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
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.