China’s tech firms are engaged in a cartoon arms race to develop or buy Chinese characters in an animation market expected to hit 216 billion yuan (US$33 billion) by 2020, according to the EntGroup consultancy. They are trying to emulate the success of Walt Disney’s ensemble, which ranges from Mickey Mouse to Iron Man.

A key to that effort has been the development of artists like Zhang, who works out of a studio in Hangzhou where he draws comics that are made available to readers on a platform operated by the gaming firm NetEase.

“When I started, I was copying Japanese cartoons, but slowly I got my own style,” Zhang says. “I had to spend a lot time getting to understand the Chinese market and what Chinese comic readers wanted.”

Chinese tech giants such as Tencent, Baidu and NetEase are trying to figure out the same thing.

Part of the winning formula has been the use of traditional Chinese religious and cultural themes and characters. That, and improved quality in terms of art and storytelling, helped China’s comic and animation market reach 150 billion yuan last year, according to EntGroup’s estimates.

China still lags behind the Japanese and American markets, but is catching up. Japan is the top producer of animation, while the US dominates in terms of sales, taking a nearly 40 per cent share of a global industry estimated at US$220 billion in 2016, according to a report from Research & Markets. China had a share of around 8 per cent that year.

For Chinese companies, the development of compelling series and characters could also open up new business opportunities such as the ones that companies like Disney have exploited, including branded theme parks, games, movies, TV shows, lunchboxes and clothes.

“To make it work there have to be good stories, good production and content that can resonate with consumers,” says Xu Zhiwei, senior manager of animation and comic copyright at Tencent in Beijing.

Tencent is already seeing some success that could help the firm maintain rapid growth and a high valuation.

The company, which covers everything from gaming to social media, bought Fox Spirit Matchmaker – which depicts romances between humans and demons – when it was a little-known comic.

Created by an artist called Xiao Xin, the comic has been developed into an animation series that has been viewed more than three billion times, Tencent says. That makes it one of the hottest hits on the company’s video platform, which has over 60 million paying subscribers.

Tushan Susu, the animation’s main character, has been featured in a commercial for the fast food chain KFC. Tencent is now looking to create a television series and a video game using Fox Spirit characters.

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China’s tech giants play an outsize role in Chinese entertainment. Tencent, search company Baidu, and e-commerce giant Alibaba control most of the top online platforms – from movies to sport – and are dominant in social media and online gaming (Alibaba owns the South China Morning Post).

These firms are looking to latch on to a surging subculture being driven by a young generation with a taste for dongman, the Chinese word for animation. This group is keen for more local-style heroes, according to industry executives. They are also wealthier than their parents were, and have money to spend.

“Youngsters, especially [under-18s], are very willing to spend money,” said Geng Danhao, senior vice-president at Baidu’s online streaming platform iQiyi, at an event in Beijing.

Zhang Tuo, a 21-year-old college student in Sichuan, says he has spent more than 7,000 yuan on comic-related merchandise, from plastic figurines to T-shirts. His favourites are local comics such as Spiritpact and Monster List.

Tao Jie, 20, a student in the southwestern city of Chengdu, says Chinese cartoons have improved in terms of storylines and animation techniques. The use of local tales is also an attraction, he says.

“A lot of the Chinese comics and animation are developed from online novels that I have already read,” he says. “I like them because I’m already a fan of the stories.”

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That shift has been helped by supportive government policies to ensure that peak-time television slots are kept for domestic animation.

The big tech firms are starting to spend, though not yet at the level of Disney. The US entertainment company bought Pixar Animation Studios for US$7.6 billion in 2006, as well as Marvel Entertainment (in 2009), and the Star Wars producer Lucasfilm (2012), for around US$4 billion each.

Tencent has invested in more than a dozen comic and animation companies since last year, according to public records, while its film arm launched a “100 animations” project to support domestic productions.

Baidu’s iQiyi is also splashing out on domestic comics and plans to spend 200 million yuan to sign Chinese artists and develop local characters. This comes on top of an earlier investment in 10 animation projects, the company said in May.

Alibaba and the news aggregator Toutiao have snapped up production companies and launched animation platforms on their own sites. NetEase signed a deal last year with Disney to create Marvel-style superheroes, but with Chinese characteristics.

Luo Qiandan, marketing director of NetEase Comics, says the firm was using big data from its platform to analyse what comic consumers wanted, and would feed this back to artists.

It is also adopting other elements such as Chinese brush-painting techniques and religious themes.

“Everybody is trying to use Chinese elements and Chinese style,” she says.