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Moving on from Chinese movies

Updated: 2012-07-05 11:05
By Xu Xiaomin in Shanghai ( China Daily)

Moving on from Chinese movies

A Huayi Brothers Media Corp cinema under decoration in Fengtai district, Beijing. Huayi Brothers is focusing on the expansion of diversified film-related businesses, such as cinemas, computer games, music, fashion and theme parks. [Photo/China Daily]

Wang Zhonglei discusses the wider entertainment industry and yearns for more time with his family

Wang Zhonglei, who founded the country's first A-share listed entertainment company, Huayi Brothers Media Corp, with his elder brother in 1994, came to Shanghai with the usual entourage of film stars and their minders to showcase the company's latest multi-million yuan productions at the 15th Shanghai International Film Festival in mid-June.

Of course, Wang is a regular at this and other film festivals around the world. But this time he and his company had more to show than movies. Since 2009 when the company was listed, Huayi Brothers has embarked on an ambitious program of diversification into theme parks and other related businesses that now account for more than 70 percent of the company's total revenue. Huayi Brothers' sales revenue amounted to 892 million yuan ($140 million) in 2011.

Having made almost all the best-seller movies in the past decade in China, including the legendary Aftershock, with global box office revenues of more than $100 million, and working with many major movie stars including Chen Daoming and Li Bingbing, Huayi Brothers is trying to reinvent the traditional profile of Chinese movie companies as pure film producers.

"Now the company's focus is on its film-related businesses, such as cinemas, computer games, music, fashion and theme parks, to name just a few," Wang told China Daily.

He was keen to emphasize that his real passion remains in making movies but, for now at least, he is more preoccupied with building an entertainment empire that can stand up to Hollywood's behemoths such as Warner Bros.

Portfolio expansion

The latest news from Huayi Brothers is its co-investment in a movie-themed commercial zone in Haikou, Hainan province.

The zone, covering nearly 1 square kilometer and featuring scenes from classic movies made by the company's top director Feng Xiaogang, as well as restaurants, stores, cinemas and hotels, was named after the director and also marks the company's first move into commercial real estate.

Haikou is not a stand-alone project. Huayi Brothers is planning to spend four to five years building another movie-themed park in Suzhou, Jiangsu province, even though the coming Disney resort will be just a two-hour drive away.

"China has not had any real movie-themed parks before. We will develop them based on adventure films or children's movies to create a place for family entertainment," the 42-year-old president of the company, said, projecting full confidence in the project.

Some analysts express doubts whether the local movie industry is able to handle diversified business. They point out investing in films is already a high-risk enterprise with an 80 percent failure rate. Huayi Brothers' ability to keep making money is a hot topic of conversation in China's entertainment circle.

The corporation's first quarter report for the financial year starting in 2012 did not make happy reading. Net profit dropped by 21.57 percent year-on-year. Revenue from online games and music saw a huge fall of more than 50 percent.

Huayi Brothers' revenue dropped by 16.73 percent year-on-year in 2011, its fiscal report said.

In the face of criticism, Wang accused his detractors of bias.

"The industry has seen rapid expansion," he said. "There are problems because the strategic administration of many companies is comparatively weak compared with their US counterparts. However, Huayi Brothers is taking care over its plans. We just need some time. How can you expect a new business to become profitable overnight?"

Wang said Huayi Brothers intends to continue diversifying its business.

Moving on from Chinese movies

An IMAX cinema in Beijing. China agreed to import 14 US films in 3D or IMAX formats every year in addition to the current quota of 20 revenue-sharing foreign films. [Photo/China Daily]

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