In the early years of the 21st century, bankers to the film industry set their eyes on East Asia and headed for Hong Kong and Beijing. They could see that mainland China’s decision to open the film business to the private sector had the potential to be a game-changer. Multiplexes were being built, box office was growing and trans-Pacific co-productions were starting.

But the revolution failed to happen, Asian film financing refused to become Westernized and debt financing of filmmaking remains a minority activity in the region.

Film production in East Asia continues to be built on a foundation of corporate balance sheets (or self-finance) with a generous sprinkling of private equity. Large, structured funds remain rare outside South Korea and the region does not have the same subsidy culture as Europe.

Location incentives have grabbed headlines in an array of countries (Malaysia, Singapore, Thailand, South Korea, mainland China, Mongolia and the Philippines) over the past decade, but governments have not always followed through. And the sums of money have been small or quietly withdrawn.

Only in Australia and New Zealand have production rebate systems remained large, transparent and reliable enough to consistently attract large projects from outside the region, allowing the bankers to turn incentives into usable production cash flow.

“Australian banks have triple A ratings, but have never had an appetite for film financing,” says Nick Cole, a lawyer and consultant who was at Film Finance Corp., the forerunner to federal support body Screen Australia. Some small private players have emerged, with lending abilities up to A$2 million ($1.4 million). Fulcrum is one such long-term player. “But there is no appetite for genuine gap, a little bit of discounted pre-sales happens and there is activity funding the tax structures, because the Australian government is rock-solid,” says Cole.

Budgets for most Australian local productions are modest. Big indie titles including “Hacksaw Ridge,” reportedly made for $40 million, and which attracted a range of financing and international partners, is a juicy exception.

The numbers get smaller in Southeast Asia.

“Getting productions bonded is virtually impossible, due to small budgets and lack of familiarity. Most activity is balance-sheet funding and cash-flowing of credits, which is why we stepped in and do what we do,” says producer-financier Justin Deimen at Singapore based 108 Media. The company recently bought stock market-listed U.K. film and TV distributor DCD Media and is positioning itself to be a multifaceted financier on an Asian scale.

Los Angeles-based Bennett Pozil at East West Bank has long been one of the most visible bankers to the film industry in Asia, but macro trends have forced the firm to change with the times. “Our China team continues to be active, even after co-productions have died down. But there is no real project financing, it is all basically corporate loans,” Pozil says. With an array of large state-backed broadcasters and streamers, a TV sector that remains robust and some muscular aggregators, that is a business that has scale and strength. “We generally don’t care about completion bonds in China, but in Australia we have to have them for the tax credits.”

With Korean content now some of the hottest in the world and Korean corporations seeking expansion, the country would appear to offer opportunities.

Jerry Ko, who has done both film and TV financing within the CJ ENM group, says that CJ uses debt financing for its U.S. productions, but not at home. “In Korea, in the past there was plentiful private equity and VC funding available. Some of the funds were run by banks. So, you could say that there was bank-led investment, but not bank lending [for production],” says Ko. “Of course, we use bank finance at the corporate level for cash flow. But we don’t use it to discount location subsidies, because tax and location incentives are not large in Korea.”

In the past, the company assembled production slates of 10 or more films per year and aimed to put up 30%-40% of the budget itself, while laying off 30%-50% outside funds.

But the COVID pandemic has shaken all previous certainties. “These days the financing environment even for Korean films is tough. It is tough to be positive,” he says.