More than a decade ago, Korean films also experienced the same kind of capital madness in China today.

"Now all kinds of capital, including real estate, coal, catering, and especially the Internet, I have two adjectives to describe them. They are rushing into the film industry at the speed of a 100-meter race and regardless of cost. The entry of financial capital, in particular, has changed the rules of the movie game and the original logic of the movie to a great extent. The "Ip Man 3" incident has sounded a wake-up call for us." This was the warning made by Rao Shuguang, Secretary-General of the China Film Association, on the current Chinese film investment market at an international film and television forum in June this year.

Recently, the reporter interviewed Park Hee-sung, a senior researcher at the Korean Film Council. When talking about the development trajectory of the Korean film market, she mentioned:

"Around 2000, large companies began to participate in the film industry. The Korean Film Council began to invest in the establishment of a special film investment portfolio (note: a fund), and the capital entering the film industry began to increase. By 2001, the rate of return of Korean investment and production departments had increased significantly. From 2004 to 2006, there was more capital in the film industry, and there was a saying in the film industry that 'directors who cannot debut on stage in this era are fools (most Korean directors at that time wrote their own scripts)'. As a result, the production of films increased sharply in 2006, but many of them failed, and there were also many bad films. From 2006 to 2008, the rate of return of Korean films plummeted, and many investment companies and distribution companies withdrew."

South Korean films have also experienced the pursuit of hot money and capital madness, and the Chinese film market is now facing similar problems. What will happen after the madness? Will it be a mess or a new life? Yiyuguancha consulted relevant information and sorted out the changes in investment and production of South Korean films from around 2000 to 2006, as well as their subsequent development - in their stories, perhaps we can find the answer for China.

Is the rapid inflow and outflow of external capital a help or a hindrance?

In 1998, President Kim Dae-jung proposed the "culture-based nation" strategy against the backdrop of the financial crisis and issued corresponding support policies, which made the government an important booster for the Korean film industry as it prepared to take off. According to statistics from the American magazine Variety, from 1998 to 2005, the Small and Medium Enterprise Administration, funded by the Korean government, injected $12.1 billion into various film industry funds and promised to compensate for loss-making film funds. During the same period, 48 funds in South Korea raised $53.5 billion to directly invest in the production and promotion of film projects.

With the economic recovery and policy support, the number of domestically produced films reached 59 in 2000, basically returning to the scale before the financial crisis. In particular, the phenomenal blockbuster of that year, "Joint Security Area", was produced at a cost of 2.7 billion won (about 13 million yuan) with a theme of North Korea and South Korea, setting an unprecedented record, more than twice the average cost of films produced in the same period. It was also from this time that the media officially started to use the term "Korean blockbuster" in their reports.

The huge commercial success of the film not only stimulated the participation of venture capitalists with keen sense of smell, but also strengthened the confidence of filmmakers to match Hollywood in production standards and investment. It also shows that Korean audiences are more receptive to the aesthetics of Hollywood-style films.

Not surprisingly, the success of the phenomenal commercial blockbusters of the millennium pushed the number of venture capitals that wanted to "dig gold" from the film industry to a peak in 2001. With a large amount of funds chasing after them, production companies fully entered the high-cost, large-scale production stage, blindly pursuing high-investment films, spending the venture capital money as soon as possible, and raising new funds.

Film critic Kim So-yeong described the unprecedented investment boom in the film industry at the time as follows: "For the dinosaur of 'Korean blockbusters', if its gradually growing body is due to the entry of finance and venture capital, then the brain and ideology driving the dinosaur forward must be nationalism."

According to statistics, in 2001, the average production cost of 28 films released by the top three distributors in South Korea was as high as 3.3 billion won (about 15.52 million yuan), of which 6 films cost more than 5 billion won (about 23.59 million yuan), including science fiction films that had never been involved in the industry before. The influx of a large amount of capital has created an unprecedented boom in the industry. At the same time, 2001 can also be regarded as the year of the rise of Korean local films. In every important period of the year, local films almost surpassed imported films in box office. A film worth mentioning this year is "Friends" starring Jang Dong-gun. The film is called the Korean version of "Once Upon a Time in America". The nostalgic theme that reflects social reality has fully resonated with the public and won a good reputation.

In 2002, the number of Korean domestic film viewers exceeded 50 million for the first time. Considering the Korea-Japan World Cup that summer, this result is already good, but there were no phenomenal films that year. In addition, a particularly obvious change is that the "hot money" for film project investment has cooled rapidly. According to data from the Korean Film Council, in 2002 alone, venture capitalists lost as much as 40 million US dollars in investment in film projects. In other words, a large number of high-cost films that imitated Hollywood themes were almost lost after they were released.

As the box office failures of big-budget films continued in 2002, external capital began to withdraw from the film industry on a large scale, and the investment trend gradually became rational. After that, South Korea's four major domestic distributors at the time, CJ, Showbox, Lotte and Cinema Service (acquired by CJ in 2006), replaced venture capitalists as the main investors.

By 2003, venture capital had cut its investment by nearly half. As investment companies suffered heavy losses, they withdrew their previous commitments to subsequent films, directly leading to the bankruptcy of some production companies.

Industry insiders began to reflect that the reason why investors failed miserably was not only the low efficiency of capital utilization, but also the fact that people were no longer interested in the large number of repetitive homemade Hollywood-style films due to aesthetic fatigue. Therefore, a group of talented filmmakers began to try to create films with unique perspectives that were more in line with national conditions and national characteristics.

The tide of capital recedes, and high-quality films emerge

From early 2003 to 2005, unique and excellent works continued to emerge - Bong Joon-ho's "Memories of Murder", Kwak Jae-yong's "If You Are the One", Park Chan-wook's "Old Boy", Kang Woo-seok's "Silmido", Kang Je-kyu's "Taegukgi: The Legend of the Condor Heroes", Kim Ki-duk's "Samaritan Girl" and "Empty Room", Lee Joon-ik's "The King and the Clown", etc. In particular, in 2004, the film industry even had the slogan "The Era of Ten Million Viewers". According to the data in the "2004 Film Market Analysis" released by the Korean I'm Pictures Film Distribution Company at the end of the year, the total number of viewers that year was about 130 million. At that time, film critic Kim Young-jin published an article expressing his opinion: "Korean films may have broken away from Hollywood plots, and the audience's fantasy of Hollywood style can be realized by consuming domestic films."

Dramatically, when Kang Je-kyu was filming "The Taegukgi: Raising the Taegukgi", the production cost was high and affected by the large-scale withdrawal of venture capitalists in 2002, so the film encountered great difficulties in raising funds in the early stage. Kang Je-kyu therefore mortgaged his property and did everything his company could to support the filming process, but when the film was about 30% completed, the funds began to be stretched. Coincidentally, Showbox, which was established not long ago and urgently needed to establish its market position, took a fancy to the film and injected investment, which enabled the film to be completed. Of course, the facts after the release proved that both director Kang Je-kyu and Showbox Company had bet on the right treasure.

2006 was a peak year. Bong Joon-ho's "The Host" became the most successful Korean domestic film in the world. The number of Korean domestic films produced and released exceeded 100 for the first time. But at the same time, the average production cost of a single film reached a historical high, but the return on capital was only negative 24.5%. External capital withdrew without hesitation. In addition, the unfavorable factors such as theater saturation, sluggish video market, low growth of DVD market, and monopoly of large investment distribution companies all laid the groundwork for the Korean film industry to enter a period of lows.

Grasping the scale: not only investment, but also personal strength

If we use a metaphor to describe the development of Korean film history at this stage, the support provided by external policies can be said to be fertile soil for innate growth, while foreign capital is more like fertilizer that promotes acquired development: on the one hand, it guarantees the material basis for the birth of new types of themes, and on the other hand, it provides ample opportunities for talented people in the film industry. However, if too much fertilizer is applied, it will "burn the seedlings". The influx of external funds that exceeds the market capacity is not all help. Hot money makes the industry impetuous and inflated, and most films lose their aesthetic interest, and their artistic and commercial values ​​are all lost. Therefore, if the concept of fertilization is used to describe film investment, "appropriate amount of investment" is the most important, which is neither wasteful nor just right.

Looking back at the current investment boom in China's film industry, in 2015, there were more than 70 A-share mergers and acquisitions related to film and television, involving a capital of up to 200 billion yuan. Many companies have been losing money but are still valued at hundreds of millions or billions. Wang Ran, CEO of China Renaissance Capital, previously joked on Weibo: "What do Chinese companies that raise pigs, make dairy products, run restaurants, make metal pipes, sell hardware, and set off fireworks have in common? The answer: They have all become film and television companies."

As Rao Shuguang said at the beginning of this article, these companies, big and small, are "running at a 100-meter race, regardless of cost" to rush to the so-called film and television outlets. Some of them don't even know what to do from investment, production, distribution to release of a film, nor do they know how to identify whether a film meets the audience's aesthetic taste. They just take it for granted to make a quick buck. It is not difficult to predict what will happen to amateur companies that enter the film industry with this mentality.

Since March this year, the trend of movie box office cooling down is very obvious. Various industry insiders have analyzed the reasons for this in different ways. But most of them point out the prominent contradiction between the taste of the audience and various "fast food" movies. People are unwilling to pay for bad movies, so the box office naturally declines. In this regard, the path that Korean movies have taken is quite valuable for reference. After encountering a box office Waterloo, they carefully reflected on the problems in the production process, emphasized telling their own stories in their own language, and understanding the psychology of the audience to create resonance. The practice of the Korean film industry has proved that this is an important foothold for them to truly win the fight against Hollywood in their home country.

After this round of capital frenzy in China's film industry subsides, will a large number of excellent films begin to emerge?

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.