New film funds are offering new platforms for small high-quality filmmakers in China, and investors hope that their efforts can raise the standard of China's film industry.
This is the ambition of Yuan Mei, president of Cheerland Entertainment Inc. She has just set up a new film fund in collaboration with Shenzhen-based Costone Venture Capital of more than 100 million yuan (US$16.3 million), which is specifically targeted at small and medium-sized budget filmmakers.
Yuan has built her company based on high standards in filmmaking. In her view, the Chinese film market is currently not very mature, and standards are low.
"The reason why we see so many bad movies is because speculators are not so pure-minded. Producers need to respect their art and their audience, write a solid screenplay and do their homework before starting to film, then we will see less bad movies," Yuan said.
As the Chinese film market has been booming, a number of private equity and venture capital funds have been set up in recent years. Noah Holdings Limited and Bona Film Group Limited have already set aside 1 billion yuan (US$163.4 million).
"Money is now pouring into the film market, which is a good thing," Yuan Mei said, "but fund managers need to understand the market. When investors have faith in managers, then managers will be able to do their job well and will care about securing high quality films."
The board of the Cheerland/Costone Film Fund will examine every film project thoroughly. Unlike the larger film funds which are still investing in uncertain projects, Cheerland/Costone has more specific plans.
"Our current projects include 'Our Golden Ages' by award-winning Hong Kong director Ann Hui and starring Tang Wei and Feng Shaofeng, 'Fang Lang Ji' by Stanley Kwan and starring Zhao Wei and Joan Chen, as well as the animated film 'Yugo & Lala 2'," Yuan said. The fund has several film projects currently in operation, which is attracting investors.
The fund will only target film projects with budgets from 10 million to 40 million yuan. They will invest in 8 - 10 films in next three years. The famous script writer Li Qiang also joined the fund team and will write screenplay for several films.
"So Young," adapted by Li and directed by actress-turned-director Zhao Wei, made more than 700 million yuan (US$114 million) at the Chinese box office this year, and the budget was only 30 million yuan (US$4.9 million).
Ren Shaojun, vice president of Costone Venture Capital, said that the script is the soul of a film. The new fund will assemble an artistic team consisting of award winning directors and creative writers and focus on subjects that resonate with the Chinese people and the young generation.
Ren also said that smaller budgets involve fewer risks and can generate good return, and are suitable for investors just starting out in the film and TV industry.
According to data provided by the China Venture Investment Consulting Group, there have been 73 film projects funded by private equity and venture capital funds, totaling 279 million U.S. dollars. So far this year, 25 film funds have been set up with targets for fundraising set at 32.281 billion yuan (US$5.275 billion), 1.291 billion yuan (US$211 million) on average.
Even though the Chinese film market is expected to gross 29.5 billion yuan (US$4.821 billion) at the box office this year, the industry is high risk. Wan Ge, an analyst with CVResearch, said that only one or two films out of every 10 make a profit. The environment is not healthy, due to piracy, poor screenplays, and a lack of merchandise and other follow-up income.