Business / Industries

Crowdfunding tastes blood in China's movie market

(Xinhua) Updated: 2015-07-29 15:24

SHANGHAI - The overwhelming success of a China-made animation has trained the spotlight on a burgeoning mode of Internet finance -- crowdfunding.

The novel fundraising channel impressed many Chinese movie-goers when "Monkey King: Hero is Back" presented a long producer list that included 109 children, whose parents pooled money to aid in the movie's marketing.

More inspiring is the news that the parents, who have invested a total of 7 million yuan ($1.1m), will get more than 30 million yuan in return thanks to the film's immense box office success.

China's largest blackhorse movie this summer, the "Monkey King" amassed 700 million yuan in ticket sales as of Tuesday, beating "Kung Fu Panda 2" as the top-grossing animated film in Chinese cinemas.

Lu Wei, producer of the film, said he posted the crowdfunding bid on WeChat, a mobile messaging app, in late 2014 when the film was near completion. The initiative attracted many parents who made donations ranging from several thousands to over 100,000 yuan.

"Their participation contributed greatly to the movie -- they are not just funders, but also enthusiastic promoters who actively advertised for the film. Some booked the entire cinema for the film's screening," he said.

Crowdfunding, which allows a project to raise funds from a large number of people via the Internet, has been a vogue in China's movie industry, with several blockbusters, including the Tiny Times franchise, rolling out such projects to pool funding and fan popularity.

The concept is gaining traction in China where the government has been encouraging innovative fundraising to help money-strapped business startups. Statistics from Yingcan Consulting show China's crowdfunding platforms increased to 211 by the end of June, raising more than 4.6 billion yuan in the first half of the year.

Despite the boom, crowdraising remains distant from the general public. Ai Haiqing, co-founder of a crowdfunding website, said most projects have high capital thresholds and only solicit professional investors.

The projects on large platforms (with low or no investment threshold) are mostly rewards-based or are public interests activities. Equity crowdfundings (promise shares in a company or film) are rare, Ai said.

Their foray into China's booming film market to target ordinary movie lovers is also viewed as more of a marketing stunt to encourage "investors" to go into the cinema to support their own "products" rather than suppliers of much-needed funds.

"China's movie industry does not lack hot money. Good projects can easily ensure funding and thus need not resort to crowdfunding," said a producer at a Zhejiang-based movie-making company.

"Some (films) launched such projects to expand the movie's fan base and encourage public participation," he said. "What they offer are more like a finance product, which promises fixed return rates instead of making you a shareholder of the film."

Lu said crowdfunding can boost popularity, but such investors usually have no say in a movie's production. Movies that have trouble getting venture capital may also find little luck in crowdfunding, he added.

Industry insiders say it will take a while for China's crowdfunding to grow into a mature fundraising channel to benefit both small investors and businesses. The sector needs better transparency and risk control as well as more success stories to boost public confidence.

"The crowdfunding sector needs to make a fortune before it can tell its success stories," said Li Qunlin, CEO of crowdfunding platform, adding that the market is still under cultivation and needs time to bloom.

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