China’s Entertainment Industry is the Next Big Thing….

There was a significant box office success for China earlier this year. The Wandering Earth is a powerfully affecting science fiction film and a huge step forward for China in terms of cinematic ambitions. On its release, and with record box office attendance, the film sent shares of its two major producers soaring on the first trading day in the Chinese New Year. Shares in Beijing Jingxi Culture and Tourism Co jumped by 10% the week beginning 11 February 2019.

The success of The Wandering Earth is a sign of the growing power of China’s cultural influence around the world. The country’s wider cultural strengths and influences which are increasingly showcased in the West, as evidenced by the recent Shen Yun dance production and the return of the Chinese State Circus to Britain.

With particular regard to film production, we are living through an interesting era of rapid change for the blockbuster movie model. US producers, eager to get their $200 million movies into the lucrative Chinese market are increasingly looking for Chinese production partners, shooting in Chinese locations, and adding Chinese characters and plotlines to American movies.

In the following interview, London Business School’s Adjunct Professor of Marketing Richard Hytner, talks to Judith Zhai EMBAGA2017, president of Strawbear Entertainment Group, a TV production company, and a former Alibaba Pictures Group President and Vice President of Strategic Investment.

The two explore China’s growing cultural and commercial influence, particularly in the sphere of visual entertainment.

Richard Hytner (RH): The 20th century is frequently referred to as the ‘American century’, so influential was it in terms of industry, economic growth and, most importantly, its influence on popular culture, in particular through the silver screen. Even in the second decade of the 21st century, we continue to have a fixed gaze on the icons and influences of the Hollywood film industry. The names resonate to this day: 20th Century Fox, Disney and Warner Bros. So great are these giant figures that it is difficult to imagine new players to challenge what appears to be the status quo.

The television industry is similarly dominated by the US, even though changes in the industry are delivering transformations which are completely altering the landscape, including the rise of online streaming and such novelties as Netflix wanting to merge TV with the gaming industry.

China, however, might be the one nation to challenge the might of Hollywood and the US media companies.

For example, China’s movie industry is exploding. The Chinese movie industry – called Sino-Hollywood – has released multi-million dollar blockbusters and is changing the way films are made.

To learn more about how the Chinese entertainment industry is changing the way productions are made, and entertainment is consumed, I turned to Judith Zhai, the president of Strawbear Entertainment Group. Formerly vice president of strategic investment at Alibaba Pictures Group Limited, Judith has a substantial background in the investment and entertainment industries and is an EMBA graduate from 2017.Judith, one of the first questions I have for you is how your time here at London Business School informs your present role with Strawbear?

Judith Zhai (JZ): Returning here to London reminds me how LBS helped me think more internationally, more globally and in a more open-minded way. This experience certainly helps me in my job with Strawbear Entertainment Group.

RH: What are your thoughts about China eventually overtaking Hollywood as an exporter of content, movies, and all sorts of entertainment? How does this dynamic play out in in China? Is the ambition for the movie industry, the entertainment industry, to be solely huge domestically, or is there an ambition to export creative content overseas?

JZ: The entertainment industry is the main part, a very significant part, of the upward consumption of the middle class. It has helped it to grow. I think that in the near future, China’s middle class will be the biggest in the world. This domestic consumption is focused on what might be termed as a ‘spiritual orientated’ lifestyle and so entertainment is very much focused on China, including Chinese movies, TV dramas, sports, and lifestyle shows.

RH: In a country where there are more movie screens and theatres than any country in the world. It is believed that Chinese people are on average looking, watching, and using their mobile phone up to seven hours a day. I felt that this touches on the changing nature of the entertainment industry itself and the way it is structured, or changing in structure.  With the big media players in mind – BAT – Baidu, Alibaba and Tencent – I wonder what is it about the structure, technologies and creative output, which makes the Chinese entertainment industry so unique?

JZ: I think your observations are correct. In the beginning, most of the production companies in China thought about how to copy the Hollywood model. Then, after about 10 years, it was found that if we just copy the Hollywood model, the industry would not be successful in China. Today, the theatres are very developed in China; however, in the first quarter of this year we have seen for the first time box office takings lower than the last year. This is a sign of the maturity of the market. We live in a very innovation-driven time and are seeing that we have become different to Hollywood, more innovative thanks to our use of the internet, and especially the mobile internet. We know the internet and digital radio platforms have experienced a very rapid growth in the past five years in China, and more people are looking to the mobile phone and tablets for their content. For the Chinese middle class this means that more people like to spend time at home with their families watching TV dramas through different platforms.

RH: How open do you think the Chinese entertainment market is?

JZ: We know that the Chinese government has already opened up the market. Every overseas movie currently made can be exported to China; it is easy for distributors to get an import code from the China government. The Chinese middle class audience already watches many of the movies from the US. With regard to the TV drama series and so on, the government still controls the content although this is changing with big dramas, such as Game of Thrones being watched at the same as the rest of the world.

RH: And what of the future?

JZ: Last year, many good things happened in China. We know there are several blockbuster movies released in China, and even the global audiences are beginning to know more about these, such as The Wandering Earth. It has been very successful, both in terms of its artistic value but also its commercial value. There was also another film made of a very different type. A successful co-production, which was distributed by Alibaba Pictures. ‘Dying to Survive’ – a film about cancer sufferers and the high cost of medication – proved very successful in other countries because it is so relatable. Why? Because this story is not just a Chinese story; it is a story about human nature. When you are talking about a Chinese story, you are also talking about being a good global storyteller. So, that’s why now Chinese production movies can be successful globally – they have international appeal.

RH: In the end, movies, as with any great content, follows some kind of narrative arc, a storytelling arc. And they can be no reason why people with deep insight into the human condition in China shouldn’t be able to create stories that appeal to the universal audiences. One of the key factors in film marketing is to produce a good story that resonates with the domestic and international audiences. With the film, Dying to Survive, this was ultimately about surviving cancer, the universal condition. Are there more windows that might be opened and might reveal a bit more about the real China? In addition, what are your own aspirations moving forward? 

JZ: I think the job here we are all focusing on is to be a ‘China storyteller’ first. In terms of the technology, I see the need to bring traditional TV, internet radio and the internet come together. But it is the storytelling which really makes it all work in the end.

RH: A ‘China storyteller’ – I love that. That is a tremendous way to end this discussion.

Richard Hytner is Adjunct Professor of Marketing at London Business School

This article was originally published in the London Business Review