Wednesday, July 1, 2009

Economy cools while films get hotter

'If You Are the One', a top performer at the Chinese box office (RMB 340 million)

China’s film industry is one of the few industries that are immune to the current financial crisis. I watched a TV program entitled Economy Cools While Films Get Hotter (《冷了经济 火了电影》) on CCTV a few days ago. A number of actors, producers and some other professionals involved in the film industry are interviewed in the program. The lipstick effect is believed to have played a role in China’s fast growing film industry under the current financial climate. There is no doubt that China’s film industry has been growing by leaps and bounds in the recent 5-7 years. According to the program, the number of homegrown films grew from 88 in 2001 to 406 in 2008. Box office sales grew to RMB 4.341 billion ($638 million) in 2008 from RMB 950 million ($140 million) in 2003. Despite the impressive growth of the film industry, the program points out a number of issues that need to be addressed:
  • A small number of homegrown films are making money. Most homegrown films are either losing money or merely at breakeven.
  • It’s difficult to raise capital. Many film production companies spend more time raising capital rather than actually creating and producing films.
  • Lack of original/excellent creation in film production.
  • Box office is the only main revenue stream. More revenue streams need to be utilized.
This is an interesting TV program that gives some basic knowledge of China’s film industry. China’s homegrown films accounted for more than 60% of the total box office in 2008, and China is one of the fastest-growing film markets in the world. No wonder U. S. is battling to get more Hollywood films exported to China. Some Chinese film production companies (e.g. China Film Group, Huayi Brothers) are doing very well. However, for all Chinese filmmakers, there is still a lot to learn from their American counterparts.

In short, China’s film industry is prosperous and full of potential. However, there are still a lot of losers out there. It can be very risky to invest in this fast growing industry.

BTW, Transformers 2 has been on screen for a while and I will contribute 80 yuan to China’s box office sometime next week.

Related reading: China's film industry on fast track


Ramesh said...

Good post Hang. Many features of the industry you describe are the same in all countries. I see the local cinemas in Guangzhou packed with youngsters all the time.

Why not abandon boring work and become a movie star instead ! I shall await for the movie starring Hang and Zhang Ziyi !! :)

Hang said...

Ha, ha ... Ramesh, I wish I were a movie star!

The cinemas in Beijing are also packed with youngsters. I didn't get a ticket to see Transformers 2 on Tuesday.

Actually, there are more issues that need to be addressed in China's film industry. The TV program covers only a few of them.

Ira said...

You need to spend 80 RMB for Transform II? too expensive. In Singapore, movie ticket is only S$7 for weekday, and S$9 (about 45RMB) for weekend, much cheaper than in China.
I live the comedy from director Fengxiaogang, always have a good laugh when watching his movies

Ira said...

As for capital raising, new directors may find it tough to raise money, those established directors like Zhang YiMou and Chen KaiGe, have no such problem. But they have another problem that they cannot produce movies as good as those when they were still young and creative. Their recent movies just don't live up to expectation, despite all the hypes

Hang said...

Ira, 80 yuan is expensive. This is another problem in the film industry. If you take disposable income into consideration, China has one of the highest ticket price in the world. I agree that established directors are well positioned when it comes to obtaining investment. But what I'm talking about is that those film production companies (e.g. Huayi Brothers) need to raise capital to invest in directors' film productions. One positive trend is that some financial institutions have tried to explore the film market. For example, China Merchant Bank granted a loan of RMB 50 million (with no security) to Huayi Brothers to make the film Assembly (《集结号》)