11 Dec 2009 13:05

Marketing and Internet key to China film industry - GM of China Film Group Marketing Corp.

By Hua JingLei

Shanghai. December. 11. INTERFAX-CHINA - The majority of Chinese film producers lack strategic marketing sense and an innovative entrepreneurial spirit, Jiang Defu, the general manager of China Film Group Marketing Corp. (CFGMC), the marketing subsidiary of the nation's largest film producer China Film Group, told Interfax in a face-to-face interview on Dec. 11.

"China's film production industry is still lagging far behind Hollywood. Most Chinese film producers still follow an outdated, oversimplified business model with only three stages - production, distribution and projection," according to Jiang, who said that a small number of industry pioneers, including China Film Group, are starting to realize the importance of marketing and new media to the film business.

Traditional box office revenues still contribute over 80 percent of total industry revenues, while in developed markets this figure is only about 20 percent, Jiang said.

"The recent global economic downturn has forced consumers cut personal entertainment budgets, which includes going to the theatre to watch movies. This has forced us to engage in more innovative marketing activities while exploring more diverse operation models," he continued.

China Film Group established its marketing subsidiary in 2007 and is the first among state-owned film production companies to establish such a division. The subsidiary commenced operations in 2008 with a staff of less than 20.

"We are pleased to witness CFGMC's rapid growth over the past two years. We now have over 80 employees and generated annual revenues of RMB 27 million ($3.95 million) in 2008. We estimate revenues to hit RMB 120 million ($17.56 million) in 2009," Jiang said.

Jiang says CFGMC will explore various marketing methods in search of new sources of revenue for China Film Group. "Internet companies are perfect potential partners for film production companies, as China is home to the world's largest Internet user base. Furthermore, our market research has shown that there is an overlap between Internet users and film audiences," Jiang said, citing two years of experience in film marketing.

The most recent figures released by the Ministry of Industry and Information Technology (MIIT) showed that China was home to 360 million Internet users as of Sept. 30, ranking the top in terms of user base in the world. Internet-related businesses including online gaming, online advertising and search engines have grown quickly in the first three quarters of this year.

"We found that Internet users, particularly the most active users, are also frequent film watchers," Jiang said.

Such findings have encouraged China Film Group to shift focus to the Internet. Through CFGMC, China Film Group has partnered with a number of Chinese online game operators, like Shanda Interactive Entertainment Ltd. and Kylin Network Information Science and Technology Co. Ltd.

"We also plan to launch an Internet company incorporating resources from our existing Web site, Chinafilm.com. We expect to feature a number of new projects, including online games and cartoons based on our films," Jiang said.

CFGMC is also interested in expanding internationally, according to Jiang. "The export of Chinese films is important to the development of the film industry as well as for facilitating cultural communication and exchanges between China and the rest of the world," Jiang said.

Jiang suggested that Chinese film producers introduce more films reflecting modern China and the future, rather than reiterating stories of antiquity.

"Similar to Chinese people's interest in futuristic American films like 2012, overseas audiences will also embrace Chinese movies about modern society," Jiang said.