Chinese movie market set to overtake US
The rising middle class on the mainland is not only good news for luxury goods retailers and restaurant operators, but also the country's booming film business.
Top-grossing films in China are expected to equal the revenue of those in the United States within five years.
"For many youngsters in China, particularly those born in the 1980s and 1990s, going to the cinema is something very trendy and stylish. They think it is cool to go the cinema to enjoy a movie with friends and family," said Dong Ping, the chairman of the Hong Kong-listed ChinaVision Media.
The average annual income on the mainland rose to US$3,000 per capita in 2010, which means a family of three had about US$9,000 available a year, according to official government statistics.
Household income has increased four times since 2000, and 10 times since 1980, expanding discretionary spending of the middle class.
"China now is like the Hong Kong film market in the 1980s. Mainland youngsters can afford to go to the cinema," Dong said.
The country, which has been known for the pirating of many films in the past, is now becoming an important film market to both local Chinese and Hollywood filmmakers.
Government statistics showed the mainland film market grossed 17.07 billion yuan (HK$21.5 billion) last year, representing 40 per cent growth every year over the past seven years and 7.4 times the 2.3 billion yuan in 2006.
In terms of gross revenue, China is dwarfed by the US film market. The mainland Chinese market only represented about 25 per cent of US gross revenue of US$10.84 billion last year.
In terms of its growth rate, however, US revenue last year only achieved annual expansion of 6.5 per cent from 2011, which came after annual declines of 3.7 per cent and 0.3 per cent, according to Box Office Mojo.
Dong, who has made many commercially successful and award-winning movies including the 2001 Oscar-winning Crouching Tiger, Hidden Dragon, said the growing film market on the mainland provided huge business opportunities for the more than 1,000 filmmaking companies.
"We are at the beginning of a golden era of filmmaking in China. The mainland film market will grow to match the US in three to five years and will overtake it in the longer term as we have a population three times the size of the US," Dong said.
His company owns 30 per cent of Stephen Chow's Journey to the West: Conquering the Demons, which grossed 1.25 billion yuan on the mainland and passed the US$200 million box office threshold. That makes it the second-highest grossing local film in China.
Three years earlier, his other landmark film Let the Bullets Fly broke the 700 million yuan threshold and the US$100 million threshold in 2010.
"From the two landmark box office thresholds, it needed less than three years. In another three to five years' time, I believe China's top movie can easily reach 1.5 billion yuan to 2.5 billion yuan, which will be similar to the US where its top movie can gross US$300 million to US$400 million," Dong said.
Last year, there were only five movies in the US that reached the US$300 million threshold and only three made it above US$400 million.
"China has bypassed Japan to become the world's second-largest film market for some years now. Now we are only below the US. Considering China has 1.3 billion people, which is more than three times of the US, China will definitely pass the US as the world's biggest film market in the future," Dong said.
The Chinese film market has become big enough to attract Hollywood filmmakers to film on location or do promotions in the country. The latest James Bond movie Skyfall shows British spy 007, actor Daniel Craig, on a mission in Shanghai.
Superstar Tom Cruise went to shoot in Xitang in Zhejiang province in 2005 for Mission: Impossible III. In May, he flew to Beijing to pose at the Great Wall as he promoted his movie Oblivion, which grossed US$23 million on the mainland, representing 12 per cent of international sales or 8 per cent of its worldwide gross at US$285 million.
Dong does not think the Hollywood movies will affect local filmmakers.
"The audience wants to watch movies that can reflect their concerns and their dreams. This is what overseas filmmakers can never achieve and why some low-budget Chinese-made films can beat Hollywood blockbusters," he said.