Chinese Movie Market is a Gold Mine for Foreigners
Foreign filmmakers believe the Chinese movie market is a gold mine are putting in major efforts to develop in China.
There is one kind of product which needs multi-million investments but can see a return in only 15 to 30 days. It is based on innovation and represents a country's culture. Depending on its collection of audio and visual experiences, it can earn praises or criticism from thousands of people. Movies are enchanting products for the world.
For a long time Hollywood has been the best film production base and has produced many classic films for audiences all over the world. Now, Hollywood is turning its focus to the Chinese market as other industries have. The giants from Hollywood have been using different methods to take the Chinese market.
Earning money using Chinese elements
The hottest movie in May was none other than Kung Fu Panda 2. Chinese viewers enjoyed the movie very much. On the first day its revenue from the box office exceeded 40 million yuan (USD 6.17 million). Its producer DreamWorks hopes to earn 600 million yuan (USD 92.58 million) in China. DreamWorks’ ambition comes from its understanding of Chinese consumers’ psychology. Kung Fu Panda, which was presented by DreamWorks in 2008, mainly targeted Chinese viewers. The Chinese-style music, buildings and Chinese kung fu won the hearts of Chinese audiences. Its sequel, Kung Fu Panda 2, has more Chinese elements, including lanes that share the same style as the streets in Chengdu, as well as Chinese banners of “Dan Dan Mian” (a kind of noodle), “hotpot” and “Mapo Tofu”.
Aside from the two episodes of Kung Fu Panda, Chinese elements are more and more common in foreign movies. For example, the movie 2012 produced by Sony Image Corporation used Tibet, China as the last sanctuary for the world.
These movies which cater to Chinese viewer’s appetites or even flatter them are seeking high box office revenues in China. Prof. Ning Zongyi from Nankai University says: “The foreign filmmakers add Chinese elements into their movies to attract a large number of Chinese viewers. These deliberate designs target Chinese people's wallets.”
The numbers show that the total box office revenue in China reached 1.496 billion U.S. dollars in 2010, fifth in the world. In addition, the average box office income for each film in China is ranked at second place with only the U.S. ahead of it. There is great potential for the market and it is a big magnet for filmmakers.
Foreign filmmakers earn money in an “artistic” way by combining the Chinese elements with American technology.
Setting up cinemas in China
Apart from adding Chinese elements into movies, foreigners also are establishing cinemas in China. This started in 2003 and has developed very well in the past few years. Kodak Cinema World, Yonghua Cinema City and some other Sino-foreign joint venture cinemas have already become popular places for Chinese people to enjoy themselves. Kadokawa Pictures from Japan began to build cinemas, make and publish films in mainland China in 2005. It established a special small-area cinema in a town next to Beijing with a Hong Kong-based cinema operator. Now the cinema is running well and serves as an example for other cinemas in China’s rural areas.
In 2007, Orion Group from Korea united with Beijing New Alliances Cinema Co., set up Mega Cinema in Beijing, which has also developed well with its cheap tickets and comfortable environment.
Experts think that setting up cinemas is the most direct and most profitable method for foreign companies in China. Though the number of foreign-funded cinemas is small in China, they are ranked at the top of box office incomes. For example, there are hundreds of cinemas in Beijing and only a dozen of them are foreign-funded. But these cinemas took one third of the total box office income in Beijing. That is because foreign-funded cinemas have advanced equipment which adds better visual and audio effects to its movies. In addition, these foreign-funded companies put efforts into creating more comfortable circumstances for the audience to watch movies.
Presently, the number of cinemas in developed countries is so high that the industry has become saturated. Therefore, foreign cinema operators in developed countries are looking to developing countries for a new profit source. Therefore international giants in the cinema industry are focusing on expanding overseas.
It is worthwhile to note that foreign companies are not allowed to set up cinemas by themselves and are required to have a Chinese partner. In addition, their shares of these joint-venture cinemas are capped at 49%. However, Ning Zongyi argues this will not stop foreign cinema operators’ from developing because they can build more cinemas in China with less money.
Foreign cinema operators have extended their reach to not only to the major cities in China but also the second- and third-tier cities. In Ning Zongyi’s opinion, the second- and third-tier cities in China, which have larger populations, can be more profitable for foreign companies. The economies of these cities are developing at a fast pace along with the income of residents, but their movie markets are not fully developed. Therefore, it is easier for foreign cinema operators to seize these markets.
“Actually, the branches of Fox, Universal and the other movie giants in Hong Kong have already launched surveys regarding the Chinese cinema market and have put forward their own strategies and plans. They will open cinemas in mainland China when the time is right,” says Ning Zhongyi. “The foreign cinemas are better in operation theories, management pattern, equipment and service, which will bring new force to the Chinese market while intensifying the competition there.”
