BIG MARKET: Chinese are now among the world's biggest movie goers

Investments up

The number of domestic feature films had reached 530 by the end of 2010. At the same time, the number of animated cartoons, documentary films and films of other genres has increased sharply over previous years. "Statistics are not the only way to measure the development of the film industry," said Zhang Hongsen, Deputy Director of the Film Bureau under SARFT. "Nevertheless, only with the increase of quantity can quality improve."

China has also agreed to further open its entertainment market, in accordance with a WTO agreement. In the past, no more than 20 foreign films were allowed to be imported into China each year. As a result, fiercer competition is expected in the film industry, along with more opportunities.

The situation of the so-called "New Year movie" demonstrates the heated competition in the film market. This new phenomenon got its start in 1997 with Director Feng Xiaogang's Dream Factory, a comedy made on a slim budget of 6 million yuan ($895,522) that ultimately grossed 36 million yuan ($5.37 million). Now there are over 50 films vying for the title of box-office champion in the 90-day-long New Year season (roughly from December to February).

Meanwhile, filmmaking has become a new hot area of investment. The number of investment companies in this area topped 1,100 in 2010, a sharp rise from the average figure of 400 or 500 in previous years.

However, risks exist at the same time, he said. "In any case, every year only 100 or so films can be released. What's more, just a few of them will become big box-office winners in the end."

"But the fact is, there are different ways to recoup a movie's expenses, not just from ticket sales," Zhang said. "We have to judge whether a movie makes a profit or loses money in the long run, which is quite a complicated process."

Currently, Chinese filmmakers mainly raise funds on their own, but new channels for raising capital are emerging. "With the improvement in China's banking system, more and more film and TV companies are relying on financial institutions to raise money, with box-office income, copyrights and sometimes an individual's personal reputation as guarantees," said Wang Ran, CEO of Yikai Capital Co. Ltd.

Unsatisfied quality

Many Chinese directors believe that acclaimed stars are the best way to attract audiences. This may explain why three famous directors chose Ge You, a Cannes Best Actor winner in 1994, to play the leading role in their films released last December.

"As a matter of fact, there are not many highly rated films to sustain the market," said Gao Jun, Vice General Manager of the New Film Association Co. Ltd., a Beijing-based cinema chain. Citing the 27 domestic films shown in October last year as an example, he said that only one made a profit, while all the others lost money. "In the final analysis, the audience is more concerned about quality than other elements."

Nevertheless, Director Jiang Wen's Let the Bullets Fly, starring himself, Ge, and Hong Kong star Chow Yun-fat, appeared to be a huge box-office success. This film, which had a budget of 110 million yuan ($16.42 million), brought in 400 million yuan ($59.7 million) in its first two weeks.

"To attract an audience of 20 million, box-office receipts should exceed 600 million yuan ($90 million). That means we have to let at least 200 million people hear of the movie in advance, if 10 percent of them eventually show up at the cinema, in order to reach this goal," said Ma Ke, the producer of Let the Bullets Fly. Therefore, he spent 50 million yuan ($7.46 million), nearly half of the movie's budget, on advertising.

"Of course, the prerequisite is that we must shoot a good movie that is really appealing to the audience. A person who spends dozens of yuan going to the cinema wants to have an artistic treat, not be fooled by low-quality stuff. We must manage to meet the needs of the people; then naturally we will be repaid by good box-office sales," Ma said.