HONG KONG, March 18, 2014 /PRNewswire/ -- On February 25, 2014, the Forum on Major Development of China's National Culture Industry was held in Beijing. Organizer of the Forum is China National Culture & Art Co. Ltd. ("CNCAC"), exclusive partner of i-marker Culture & Media Investments Ltd. ("i-marker Media"). CNCAC is the sole state-owned enterprise under the Ministry of Culture of China. Five topics discussed in the Forum include: 1, the use of allocated lands in Beijing to build the culture, film and television industry base which consists of film and TV studio complex and related real estate development projects; 2, film co-production; 3, engaging in the import and distribution of foreign films; 4, launch of securitized culture, film and TV products stock exchange; 5, establishment of the special fund for culture, film and TV Industry to provide funding for the abovementioned four businesses.
For the implementation of the above business, CNCAC has submitted application to the State Administration of Press, Publication, Radio, Film and Television ("SAPPRFT") in the second half of 2013 for the qualification and license to import and distribute foreign films in China, and will become the second company besides the China Film Group ("CFG") which owns foreign films import qualification and license.
According to statistics, foreign films, especially Hollywood films have huge growth potential in the Chinese market. Especially since 2012, the import quota of U.S. revenue-sharing films has been increased from 20 per year to at least 34 per year, while the proportion of the box office split for U.S. film owners also been increased from 13% to 25%. It is estimated that by 2020, China will have the world's largest film box office.
Shandong Shengguang film industry thematic research report indicates that the film industry has maintained rapid growth rate over the past decade. In 2013, the country's total box office was RMB21.7 billion. Assuming the level of film ticket price remains unchanged, with an average growth rate of the past 10 years, China's box office can reach RMB100 billion in 2022.
The Forum has gained fruitful results and great response. Senior officials and leaders from Communist Party of China Central Committee Publicity Department ("CPCCC Publicity Department"), Ministry of Culture of China, SAPPRFT and other government departments have joined the Forum to express their support. The Forum was also joined by guests from Hollywood including senior executives of Hollywood studios, film talent agency companies, and Hollywood producers; senior management and analysts from JP Morgan Securities, Pacific Alliance Groups, China Cinda Asset Management, Oriental Patron Securities, Qilu International Securities and so on also attended the Forum.
Senior management of China Railsmedia Corporation Limited also attended the Forum, and actively explored the development of the five topics, including Mr. Xue Qiliang, honorary chairman of China Railmedia, Mr. Wan Boao, Honorary Consultant of China Railsmedia, and Mr. Bondy Tan, Executive Director of China Railsmedia. Mr. Xue Qiliang is also current Party Committee Member of the 8thCPCCC Publicity Department and Party Committee Secretary of Bureau of Retired Veteran Cadres of CPCCC Publicity Department. Mr. Wan Boao is also current Vice-Chairman of the Chinese Tennis Association, former Director of Publicity Department of State General Administration of Sports, and the eldest son of Mr. Wan Li, former Politburo member and Secretary of the Central Committee of the Communist Party of China, former Chairman of the Standing Committee of the National People's Congress and former Vice Premier of the People's Republic of China. Mr. Bondy Tan is also current Chief Executive Officer of Beijing Cultural Art Exchange.
Mr. Lyu Changhe, chairman of CNCAC, said during the Forum that CNCAC's application for foreign films import and distribution qualification and license has received full support by the Ministry of Culture of China, CPCCC Publicity Department and SAPPRFT, and the license will be effective at the beginning of the second quarter of 2014. After getting the license, CNCAC and CFG will be sharing equally in the huge Chinese film market. If institutional restructuring and merger occur in the future, the actual allocation of import films between CNCAC and CFG will be determined and assigned by the higher government authorities, which are in substance parent enterprises of CNCAC and CFG. As a latecomer, CNCAC will offer the foreign film property right owners a better deal in terms of the film box office revenue sharing, promotion and promotion, etc. CNCAC also plans to strengthen cooperation with Tencent and China Investment Corporation (CIC) to continue expanding the related business operation.
Mr. Bondy Tan, Executive Director of China Railsmedia and Chief Executive Officer of Beijing Cultural Artwork Exchange, believed that after getting the license, CNCAC will offer the foreign film property right owners a better deal in terms of higher film box office revenue sharing, more opportunities and greater transparency.
National film box office of 2013 totaled RMB21.7 billion, of which imported film box office was RMB9.0 billion. In accordance with existing regulations, income of importation & distribution of foreign films accounts for 20% of the box office. In the past, only CFG has the right to import foreign films and enjoys the revenue sharing. CFG's revenue in 2013 for the importation and distribution revenue alone is RMB1.8 billion. Assuming CNCAC will share 50% of the import quota after obtaining the foreign film import license, it should generate RMB900 million related revenue each year, and with the development and growth of the film industry, expected increase in import quotas and the growth in market share of CNCAC, the revenue generated by China Railsmedia from the cooperation with CNCAC will also continue to increase.
According to the introduction made by Mr. Dong, senior consultant of CNCAC who attended the Forum, CNCAC and China Railsmedia will also produce co-production films with foreign filmmakers. Its huge profit potential will obviously strengthen the earnings base of China Railsmedia. Film production is probably one of industries with the highest return today. Beijing Enlight Media's "High Fidelity 33 days" with production and distribution cost of RMB 30 million, and a very good box office return of RMB330 million, "Lost in Thailand" with production and distribution cost of RMB60 million, and box office return of RMB1.27 billion. From 2008 to 2013, Enlight Media has achieved compound annual growth rate of 107%, far exceeding the compound annual growth rate of 42% of Huayi Brothers, while China's total box office over the same period saw a compound annual growth rate of about 30%.
Mr. Xue Qiliang, current Party Committee Member of the 8th CPCCC Publicity Department, added that CPCCC Publicity Department, SAPPRFT and China Broadcasting Corporation (CBC) will build 2,800 digital cinema in counties nationwide, to meet residents' demand for film entertainment in small to middle size towns.
In 2013, Wanda's screen reached a total of 1247, cinema revenue at RMB 4.1 billion, with an average annual income per screen of RMB3.29 million. If CNCAC and China Railsmedia achieved the target of 2800 digital cinema nationwide, their revenue will be in billions.
Furthermore, by operating China's first securitized culture, film & TV assets stock exchange, the potential enormous contribution to China Railsmedia's future growth in business performance, though being difficult to assess, is very encouraging.
The Forum was very successful, participating organizations and Hollywood film and television industry participants including Hollywood studios and filmmakers believed that under China's long term national policy of fostering and supporting development of its culture industries, their cooperation with CNCAC and China Railsmedia can empower the entire culture and film industry of China, making them bigger and stronger.
i-marker Media, a company with headquarter in Hong Kong, had entered into a cooperation agreement ("Cooperation Agreement") with CNCAC in October 2013 on the exclusive partnership in import and distribution of foreign revenue sharing import films and flat fee import films and TV content in the PRC. Pursuant to the Cooperation Agreement and on exclusive basis, i-marker Media will apply its strategic partnership with leading Hollywood and international film and TV studios, producers, film makers and production teams, to assist in film import businesses in China to ensure access to a pipeline of premium Hollywood blockbuster film content and acquisitions of related IPs and other rights including merchandize, internet and mobile gaming forimport and distribution across all media platform throughout mainland China, Hong Kong and internationally.
Founded in 1987, CNCAC is a large-scale and the sole state-owned cultural enterprise under the Ministry of Culture of China. Its main business includes operating various large-scale cultural and artistic performances in China, and actively developing economic cooperation and related product development of well-known art groups and artists in China.
i-marker Media had signed a MOU on October 8, 2013 with FingerAd Media Company Limited (the "MOU"), a wholly owned subsidiary of China Railsmedia in relation to the proposed exclusive cooperation in import and distribution of foreign films and TV contents into the PRC. Pursuant to the MOU, i-Marker will assign all rights and obligations under the Cooperation Agreement to FingerAd, including the set up of strategic partnership with world class Hollywood and international film and TV studios, producers, and production teams; formulation of import film plan and strategy; appointment of Hollywood import film agent and partner; and assisting in the set up of cinema circuits in China.
Ms. Amy Wong