Pyramid scheme bolsters box office results

By Raymond Zhou ( China Daily ) Updated: 2014-04-03 08:21:40

Pyramid scheme bolsters box office results

Fighting, starring newly beefed-up actor Lu Yi, arouses doubts and attention when its production company predicts it will become the No 1 Chinese movie at the box office.

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It was not the first time a Chinese film company has been suspected of using sales as marketing. Daohe was extreme only in the amount spent. But it was soon discovered that the figure for presales was exaggerated. The real number was around 1 million tickets, not 4.5 million, but still a substantial amount if translated into a marketing budget.

Most unorthodox was the way the company distributed the tickets it bought. First, it reminded its employees to treat their account contacts, family members and friends to the movie, saying this was a means to boost corporate culture.

In corporate memos obtained by the media, there were detailed instructions about the cameo appearances of its executives and how employees should artfully praise the movie - but not too much lest they sound conceited. Funny thing, the movie is a period piece with no ostensible link to the company or its products. On a certain level it seems it was being used as a corporate video to build customer relations and employee cohesion.

Then came the really dubious part. Daohe made the movie under a subsidiary and the parent company is reported to be engaged in selling so-called ecological products in a multilevel marketing arrangement.

Members are required to spend tens of thousands of yuan to be admitted into various levels of membership and sell the products further downstream. For example, someone who buys 55,000 yuan worth of its "ecological bedding" can qualify for 300 tickets to Fighting.

Mind you, they get the movie tickets for free, which theoretically they should give as a fringe benefit to those who buy the bedding from them. The lowest membership costs 32,000 yuan, but if you can enroll 12 people to join, you'll become a diamond member. And you'll get 10,000 yuan on top of that when you recruit three more members. So, the complimentary tickets seem to figure in nicely with this complicated game plan even though the plot of the movie has little to do with the business.

One diamond member said he had seen the film many times but he is going to see it many more when he takes members he recruited to future screenings. "If I do well, I'll have a chance to be selected for appearing in future movies produced by the company," he disclosed in an elated voice.

Yu Junhao, director of Fighting, admitted that there were indeed block bookings by the production company, but the whole scandal was hatched by competitors who tried to "denigrate it as a pyramid-scheme film", he insisted.

Fighting yielded a box-office gross of 13.4 million yuan in its first day of release and 42 million yuan in its first four days. When the self-purchased part - around 35 million - is discounted, that left only a few ticket-buyers who paid out of their own pockets.

When I first started to research China's film industry a decade ago, I was told by insiders that showbiz attracted all kinds of money and shady deals. People do not pursue profits in the movie industry as they would with less glamorous ventures, they maintained. One-third of investors or producers were in it for money laundering, and a second third for "meeting beautiful chicks", said some, and that left only one-third for the purpose of making movies.

Of course that claim was impossible to corroborate on a mathematical basis, but it was evident that many got into making movies for purposes other than what they would admit. That is also true of Hollywood, which used to attract investors who were in the game mainly for tax reasons. In the classic comedy The Producers, a pair of Broadway producers designed a technique by which they could profit from a surefire flop.

When people in a for-profit business do not intend to make money, it usually wreaks havoc with the whole industry. The rational way is to turn out quality products and bring in a healthy profit.

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