Survival Skills at China Animation Trade Show

Bizmatch01
At most western animation trade shows, you can arrange meetings in advance. At a recent China animation trade show I went to (one of the largest animation trade show, outsourcing & investment event for IP – tv/film, animation, games, comics, toys etc), I realise in China, they do not seems to have a practice of arranging meetings in advance at animation trade show.

It wasn’t easy for someone new like me who do not know anyone there. It’s like a fan hunting for your superstar. (The top executive from an important organization) But the best part of the game is you do not know who is the superstar. So you need to do your research. Find out which talk your superstar is attending. It could be a press conference of an animated series they have invested in. During such an event, pay attention to the host when he made an introduction to the VIP at the event. Normally the VIPs sit in front. They are part of the evaluation panelist for project being pitched. The host will announced who the VIP are. Once the event is over, you need to go straight to him asap as many will do the same. And when you meet the VIP. Getting the namecard is not enough. You need to scan his WeChat account so that you can get in touch with the top executive from these big companies. You have to do this as email is not sufficient to reach them. They hardly read their emails. At the event, many will be there, crowding around the VIP.  It’s like you are a fan hunting for the autograph of the superstar.

Another opportunity is during networking party. Walk around. See if you can hijack into others conversation. (Sorry. I know it sounds horrible. Seems like this is the mode of survival there at the market)

Bizmatch02
At the one to one business matching, I was told that Chinese companies do not like to have a schedule of appointments every 30 mins like what we used to do in Western market. So it is really like a market place. You walk from table to table to look for the buyer. (They will put a badge on the table) You do not know which company (buyer) is there at the table before hand. And the buyer is different in the morning and afternoon. So you need to walk around. When you see a good buyer, you need to circle around the table like a vulture. ha ha Once you see a vacancy, put your yourself on the seat immediately ha ha. Else someone else would.

I know it all sounds crazy. Its a world of cowboy. If you are shy, you might end up going home empty-handed. I felt uneasy at first. But there is no choice. In order to survive, one must seize every opportunity. Once you get the attention and interest, do your best as this is the only chance to impress them. I guess once you have established your connections, you do not need to do all these in future. Its all about connections and relationships.

Coming to China is really a good training for survival.

 

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Co Productions with China

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Something I learnt from my recent trip. If a country has a co-production treaty with China, the film made may be considered as China/Domestic film. Hence not restricted by the foreign films quota of 34 films a year. In order to qualify for the co-production treaty, 50% of the film investment and production must involve a China company。The topic of the film must have elements of China. And there are a couple more things.

So far, China has entered into film co-production agreements with 14 countries
http://www.cfcc-film.com.cn/policeg/content/id/2.html

(Singapore and China do have this co-production treaty.)


China Film Co-Production Corporation (CFCC)

Founded in 1979, China Film Co-Production Corporation (CFCC) is a special organization solely authorized by the State Administration of Press, Publication, Radio, Film and Television to administer affairs relating to Chinese-foreign film co-productions. We are always ready to provide filmmakers wishing to film in mainland China with all-round information related to co-production policies, industry landscape and co-production resources. We are committed to deal with any inquiry regarding filming in mainland China in a timely, authoritative manner.

As administrator and supporter of international co-production, we encourage domestic filmmakers to film overseas, and also support overseas filmmakers to film in China. Throughout the past decades, we have been dedicated to bringing together domestic and overseas film organizations and production houses, and enjoyed working with internationally established filmmakers including Steven Spielberg, Bernardo Bertolucci, Jean Jacques Annaud, John Woo, Wong Karwai, Ang Lee, Chen Kaige, Zhang Yimou and Feng Xiaogang, among many others. We are proud to have made our contributions to the growth of international co-production and the drive of Chinese cinema to go global.

KEY ROLES

Our major responsibility is to assess and approve international co-production applications, conduct reviews of completed co-production films, supervise the performance of co-production agreement between the co-producing parties, provide relevant services, and assist in negotiations of governmental agreement on film co-production between China and other countries. The precise roles are as follows:

1) Read and assess proposed co-production scripts;

2) Examine applying documents from co-producing parties;

3) Review completed co-production films;

4) Deal with inquiry regarding industry policies, rules and regulations and co-production procedures;

5) Bridge domestic and overseas co-producers;

6) Facilitate entry visas for foreign crews participating in co-productions;

7) Facilitate customs clearance for filming equipment, film stocks and materials to be used in co-productions;

8) Process applications and provide related services for overseas crews to shoot short films in Mainland China.

 

 

Tax Issues for Servicing Work

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More and more China studios are shifting from providing outsource services to foreign companies to creating their own IP. Based on our recent observations, there seems to be more and more China studios looking at outsourcing their work.

In fact, due to the weak euros and also the decline of western economy, we might see growing opportunities coming from China than the West in next few years.

One thing to take note about getting service work from China is withholding tax.  In the past, many countries outsource their work to China tapping on its low labour cost. However things are changing now. Chinese Companies have started to look at outsourcing their work as labour cost is raising in Beijing and Shanghai. This is all new. No one exactly know how much withholding tax they must hold back if they were to outsource their work to foreign companies. So on the safe side, some will just hold back the maximum. Which is 17%. This is based on our own experience. E.g if your client ask you to do a job at $1000. They might withhold up to 17%. Meaning they might eventually pay you only $830.

If the value is high, you might want to seek a tax advisor for help. Singapore has many companies in Shanghai. Hence many of them are familiar with the tax issue. IE has introduced me to the following company who has served many Singapore companies in China. They have offices in various part of China. This is important as different province has a slight different tax regulations. http://www.sbasf.com/

What they will do is to help you look through your Chinese Contract. Advise you how to word it to protect yourself and also in a way easier for them to negotiate with the China Tax Department. You need to prove that the service work is not executed from China. From there, the tax consultant will discuss with the China tax department to lock down a rate. For my case, they help me to bring down from 17% to 6%. This is a huge saving.

Once the tax rate has been locked down, you can show the documentation to your client. So that your client cannot hold you at e.g 17%. I am not an expert in this. I can only share with you what we have gone through. Hope it helps you too.

Market Orientation for Chinese Animation Industry

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This is a very interesting place in Beijing where there are many feature film, games and animation companies based here. I was told there are quite a number of places like this in Beijing.

The following cities have more companies in the Animation, VFX and Games.
Beijing, Shanghai, GuangZhou and ShenZhen.

BEIJING
In terms of investment, IP creations, feature films and computer games, Beijing seems to be leading. There are some in Shanghai too. Many head office is based in Beijing. Most of the film companies are also based in Beijing.

SHANGHAI
Shanghai seems to have more post houses that provide services for TV commercials.
Here are some interesting articles with regards to the TVC market

http://shpplus.com/insight/commercial-postproduction-in-china-part-one-landscape/
http://shpplus.com/insight/commercial-postproduction-in-china-part-two-the-china-schedule/
http://shpplus.com/insight/commercial-postproduction-in-china-part-three-talent-crisis/

GUANGZHOU & SHENZHEN
Guang Zhou and Sheng Zhen have more outsourcing services and Animated TV Series facilities.

COST OF LIVING
Beijing and Shanghai cost of living is very high as compared to other cities. In fact, their rental cost is quite close to Singapore.

STARTING SALARY
In general,  a starting salary in Beijing and Shanghai could be anything between 4000rmb to 5000rmb (S$800 to S$1000)

Other less developed cities has a starting pay of around 3000rmb. (S$600)

The market is changing tremendously. From servicing foreign companies, now more and more are looking at IP creations and globalisation. In fact, China companies are looking at outsourcing their work.

 

Outsourcing work coming from China

Outsourcing

The CICAF/IABC event in Hang Zhou has several unique activities where we have never seen it in other overseas trade events. This particular conference focus in outsourcing. Company who wants to outsource their work will present the specification, concept and materials. Attendees are companies who are interested to provide their services. There seems to be a lot of work available in China now. There are 11 companies who want to outsource their work. Each has 3 to 4 projects. I was told that there are about 100 animated films in production now. The seminar is good for companies looking for work. In the west, it seems to be harder and harder to get work. Maybe it’s time to look east.

The only challenge for foreign companies is you have to figure out how to deal with the withholding taxes and understanding their pipeline etc.

Making Connection in China

wechat-logo1In most market, once I gotten the name card of that important person, I will be overjoyed. Thinking I have now gotten the person contact and I can start communicating.

In China, it is very different. You must get connected with that person via WeChat. (Very often you offer to let him scan your WeChat account or you scan his) That represents one step closer. I didn’t realise this initially and lost some good contacts. This is very important.  In other markets, we seldom do that as sometimes it feels like you are going into personal space. But in China, it is different. Its all about relationship.

For email, I realise many Chinese executive seldom check it. Or your Gmail might be blocked by their firewall or their company email at times cannot send or receive email outside China. Hence WeChat is crucial.

At times if that person do not offer to connect you via WeChat account. It almost feel like your relationship hasn’t reach the close level yet. Ha ha.

The IP creations for Animation is growing in China

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Chinese companies are slowly moving away from servicing work to IP creations. Not only they are interested in IP creations for their own domestic markets. More and more are looking for overseas partners to learn how to create content for the global market. Though they have started much later than most Asian countries. In terms of learning how to monetize their IP and gain knowledge in licensing & merchandising, they have caught up very fast. In fact, I would say faster than some Asian countries like us who has started even way before them. With their huge capital, population and box office, I anticipate that they will slowly catch up with US. Or might even replace their position eventually.

There is a potential that some of them can become the next Mattel or Hasbro in the East. Or even Turner or Disney who has the entire eco system. Some of the big players already have their own TV stations, Film Production Company, Distribution Network, Toy Manufacturing Arm, Games Companies, Themeparks etc.

The Themepark owners, Toys Manufacturers and Computer Games Companies are especially the ones most interested in IP creations and learning how to globalize it.

I see a trend of them setting up a pre production arm in LA to tap on the best talents there. Or they will buy over good IP from overseas. Then slowly looking at outsourcing their productions to cheaper countries. So that they will focus on IP management, licensing / merchandising and stay at the top of the value chain.

Currently there are still companies who are willing to learn how to globalize their IP. Initially I was estimating maybe in another 5 years time, they probably already learn all they need and will be independent enough to operate on their own. In 5 years time, they might already have the entire value chain setup. But looking at the rate they are progressing, I think maybe another 3 years (Not 5 years anymore) they will be ready and will NOT need others help anymore. So if you are heading to China for opportunity. I say, it has to be NOW or NEVER.

Dreaming the Impossibles

A very inspiring story and interview by the founder of Baidu. Robin Li / Li Yanhong (Baidu, Inc., incorporated on January 18, 2000, is a Chinese web services company headquartered at the Baidu Campus in Beijing’s Haidian District. Baidu offers many services, including an amazing Chinese search engine for websites, audio files and images. In December 2007, Baidu became the first Chinese company to be included in the NASDAQ-100 index.)

Something Mr Robin said touches my heart deeply. In the early years of his journey, he went for a job interview to be the assistant of a US Professor. At the interview, he was asked a series of tech questions. He felt that he has performed badly. At the end of the session, the Professor asked him the last question. Till this very day, this question left him with a deep impression. The Professor said. “Do you have computers in China?”  That question has a deep meaning. He wasn’t exactly asking him if there are Computers in China.  At that time in China, no Chinese could afford to buy a computer. At that instant, he was almost speechless. Deep inside him, he has an impossible dream. He wish that he could tell the professor that one day, he wants to build the world’s greatest Chinese Search Engine. He wishes to buy many computers to make this happen. With the professor’s question. It makes everything sounded impossible. This incident cuts him real deep.

This reminded me a story of my own journey. This was in my early years too. I was given a chance to meet the president of a major MNC (Multi National Corporation) in the US. I was really touched and excited. How often do you get such an opportunity! Filled with hopes and dreams I arrived at the meeting. The first thing the President asked me was “If you have nothing fruitful to discuss, don’t waste my time.” (These words make me feel like a nobody coming from a small country. Trying to dream the impossibles) The night before, I was well prepared with the presentation. Feeling high with hopes and dreams. This one second, the message has melted me from top to the ground. At this point, I almost do not know how to go on.  However the show has to go on. I have to hold back my tears and emotion. Bringing myself together. And continue the meeting. It is really hard. Very hard.

The world is fair. What goes around comes around. Several years later. A bigger MNC bought over the MNC I told you. The president I met got replaced. I met him in Cannes. Outside a Korean restaurant. He walked over and said hello. “So what is my friend doing here in Cannes.” he said. I told him that I am here to present Dream Defenders. Eventually he came by our booth and has taken a look at Dream Defenders. He was impressed and offered to represent us in the global market. We didn’t take it up as I was already working with Dreamworks. But I remain in good spirit and let the past go. Now I am still in touch with him.

At times, things like this do happen. Looking back, it is not a bad thing. It makes you stronger. It makes you become who you are today.

 

Valuable Entrepreneur’s Tips from Jack Ma (Part 1)

Jack Ma’s talk at the General Association of ZheJiang Entrepreneurs. (Sorry. Only in Chinese)

I have selected some valuable points to be taken away.
1) When the News report that a bad year is coming up due to the bad economy. Don’t panic when you hear the bad news. This is because the Good News is everyone is affected. Not just you. ha ha.

2) If you want to be an entrepreneur, venture into something you have passion. It’s like your life. You are willing to sacrifice and fight for it. Don’t venture into something that others said it will make money. It will not last long. You need to believe in what you are doing. And assemble the people who believe in this dream. Only then the company will have opportunity to succeed.

3) Ability to see the problems that will kill your company is important. (Not ability to see ways to succeed) Prepare your company for crisis. Only those who are unable to see potential problem will survive. When you see a crisis, ability to remain calm, analyse and react to it accordingly is your key to survival.

4) Always try to work within constraints. Don’t increase your man power anyhow. Only when you have constraints, then you are forced to come up with good & innovative solutions to face any problems. Else people will always take the easy way out. But not necessary solve the problem.

Growing attention to IP in China

(上海正大乐场)

China market as a whole, seems to be paying more attention to IP. The major players have now their own IP licensing and acquisition department. Shopping malls in China also seems to be looking into having its own mascot and events within the mall to attract more customers.

As more and more malls is built in China, they have to find ways to compete with each other. Many malls also have their own in door theme playground. Hence also rolling out their own merchandise.

Another Case Study –  阿狸的冬曰魔法乐园-上海时代广场。

Shanghai Times Square02

Source:
https://en.wikipedia.org/wiki/Ali_%28character%29

Ali the Fox (Chinese: 阿狸) is a cartoon character created by Xu Han (Chinese: 徐 瀚 known as “Hans”), who graduated from the School of Fine Arts of Tsinghua University and received a master’s degree. Ali is a red fox in white pants. The company controlling the character is Beijing Dream Castle Culture Co., Ltd (S: 北京梦之城文化有限公司, T: 北京夢之城文化有限公司).

Ali began as an internet emoticon. He began appearing on Chinese internet sites in 2006. They included QQ, Renren, Sina Weibo, and WeChat. Ali has an animated TV series and a picture book series.

There is a film, Ali.Dream Island (阿狸.梦之島).

When making the picture book series, he originally wanted to adapt European fairy tales but instead decided to write the stories himself. By 2013 the Ali picture books have sold over two million copies. A promotional event for the third Ali picture book occurred in October 2013. In some cities, including Shanghai, Zhengzhou, and other cities, 2,000 signed books became sold out in fewer than three hours.

Hans, the creator of Ali, graduated from the School of Fine Arts of Tsinghua University and received a master’s degree in 2007.He is now a college teacher. He began to create Ali when he was a graduate student. In the year of 2010, he was nominated the award of Beijing Youth Star of Start-ups. Things he loves to do are watching movies and comic books and one of his dreams is to build a dream kingdom for Ali. Hans completed on his own all the work of Ali, including the design of Ali’s expressions and websites. The book Ali’s Dream Castle (S: 阿狸·梦之城堡, ) is considered one of the five-star books of Dangdang in 2010. And his second book Ali’s Eternal Stop (S: 阿狸·永远站) was launched in 2010 during Christmas. They sell over 2000 copies, breaking the selling record of Chinese comic books. The third book Ali•tail is under creation

As of 2013 he is a teacher at Minzu University of China and he is the chairperson of Beijing Dream Castle Culture Co., Ltd

More about Ali:
https://www.youtube.com/user/alithefox
https://www.facebook.com/AliTheFoxTW
http://a-li.kadokawa.com.tw/p1-1-1.php
http://www.a-li.com.cn/home/