China multiplexing

The first Western-style multiplex cinemas in China are due to open in Shanghai next year, developed by a high-powered international consortium that launched Friday.

The co-venture, SMI Leisure & Entertainment Ltd, said it has raised $ 60 million to build a web of 60 screens at 12-15 situations throughout China within 18 months.

The group plans to develop integrated family entertainment centers comprising multiplexes, computerized theme rides, videogame arcades and fastfood restaurants.

Some members of the consortium separately have signed a1licensing and equipment supply agreement with Showscan Corp. to build Dynamic Motion Simulator Centers.

The cinemas will be managed by United Cinemas Intl., the Paramount-Universal exhib co-venture, which also has a 5% stake in the cinemas. This represents UCI’s first foray into China after posting former U.K. exec Ian Riches to Japan last year to explore opportunities in the Asian region.

“With more than 1 billion people, China is definitely the market to enter,” said K.K. Chua, who’ll start in June as CEO of the Hong Kong-based SMI Leisure & Entertainment, or Smile. The new screens will “revolutionize the film business in China,” he predicted Friday before a signing ceremony in Kuala Lumpur to launch the co-venture.

Chua, who is leaving his post as United Intl. Pictures VP sales for Southeast Asia, said the group is ready to proceed with three multiplexes in Shanghai, and the first is slated to open Jan. 1, 1995.

China does have multiscreen theaters but Chua says none is purpose-built and many use electronic video projection.

Chua estimates it will cost $ 1.5 million to retrofit each four- or five-screen complex.

The Smile org is forming a partnership with Shanghai Paradise (formerly Shanghai Film Distribution and Exhibition Co.) to develop and manage the multiplexes and to exhibit foreign and Chinese movies.

Shanghai Paradise is China’s largest provincial distrib and its chairman Wu Meng Chen is also the managing director of China Film, the sole importer and distributor of foreign films in China. It was Wu who recently announced China’s reversal of policy on film distribution. Abandoning its long-standing insistence on purchasing films for low flat fees, China will now negotiate to share pic revenues with distributors.

The Wu connection guarantees the multiplexes access to all the product currently imported by China Film — and the slew of new releases expected to start flowing into China later this year under the new policy. Shanghai Paradise also manufactures cinema seats and thus will be an important supplier to the multiplexes.

Smile itself brings to the film business some wealthy Asian players and high-level political connections. It’s 60% owned by South Malaysia Industries Berhad, a publicly listed Malaysian company involved in property development and investment. Another member, with a 10% stake, is China Venturetechno Intl. Co., a unit of a Beijing-based venture capital company whose Hong Kong operations head, Chen Wei Li, is the daughter of elder statesman Chen Yun and sister of Chen Yuan, deputy governor of the People’s Bank of China.

The others are Active Quest, a Malaysian investment company owned by Mokhzani and Mukhriz Mahathir (sons of Malaysian Prime Minister Mahathir Mohamad); Vigotex, a Hong Kong investment company; and LGA Capital Limited, a Singapore-based mergers and acquisition consultancy.

The DMS centers will be developed by a co-venture between Golden Fame (involving most of Smile’s shareholders) and Asian Light, a Hong Kong distrib/production company headed by William Kong. The first dynamic motion simulator rides will open in Shanghai before the end of this year and others are planned in Beijing and Guangzhou.

Chua adds that Smile/Shanghai Paradise intends to form partnerships in other China areas to build multiplexes.

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