China’s Movies Are a Hit With Investors – Updated April 29, 2016 10:16 p.m. ET


With an annual growth rate of 30%, China’s film industry is attracting a flood of new money, much of it from risky financial instruments

Moviegoers at an IMAX film in the city of Shenyang, in northeastern China’s Liaoning province in 2012. Film is one of the few boom industries in China these days.

Moviegoers at an IMAX film in the city of Shenyang, in northeastern China’s Liaoning province in 2012. Film is one of the few boom industries in China these days. — Photo: Sun hai – Imaginechina

Chinese filmmakers used to have a hard time finding financing; now investors can’t wait to get into show business.

The film sector is one of few boom industries in China, with an annual growth rate of more than 30%. As a result, movies have become a top draw for high-risk financial instruments.

The flood of cash has been a boon for actors, directors and others tied to the industry; salaries of movie stars just below the top tier doubled in the past few years to more than 10 million yuan ($1.5 million) per film, according to talent agencies and producers.

Much of the money has been attracted by the success of movies such as “The Mermaid,” a comedy about a romance between a business tycoon and a mermaid, directed by Hong Kong hit maker Stephen Chow. Before it opened in February, Hehe Pictures, a film company affiliated with state-run China Minmetals Group, set up a private-equity fund to secure the distribution rights. Together with two studios, they bet the movie would gross at least 1.5 billion yuan, say executives among the sponsors.

It was a daring bet. At the time, only two films in China had grossed more than 2 billion yuan. But it paid off: The film broke all Chinese box-office records and still is in theaters after regulators granted it an extended screening period. It has grossed nearly 3.4 billion yuan so far.

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