FilMart: China Industry Shows Signs of Bubble

Rising costs and high wastage are dark side of booming China industry

Multiplex cinema

HONG KONG — A bubble may be forming in the mainland Chinese film industry, a veteran Hong Kong filmmaker has warned.

Speaking at a FilMart conference on the challenges and opportunities in the Asian film industry, Cheung Chi-sing, vice chairman of the Federation of Hong Kong Filmmakers, cited a series of figures indicating some disturbing trends behind the booming box office headlines.

“In 2013, over 700 Chinese movies were sent to China’s Film Bureau [for scrutiny]. Only around 200 have been released theatrically. How about the other 500? And if you only [look at] the box office, things seem hopeful and nice. But actually over 90% of the B.O. for Chinese movies goes to less than 10% percent of Chinese movies [made annually],” he said. “And more than 70% of Chinese movies shown in theatres lose money.”

Cheung also pointed to soaring production costs, in particular talent fees, as another area for concern. “Investing in Chinese movies means risking an investment in a bubble economy,” he said.

In terms of the movie theatre business, Cheung said mounting competition and rising operating costs in China today are eating up profit margins.

With the number of movie theaters rising by 5,000 last year to end 2013 with a total of some 18,000 screens, the growth in screens last year outpaced the growth in the box office.

“This means the average income for every screen is falling,” he said. “If one wants to run a theater in China, it is better to go to third- or fourth-tier cities.”