s regulatory grip on film approvals, its quota system limiting foreign releases, and a preference for domestically produced content all shape the playing field, relying on this explanation alone is too convenient. Hollywood’s struggles in China are not just about politics. They reflect a deeper failure: a refusal to take Chinese audiences seriously.
The runaway success of Ne Zha 2, which has broken box office records in China and is now the 6th highest grossing IMAX film of all time worldwide, should be a wake-up call. At the heart of this success is Ne Zha himself, one of the most enduring figures in Chinese folklore. Traditionally depicted as a fierce, youthful warrior wielding a fire-tipped spear and flaming wheels, Ne Zha is known for defying fate and challenging authority.
Ne Zha 2 builds upon a rich tradition of Chinese animation dating back to classics like Havoc in Heaven (1961) and Ne Zha Conquers the Dragon King (1979). The modern Ne Zha franchise continues this legacy, but with a contemporary flair: sharp humor, striking visuals, and a story arc that foregrounds themes of identity, struggle, and family approval. The film has won rave reviews as well as being a box office hit.
Like Marvel, the studio has pitched it as the third part of a cinematic universe of characters drawn from Fengshen Yanyi (“Investiture of the Gods”), a 16th century novel that provided the material for centuries of popular drama in China but is almost unknown outside the country.
It is easy for Hollywood to dismiss Ne Zha 2‘s success as the result of nationalism or state intervention. The harder truth is that Chinese audiences, far from being passive consumers solely swayed by propaganda or restricted choices, are making active and sophisticated decisions about what they watch. And more often than not, they are choosing homegrown films over formulaic Hollywood imports.
Visitors look at hand-drawn posters of Ne Zha 2 displayed at an exhibition in Chengdu on March 4.Chen Yusheng/VCG via Getty Images
Granted, Chinese audiences operate within a heavily controlled environment—the number and type of Hollywood films they can watch are dictated by government quotas. But even within those constraints, Hollywood has consistently misjudged the market, assuming that formulaic, algorithm-driven filmmaking backed by state support would be enough to succeed.
Some Chinese films have made similar errors. The failure in February of Operation Leviathan, the sequel to the hit Operation Red Sea, is instructive. Despite its high production values and the popularity of its predecessor, the film flopped with audiences, earning only 3.8 million RMB—far below expectations. Why? Viewers found its pacing weak, its plot underdeveloped, and its overreliance on visual spectacle tiresome.
Even its patriotic themes, once a surefire formula for success, failed to engage audiences who have grown weary of empty spectacle. The film’s attempt to balance authenticity with market appeal resulted in an unfocused narrative that lacked emotional depth. The lesson is clear: Audiences expect more than just bombast—they want well-crafted stories and characters that resonate on a deeper level.
Hollywood’s miscalculations in China date back more than a decade. For years, studios assumed that market size alone guaranteed success. They flooded theaters with tentpole blockbusters, convinced that bigger budgets meant bigger profits. And for a time, this strategy worked. Films like Transformers: Age of Extinction and Venom made hundreds of millions in China, reinforcing the belief that spectacle alone could carry Hollywood films in the market. But as China’s own film industry matured, audiences became more discerning. The appeal of high-budget, CGI-heavy action sequences faded, and what Hollywood once saw as a surefire formula became stale.
A model of Optimus Prime on display in Beijing on Aug. 22, 2011.Feng Li/Getty Images
When brute-force spectacle stopped working, Hollywood pivoted to a localization strategy designed to make its films more palatable to Chinese audiences. Studios inserted Chinese actors into minor roles, set a few scenes in China, and cut China-specific edits to comply with regulators. The assumption was that these superficial modifications would be enough to maintain market dominance. But audiences saw through the pandering.
Films like X-Men: Days of Future Past featured token Chinese elements, while The Great Wall was pitched entirely as a Chinese fantasy movie—but both failed because they lacked genuine cultural integration. The difference lay mainly in the sophistication of the packaging—one was overtly pandering, while the other was framed as a Chinese film but still failed to resonate authentically with audiences.
Meanwhile, the Kung Fu Panda franchise initially succeeded because of its thoughtful incorporation of Chinese culture, philosophy, and martial arts. Unlike many Hollywood attempts to use Chinese elements as mere visual or marketing gimmicks, the first three Kung Fu Panda films demonstrated a genuine understanding of key Chinese philosophical concepts such as balance, self-discovery, and resilience. They respected martial arts not just as spectacle, but as an expression of discipline and inner growth. The films seamlessly integrated traditional aesthetics, architectural details, and cultural motifs, from calligraphy-inspired fight choreography to deeply rooted Daoist and Buddhist themes.
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This level of nuance and authenticity helped endear the franchise to Chinese audiences, making it one of Hollywood’s most successful cross-cultural achievements. Yet Kung Fu Panda 4 faltered, despite retaining its Chinese aesthetic. The story felt forced, the humor derivative, and the character arcs predictable—a sign that audiences demand more than just surface-level engagement with their culture. Reviews on the movie-ranking site Douban noted that the humor felt more exaggerated and juvenile rather than the clever, layered comedy of the earlier films; the new characters introduced lacked the distinctive personalities and rich development that made the original supporting cast so beloved; and the film’s attempts at emotional moments simply felt hollow and unnecessary. This shift from sincerity to formula was a major reason why Kung Fu Panda 4 failed to recapture the success of its predecessors in China.
The failure of Disney’s 2017 film The Dreaming Man is another cautionary tale. Designed from the ground up as a China-grown project with a Chinese director and a local cast, it should have been a seamless Hollywood-China collaboration. Instead, it flopped because it felt contrived and awkward. As one industry veteran put it, “It looked Chinese but felt unmistakably Hollywood—a forced hybrid that audiences rejected.”
A child and dog dressed as Nezha from Ne Zha 2 wait to watch the film in Tianjin, China, on Feb. 28.Tong Yu/China News Service via Getty Images
Meanwhile, Qing Sheng, a Chinese remake of The Woman in Red, succeeded because it fully adapted the story to Chinese sensibilities, embedding it in a cultural logic that felt natural. Similarly, Ne Zha 2 resonates because its protagonist is not a conventionally handsome or perfect hero, but an underdog struggling for parental approval—a theme that deeply connects with Chinese audiences. It has particularly moved young viewers, because of its emotionally charged depiction of family dynamics—unmet expectations, generational tensions, and the desperate search for parental recognition. These themes have struck a chord with many Chinese children and young adults, who see their own struggles reflected in Ne Zha’s journey, making the film a deeply personal experience for them.
The notion that Chinese cultural products thrive solely due to state backing overlooks a more fundamental truth: Chinese consumers are discerning and deliberate in their choices. Ne Zha 2 is not a manufactured success—it has become a cultural phenomenon, propelled by genuine audience enthusiasm and creative ambition. Likewise, the 2024 video game Black Myth: Wukong captured global attention, not through government intervention, but through meticulous craftsmanship and a compelling indie-studio narrative.
These successes underscore a pivotal shift—China is not merely producing content under state patronage; it is actively competing with, and in some cases surpassing, Western studios in artistic and technical execution.
Admittedly, Hollywood has not been entirely pushed out of China. Tentpole blockbusters still have their moments—Godzilla vs. Kong grossed $132 million in China last year, proving that spectacle-driven films can still find an audience. However, these successes are no longer the norm, and Hollywood can no longer rely on sheer scale and special effects to guarantee box office dominance.
People play Black Myth: Wukong in Shanghai on Aug. 20, 2024.Hector Retamal/AFP via Getty Images
At the same time, Chinese films have yet to achieve Hollywood’s global reach. Ne Zha 2, for all its domestic triumph, remains largely confined to the Chinese market. Black Myth: Wukong may be generating global buzz, but its core audience is still overwhelmingly Chinese. Despite growing creative ambition, China has yet to produce an entertainment juggernaut that truly transcends its home market. Yet the broader trend is clear: Chinese audiences have become more selective, demanding films with strong narratives, emotional depth, and characters who feel authentic rather than generic placeholders in a CGI-fueled extravaganza.
This evolution signals a shift that Hollywood has been slow to acknowledge. While Chinese studios have invested in storytelling and nurturing homegrown talent, Hollywood has continued to treat China primarily as a market for distribution rather than a cultural powerhouse in its own right. The days when adding a token Chinese actor, inserting a brief scene set in Shanghai, or making minor edits for censors was enough to ensure success are long gone. What once worked as an easy localization strategy now feels like a relic of a bygone era.
The lesson of Ne Zha 2 is not that Hollywood should start making Chinese blockbusters. It is that Hollywood must abandon the assumption that its storytelling formula is the global default. If studios continue to approach China as an afterthought rather than as an equal and unique cultural force, they will find themselves increasingly irrelevant in a market that was once central to their global strategy.