China – A Whole New Opportunity

CIyKy6FUkAEjl5V

There is a Chinese Proverb saying (天时地利人和) – Being at the right time, right place with the right people. Few years ago, Singapore has encouraged Animation Companies to explore opportunities in China. Personally I feel that was too early. During the last 6 to 12 months, I have observed the tremendous shift in opportunities with regards to IP creation in China. More and more western consultants are going into China to assist them in preproduction. Give them another 3 to 5 years, the Chinese studios probably will be mature enough to execute the whole game plan on their own. And no longer need external help anymore. By then, it will be too late to enter their market. So in my opinion, this is the just right time.

In the past, China Animation Industry focus a lot on service work or animation production for its domestic market. With the amazing growth of the Chinese economy, the purchasing power has grown much stronger than before. And lets not forget that China has a huge population. This increases the  licensing / merchandising opportunity.

Due to the rising cost in major developed cities in China, many companies realise that it won’t be wise to remain as a service studio and compete based on lowest cost. In order to stay above the food chain, companies start to explore being IP owners themselves and eventually take advantage of the monetization of the IP. At the National Level, there are a lot more interest and support in producing higher quality work for international exposure which eventually leads to licensing and merchandising.

There has also been a tremendous growth in their box office. The box office in China now is close to US. I am not even surprise that it might go beyond US in coming years. With the recent success of the animation block buster – “大圣归来 – Monkey King: Hero is Back.” It has helped to boost the confidence of the industry. The film was released on July 10, 2015. It is also the highest-grossing animated film released in China, surpassing Kung Fu Panda 2 at US$131 million.

There is also a growth in their distribution network. Not just locally in China. I am anticipating it will probably grow globally in the next 5 to 10 years. Alibaba seems to be more and more involved in the global animation content distributions on both the internet platform / cinema as well as investment. I am speculating that their network will continue to grow as predicted. Dalian Wanda Group, China’s largest real estate developer has acquired 80 percent of AMC — North America’s second largest movie chain. This will give them a potential advantage over global market domination as foreign films in general still having restricted criteria to enter their market.

Nowadays, when you discussed opportunities with the major players in China. Besides distribution, they are also able to tap on opportunities in licensing / merchandising, computer games, theme parks and theme restaurants etc.  A huge one stop solution. Computer games companies and toys manufacturing companies are also the key players who has the capital to invest in IP and animation. There seems to be greater interest in tapping on the teenagers / young adults market and also family entertainment. (It is no longer just for children below 12.) One main focus is the lucrative computer games market.

Having said all these, it is still not easy for a foreign animated content to enter the Chinese market just like that. One need to partner with the right key player who knows the ground well. There are a lot of restrictions to foreign content entering its TV market. For foreign films, only 34 foreigner films a year is allowed. In the past, it used to be 20. The chances for a foreign content to get a permit is almost zero if you do not work with a key reputable Chinese partner. Since March 2015, even restriction has been placed on the online platform. (OTT and other VOD and video streaming platform) Hence a content has to be classified as China Made so that it is easier to enter the market. One of my partner told me that for a production to be considered as China Made, it needs to have less than 3 foreign members in the credits.

At the moment, the Korean companies which have a lot more experience in licensing/merchandising are leading the way into the China market. The Korean designs are strong for merchandise and their high production value give them an advantage. The Korean government is also very sharp in identifying the key players in China to help their industry. However most Korean contents are for preschool. As that is good for the Korean market. Those companies who creates content for slightly older kids will stand out in coming months in China.

From my own experience as a Singaporean, we actually do have our advantage. Thanks to our late prime minister Lee Kuan Yew, many Chinese companies do have a very good impression of Singapore and they do like working with Singapore companies. Our understanding of the Chinese culture and ability to communicate in Chinese helps us to break the ice and establish a relationship quickly. The trust we gained from the Westerner Companies has also given us an added advantage. However it seems that many from our industry are not aware of this advantage.

In Singapore, we do not have many entrepreneurs who build their own animation studios here. Hence not many has taken full advantage of this opportunity.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s