Golden Harvest once presided over the most powerful film production and distribution operations in Asia. The Hong Kong-based company’s stars included Bruce Lee, Jackie Chan and Jet Li.

But as times have changed the firm wound down its production activities and reinvented itself as a diversified movie theater operator. An initial focus on Southeast Asia has given way to a growing emphasis on mainland China.

In restructuring, Golden Harvest has attempted to ride one of the great bull market runs in world cinema.

From a standing start at the turn of the millennium, the Chinese film exhibition scene has gone from its first multiplex to some 25,000 screens by the end of 2015, and from a gross box office the same size as tiny Hong Kong or Singapore to a $5 billion theatrical market in 2014. (Official government data shows 1,015 cinema complexes were opened across China in 2014, delivering 5,397 new screens — an average of 15 new screens per day — and bringing the year-end total to 23,600 screens.) On its present 30% annual growth track the Chinese theatrical market is expected to overtake the North American box office by 2017.

Even before the company’s linkup with China’s Orange Sky and Chengtian in 2007, it had its sights set on the mainland. In 2006 Golden Harvest sold off TGV, one of its two Malaysian cinema chains, with the intention of redirecting the freed-up capital into China.

Golden Harvest opened its first multiplex in China in 2005, in Shenzhen, the metropolis just across the border from Hong Kong. The seven-screen complex quickly grabbed some 45% of the Shenzhen box office and ranked in the top three China-wide. Management notes at the time record the need to build a cinema-going habit in the Chinese public.

The obstacle was that after decades of non-commercial Chinese films and a crumbling exhibition infrastructure, mainland audiences had largely deserted cinemas, preferring to watch movies — local and foreign —in disc format, many pirated.

Good locations, flexible pricing and theater marketing were key to converting China’s potential audiences back into ticket-buying spectators.

The decision by Golden Harvest founder Raymond Chow to sell his remaining 20% stake in the company in 2007 was seen by some in Hong Kong as the end of an era. The buyer, Orange Sky Entertainment, was a vehicle headed by businessman Wu Kebo. In the following two years Wu, helped by Hong Kong investment banker Kelvin Wu (no relation), consolidated their control of the group through a share offer and the injection of Wu’s Chengtian Zhihong production and talent management company. Orange Sky Golden Harvest was born.

The strategy since has been to add theater capacity in China as fast as possible, while keeping the other businesses in the more mature Hong Kong, Singapore and Taiwan markets growing.

In ultra-cramped and competitive Hong Kong the company has done an impressive job of refurbishing cinema interiors and hardware in the past two years. And it says it would like to build more if the opportunities arise.

The pressure is on in Singapore, where it owns 50% of the Golden Village joint venture with Australia’s Village Roadshow: The company aims to hold on to its role as multiplex market leader through refurbishments and opportunistic expansion. Unlike its two main competitors that own some of their sites, Golden Village operates entirely out of leased premises. Property and labor costs are high and Singapore’s theatrical market, dominated by Hollywood titles, is treading water.

In Taiwan, OSGH owns 36% of the market-leading Vie Show chain, and expects to open two complexes this year.

Mainland China holds the key to the group’s future strategy. It opened 10 multiplexes in 2014 and says it is aiming for a further 11 this year. That would give it 70 complexes and a total of more than 500 screens in China.

Expansion for OSGH, like all mainland distributors these days, is no longer confined to the very biggest cities. It is reaching deep into the smaller cities, which are still large by European standards, with over a million inhabitants.

As the cinema industry reaches into these less cosmopolitan destinations, market demographics and dynamics change — with average age and purchasing power decreasing. OSGH has now split its China management into four regional divisions in order to stay local, but it says that it will continue to aim for mid-market ticket pricing, rather than chasing market share through deep discounts.

“We are more focused on building our loyalty club. Marketing strategy will be two-fold: on one hand our HQ in Beijing will initiate regional marketing campaigns, while individual cinemas will take the lead on location marketing,” a spokesman says.

Similarly, OSGH has not pushed too far into the high end of the market and has only opened two Imax screens to date, though it says it is also looking at using the rival China Giant Screen technology.

With Hong Kong-based Panasia, the group owns one of Asia’s oldest distribution companies and OSGH continues to function as a distributor across all four of its territories. For China, it will handle any movies produced in-house (“Fly Me to Venus” is set for release at the end of this year or early 2016) and import foreign titles for co-distribution with China Film Group as revenue sharing quota releases.

In Hong Kong it acts as a sub-distributor for local films coming from indie producers and handles a limited number of imported acquisitions. Where possible, the company seeks to buy rights across China, Hong Kong, Taiwan and Singapore.

But the distribution business can be volatile and in 2014 it failed to deliver the hits expected. That slowdown along with currency losses and a lack of profits from property trading caused the company to issue a profits warning at the beginning of the month.

Rich history

For more than two decades, Golden Harvest and its rival studio Shaw Bros. defined Hong Kong cinema in its Golden Era, a period running from the early 1970s to the mid-1990s.

This was a time when China was largely closed to foreign cultural imports and Hong Kong ran an export-led production colossus that dominated Asian cinema and influenced filmmakers from Europe to Hollywood.

Golden Harvest was formed in 1970 by a trio of executives — Raymond Chow, Leonard Ho and T.K. Leung — who broke away from the highly regimented Shaw, which sought to control the process from studio ownership and artist management through to distribution.

Golden Harvest offered flexibility by encouraging independent production, establishing satellite branches and offering profit-sharing. It also tried to be more diverse in terms of genre, and in 30 years produced some 600 titles ranging from action and comedy to arthouse titles.

Golden Harvest owed much to its early success to Bruce Lee, a Hong Kong-born, U.S.-raised martial-arts wizard who only made six films, but became an enduring superstar.

The company established overseas distribution offices in the 1970s, ensuring that new, international audiences got to see Lee’s films and paved the way for other Hong Kong talent — Jackie Chan, Sammo Hung, Michelle Yeoh and Michael Hui — to gain global recognition.

Lee’s “Enter the Dragon,” which was released after his death in 1973, was the first Hong Kong-U.S. film co-production and preceded international films including “The Cannonball Run” (1981) and “Teenage Mutant Ninja Turtles” (1990).

Along the way, the company was involved with many executives who have since made careers elsewhere, including producer Andre Morgan (“The Warlords”), Albert Lee (CEO of Emperor Motion Pictures) and Winnie Tsang, who started in a junior position before heading distribution and then established Hong Kong’s leading indie distributor Golden Scene.

Golden Harvest’s activity as a producer slowed in the last 15 years as it concentrated on exhibition, expanding from its Hong Kong base and working with Australia’s Village Roadshow from 1992 in a Singapore joint venture Golden Village.

The company listed on the Hong Kong Stock Exchange in 1994 and over the next decade attracted some high-profile minority shareholders including the U.K.’s EMI and Li Ka-shing, Asia’s richest man. They enabled the company in 2005 to buy a major stake in Warner Village, Taiwan’s largest cinema chain.

Raymond Chow retired as chairman and in November 2007 sold his shareholdings to the mainland’s Chengtian Entertainment, which kept the share listing and changed the group name to Orange Sky Golden Harvest.