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Wanda readies AMC cinemas for close-up
By Chen Weihua in Washington ( China Daily )

Wanda readies AMC cinemas for close-up

China's Dalian Wanda Group Co is upgrading many of the theaters included in its 2012 acquisition of US-based AMC Entertainment Holdings Inc. This 25-screen cinema is on West 42nd Street in New York. Hu Haidan / China Daily

Moviegoers in the United States might be unaware of last year's ownership change at AMC theaters, but an impending chain-wide upgrade featuring 3-D movies and snazzier food options could grab their attention.

As part of its $2.6 billion acquisition of AMC Entertainment Holdings Inc, completed in September, China-based Dalian Wanda Group Co has promised to spend $500 million to refurbish AMC cinemas over the next four years and reduce debt at the US company.

"AMC is in the process of updating its circuit from coast to coast through this acquisition, as well as enhancements such as our AMC Dine-In Theatres, improved sight and sound, new concession areas and options, and better seating," company spokesman Ryan Noonan said.

"All of these enhancements are designed to deliver an amazing experience and get our movie-loving guests excited about coming to the theater to see their favorite films on the big screen," he said.

Wang Jianlin, the real estate mogul who is Wanda's founder and chairman, shared his view of the spending around the time of the deal's completion.

"My vision is that in three or four years, the reinvestment will give AMC an edge over competitors," Wang told reporters in Los Angeles.

The acquisition, which required the approval of regulators in China and the US, makes Wanda the world's biggest operator of movie theaters. AMC had been owned since 2004 by a group of US private-equity firms including Apollo Global Management LLC, Bain Capital LLC and Carlyle Group LP.

The cinema chain, with more than 5,000 screens, remains the largest in the US by revenue. (AMC Entertainment isn't connected to US cable television producer AMC Networks Inc.)

Unlike some other Chinese enterprises that have invested in the US, Wanda learned early on how to get the most out of an acquisition.

When Wang visited AMC's home base of Kansas City, Missouri, four months ago, he promised to donate $1.3 million to the community.

Wanda and AMC are providing 13 Kansas City-area high schools with arts and educational supplies, as well as movie screenings that educators can use to supplement classroom education.

Wanda readies AMC cinemas for close-up

As an incentive for faculty and student achievement, the companies are also supplying many families of the 13 schools' students with free movie passes, popcorn and drinks, including for all of this year's graduates, according to Noonan. He said the giveaways are worth $1.3 million.

Karl Sauvant, a Columbia University professor, said efforts at good corporate citizenship undertaken by Japanese companies in the US has helped improve Americans' view of investment from Japan since an initially negative reception in the 1980s.

Viking Weiqiong Tao, of the Dallas-based law firm Kane Russell Coleman & Logan, believes Chinese companies are paying more attention to the principle of corporate social responsibility.

For Wanda's Wang, the largesse isn't a first. Placed No 1 on Forbes China's 2011 list of the country's leading philanthropists and serving as honorary chairman of the China Charity Federation, the businessman has pledged to donate most of his fortune to society, reminiscent of Bill Gates and Warren Buffett.

This week, Wanda issued a report on corporate social responsibility that showed that the company in 2012 donated 390 million yuan ($62 million) to charity and public causes and sponsored 761 volunteer activities with participation of nearly 61,000 people.

Wang called the AMC deal - one of the biggest Chinese investments in the US last year - the first step in Wanda's global expansion. "You will see more acquisition in the future," he told the BBC in December.

He believes private companies such as Wanda can outperform State-owned enterprises, which have dominated Chinese direct investment abroad.

During his visit to Los Angeles, the chairman said Wanda plans to invest $30 billion in cinemas, hotels and department stores outside China, with a third of that to be allocated to US companies in the coming decade.

"We have the will and capability to go global," Wang said.

He said he had also talked to US movie studios about possibly starting an investment fund for joint productions. "We are seeking to work with the most famous studios in Hollywood to produce quality films," Wang told reporters.

Analysts such as Clarence Kwan, formerly a senior partner in Deloitte LLP's Chinese services group, believe that if Wanda succeeds in the US, it will set an example for other big Chinese investments in the country.