New York Times - November 26, 1996

SHANGHAI, China -- Walt Disney Co. is planning on a big future in China: The appetite for animated features like "The Lion King"seems limitless, sales of merchandise at Disney-owned "Mickey'sCorner" stores are growing fast, and Disney's president, Michael Ovitz, has traveled here repeatedly this year to discuss the possibility of opening a Disney theme park in southern China.

And Disney, like most other foreign businesses operating in the huge and growing China market, has been willing to follow China's imperative that politics be kept out of the movies, books, and toysit sells here.

But Disney has suddenly learned the hidden perils of entering acountry that takes its politics so seriously, and now faces anagonizing dilemma. Its grand plans for expansion here have been thrown into doubt because of a movie being co-produced by a Disney subsidiary that is not being made in China and is not even intended for distribution in China.

The Chinese authorities warned Walt Disney executives recently that the studio's role in a major film about the life of the DalaiLama, which is now being shot in Morocco by the director Martin Scorsese, would force China to reconsider Disney's extensive plansfor investment in China's entertainment market.

Few issues have been touchier for the Chinese leaders than their country's control of Tibet, which has been condemned as repressiveby human rights advocates. A Chinese official explained the government's position that anything portraying the situation in Tibet from the point of view of the Dalai Lama, the exiled Tibetan religious leader, is unacceptable.

"We are resolutely opposed to the making of this movie," said Kong Min, an official at the Film Bureau of the Ministry of Radio Film and Television. "It is intended to glorify the Dalai Lama, soit is an interference in China's internal affairs."

Disney executives now face an alarming choice: jeopardize the huge business potential in China or capitulate to pressure on a creative issue, one involving a renowned director and a cause supported by a number of movie stars, led by Richard Gere, as well as human rights advocates around the world.

Disney executives, whose Asia-Pacific operations are based in Hong Kong, declined to comment on Monday. Some people familiar with the Western film business in China said they had a hard time imagining Disney's jeopardizing its vast potential for sales in China to take a stand on one film.

"You can't ask an American company to ignore its very treasured freedom of expression, unless it affects other business worth hundreds of millions of dollars," said William Brent, publisher of China Entertainment Network in Beijing and an adviser to American media companies in China.

But if the company were to bow to the pressure and withdraw from involvement in the film, which is nearly finished, its reputation in the world would be severely damaged.

The movie, titled "Kundun," is about the life of the Dalai Lama, the religious leader of Tibet whom the Chinese authorities regard as an enemy to their control over the Himalayan region. It is co-produced by Disney's Touchstone Pictures and Refuge Productions.

Kong, the Chinese official, said the director of the Film Bureau, Liu Jianzhong, traveled to the United States in October and told a senior Disney executive that China would be unhappy if the film was made, making it clear that other business could be affected.

As to precisely what China might do to Disney, Kong said it was too early to discuss specific measures.

"We're not sure how to answer this question yet," Kong said."We have to discuss it with the Foreign Ministry and other relevant departments."

Disney has enormous ambitions in China. Ovitz, the company's president, has traveled here repeatedly this year to discuss its growing array of business plans, including a Disney World-type theme park as well as the further sale of Disney merchandise and release of films. The stakes are high; "The Lion King" was one of the biggest-grossing movies in China last year, and the soundtrack was equally popular.

Hollywood seems suddenly enamored of Tibet, a long-isolated place along the Himalayas that the Chinese, citing historical justification, took control of in the early 1950s.

A second Tibet feature now being filmed, in South America, is Columbia Pictures' "Seven Years in Tibet," directed by Jean-Jacques Annaud and starring Brad Pitt in the lead role of Heinrich Harrer, an Austrian mountain climber who broke Tibet's veil of secrecy by venturing there in the 1940s and becoming theDalai Lama's personal tutor.

Asked whether the Film Bureau had contacted Columbia about"Seven Years in Tibet," Kong said he had not heard of the film.

"Is this a feature or a documentary?" he asked. "Maybe we should talk to them, too."

China's position will be the same for all Hollywood studios, he added.

Brent, the media company adviser, notes that the warning to Disney comes as the Chinese authorities are trying to exert strict control over China's film, television, newspaper, and publishing businesses. Economic growth in China has meant loosened government control over most businesses and ever-more exposure to information from overseas, and the authorities seem nervous about losing control over the media.

Led by the minister of propaganda, Ding Guangen, a campaign tostress "politics at every level" this year has instructed editors, studio heads, and publishers to toe the Communist Party line in all manner of topics.

At the same time, Chinese leaders fear that allowing Disney and other studios into China too fully would undermine their own, stil lstate-run film industry, which has been having a harder and harder time staying solvent.

China's position is that Tibet is historically a part of China that has periodically enjoyed greater or lesser amounts of autonomy through the centuries. Many exiled Tibetans argue that the land was traditionally independent.

Chinese officials proudly point to the hospitals and schools they have built in Tibet, and denigrate the closed and brutally elite nature of Tibetan society before the Chinese Army arrived in1951. But human rights groups say China has sought to destroy Tibetan culture, and the Chinese have been largely unable to melt the deep adulation for the Dalai Lama among many ordinary Tibetans,who revere him as a god and a king.

Orville Schell, an American writer who is writing a book about American perceptions of Tibet, said that if the feature films attracted popular attention, it would inevitably fuel popular concern over human rights abuses in China.

"There's a building groundswell of interest in Tibet which is going to break like surf on the beach," said Schell, author of several books about China. "I don't know how the Chinese are going to handle it."

Undoubtedly, Chinese officials will use whatever leverage they can muster, whether or not they actually have to carry out their threats.

Cui Tiankai, a spokesman for the Foreign Ministry, said Hollywood studies should know that while they have the freedom to make whatever movies they want, anything perceived to be "anti-China" is likely to have consequences on the studios' efforts to do business here.

As Brent put it: "The Chinese have absolutely no ground to stand on, except that they have all the leverage. And they're very good at using it."