Chinese Movie Studios Seek Shanghai Listings

Chinese Movie Studios Seek Shanghai Listings - Wall Street Journal

SHANGHAI—Two state-owned Chinese film companies are aiming to list shares on Shanghai's stock exchange, as Beijing champions the growth of a homegrown film industry to rival Hollywood.

Beijing-based China Film Co. and Shanghai-based Shanghai Film Group Co. have applied for approval for the listings from the China Securities Regulatory Commission. Financial details and timing for the initial public offerings weren't disclosed.

Raising funds on the public market would help the companies get cash to make big-budget films and to acquire the technology needed for the creation of 3-D and other advanced special effects

China's leaders are determined to take on Hollywood by building studios large enough to compete with U.S. companies such as Warner Bros. and Sony Pictures and creating films that will compete at the box office at home and overseas. Chinese policy makers see a vibrant film industry as an extension of what is called soft power, giving the nation cultural sway on par with its status as the world's No. 2 economy.

But Hollywood has overwhelmed the Chinese movie market in recent months with big-budget action films and 3-D movies, such as Warner's latest Batman film, "The Dark Night Rises," and Sony's "The Amazing Spider-Man."

Revenue from domestic films accounted for 41% of box-office sales in the first 10 months of the year, Tian Jin, vice minister of China's State Administration of Radio, Film and Television, said this month during the Chinese Communist Party's 18th Party Congress. He said the figure was down from a year earlier though not by how much.

China's box-office revenue for domestically produced films fell 4.3% for the first half. Chinese films generated 2.7 billion yuan ($434 million), while foreign movies generated 5.37 billion yuan. Huayi Brothers Media Corp.'s "Painted Skin: Resurrection" has been the highest grossing domestically made film in China this year, taking in 686 million yuan at the box office.

China Film, established in 2010, has made such movies as "Flying Swords of the Dragon Gate" and "Let the Bullets Fly," the top grossing domestic film of 2010. Shanghai Film, a unit of Shanghai Media & Entertainment Group, hit it big with "Aftershock," a 2010 documentary about a devastating 1976 earthquake in China. The film grossed 670 million yuan.

The studios are among China's largest film companies, but little is known about their revenues.

China's leaders have been building cultural industries, including news media, publishing and education-related businesses, while seeking new engines for economic growth.
Critics of China's film industry have said additional funding will do little to boost China's domestic films and that audiences prefer foreign films because they are made with more creative freedom than Chinese films have.

China Securities Co. is sponsoring the China Film offering, while China International Finance Corp. is sponsoring Shanghai Film's.

—Amy Li and Laurie Burkitt