Company to build national chain of 50 new cinemas

Beijing - Huayi Brothers Media Corp, the first movie studio publicly traded in China, plans to invest 1 billion yuan ($148 million) building a nationwide chain of movie theaters, President James Wang said.

The company, which opened its first two cinemas in the past two months, aims to add about 50 theaters within three years and may spin off the business, Wang said in an interview this week. The Beijing-based studio has also held talks to collaborate with Alibaba Group Holding Ltd, founded by Huayi Vice-Chairman Jack Ma, he said.

The producer of the country's highest-grossing film aims to ease the shortage of theaters that Wang says is hampering growth in the nation's movie industry. While China has quadruple the US population, it has almost 20 percent fewer theaters and box-office receipts were less than a 10th the estimated $10.6 billion generated in the US and Canada last year.

"There aren't enough screens," Wang said. "The reason we are getting into the exhibition business is to support the industry and help resolve the lack of screens in China which is causing some problems."

Huayi, founded in 1994 by Wang and his brother, has attracted investors including Alibaba's Ma, and has more than doubled in Shenzhen trading since its initial public offering in October.

Wang declined to comment on specifics of the discussions with Huayi.

"While there are no substantive discussions yet, we'd love to talk with them as well about opportunities," Alibaba spokesman John Spelich said.

Huayi's "Aftershock," an earthquake film produced with 150 million yuan, took in a record 36.2 million yuan on its July 22 opening in China and more than 400 million yuan in the first 10 days, according to Xinhua News Agency.

Revenue at the studio, which has produced movies including The Forbidden Kingdom starring martial-arts actors Jackie Chan and Jet Li, will probably climb 77 percent to 1 billion yuan and profit will jump 90 percent to 160 million yuan this year, according to the average of nine analyst estimates compiled by Bloomberg.

China is encouraging the development of its film industry to help local moviemakers compete with overseas producers such as Time Warner Inc.

The nation allowed foreign companies to invest in local television and film production companies in 2004.

China's box office receipts are projected to rise 61 percent to 10 billion yuan this year, the State Administration of Radio, Film and Television projected in May. Still, the country has only 5,000 modern screens for its 1.3 billion people and that has undermined industry growth, Wang said.

By comparison, the US had 6,039 theaters last year, according to the Motion Picture Association of America. The US and Canada had $10.6 billion in box office receipts, or 36 percent of the global total, according to the MPAA.

Huayi may open an additional five theaters this year alone, Wang said.

Wang said Huayi may seek to market its film merchandise online and has consistently been in talks to collaborate with Hangzhou-based Alibaba.

"It's something we've always been talking about," Wang said. "The most likely possibility is for promoting ancillary products of films. That would be a good and cheap platform for mass promotion of products such as toys, T-shirts, mugs."

Bloomberg News

(China Daily 08/05/2010 page16)