Li Ruigang invested in the loss-making Huashi Films. Is he targeting the overseas student and immigrant market?

Li Ruigang did something that outsiders "could not understand": he invested heavily in Huashi and promoted "Putian Tongying"

Recently, a large number of "bigwigs" in the domestic film industry gathered in an inconspicuous hotel behind the State Administration of Radio, Film and Television - Zhang Hongsen, director of the Film Bureau, La Peikang, chairman of China Film Group, Wang Zhongjun, chairman of Huayi Brothers, Wang Changtian, chairman of Light Media, Zhang Zhao, CEO of LeTV Pictures, Jiang Yanming, president of China Lion Film... and Li Ruigang, the "head" of China Media Capital.

In his speech, Li Ruigang talked about a private exchange between him and Director Zhang Hongsen during President Xi's visit to the United States last year.

"In September and October last year, Director Hongsen introduced me to a book. It was written by a French journalist who spent five years interviewing more than 1,000 people in the media and entertainment industry around the world. The book is called Mainstream, and the subtitle is: Who can win the global cultural war?"

During the discussion, Zhang Hongsen raised two questions: 1. With the rapid development of Chinese films, where will the future be? 2. The US film distribution system has a global monopoly, where is China's export?

After such a conversation, Li Ruigang decided to "take action".

Today, four months later, a project called “Chinese Film Overseas Distribution Platform” was officially launched, which people call “Chinese Films Screened Worldwide”.

On the first day of the 2016 Chinese New Year, "The Monkey King 3" will be released in China and in more than 50 cities around the world at the same time, along with the movie "Detective Chinatown 3."

Note that simultaneous release is a treatment that domestic commercial films have rarely received before. The company that specifically implemented this is called Huashi Films, which is the first company in China that specializes in overseas distribution of Chinese films. According to exclusive information obtained by Entertainment Capital, behind the "universal simultaneous release" is the Chinese Culture Holdings Group (CMC) that has invested heavily in Huashi Films, and the investment amount is very likely to be in the tens of millions of US dollars.

What did Li Ruigang want to achieve by investing a huge amount of money in Huashi Films?

Huashi Films is not a household name in China. The company was founded by Jiang Yanming in 2010. In addition to Jiang Yanming, its shareholders also include two major companies in the domestic film industry, Huayi Brothers and Bona Film Group.

At present, Huashi Film's overseas distribution channels are mainly concentrated in North America and Australia. Jiang Yanming, president of Huashi Film, told Entertainment Capital: "After the funding from China Media Capital is in place, Huashi will focus on developing cinema channels in Europe, and the target is all mainstream cinemas."

Behind the extreme hunger for funds is the fact that China Lion Film is still in a loss-making state.

Jiang Yanming admitted at the event: "In the first three years, the investment and output were not proportional. The three million US dollars invested was wasted in a very short time. I am grateful to Mr. Wang Zhongjun for never putting pressure on me even though he lost so much money under the circumstances of capital shortage."

So why did Li Ruigang, an old hunter in the field of cultural investment, invest in such loss-making companies and invest a huge amount of money in supporting them?

This reminds Entertainment Capital Theory of another discussion about Uncle Li a few months ago: In October 2015, China Media Capital's Ti Ao Power spent 8 billion to buy the five-year copyright of the Chinese Super League, which was regarded by the outside world as an "incomprehensible sky-high price". In an interview with Entertainment Capital Theory, Li Ruigang's response was simple: "The 8 billion investment is more about its improvement of the entire football industry, and I hope to get returns in a systematic way."

This large-scale investment in Huashi Film seems to be another flash of the "Li-style" investment style.

Li Ruigang: "It is not the business of Chinese culture to use money purely for charity"

Things may not be that simple.

After the press conference, Entertainment Capital Theory had a phone call with Li Ruigang. In response to our questions, Uncle Li said:

"It is not the business of CMC to use money purely for charity," said Li Ruigang. "There are both predictable returns and strategic perspectives involved."

First of all, the "Universal Screening" plan jointly promoted by CMC and Huashi has a very pragmatic goal in the first step. It is to target the market of international students and overseas Chinese, as well as audiences in other Chinese-speaking countries (Singapore, Malaysia, etc.). Domestic films released overseas face a large market of nearly 100 million people.

Secondly, pirated discs were still rampant in the early years, and the timing for introducing domestic films abroad was not very mature. However, with the accelerated development of the Internet, domestic and overseas entertainment information have been synchronized in real time, which has fostered expectations for watching movies among overseas Chinese audiences.

"The most important thing is synchronization," said Li Ruigang. "For example, the 16-year Spring Festival movie Journey to the West: The Monkey King 3 was released simultaneously with the domestic release, which can meet the entertainment needs of overseas Chinese audiences."

At present, Huashi can basically guarantee the release of two to three domestic films every month in North America and Australia, and one film every month in Europe. Only a steady stream of film screenings can cultivate the movie-watching habits of overseas Chinese.

Has the opportunity really arrived for Chinese films to “go global”?

In 2015, the performance of Chinese films in overseas markets, although the absolute amount of box office revenue was not high, has repeatedly broken previous box office records. The overseas box office of "Lost in Hong Kong", "Charlotte's Troubles" and "Old Cannon" have all reached around 1.3 million US dollars, and the box office of "Mojin: The Lost Legend" has also exceeded 800,000 US dollars.

In this context, the most important thing for domestic film global distribution platforms is to pursue the simultaneous release of domestic films at home and abroad, as well as sustainable domestic film output.

There are two main modes for overseas screening of domestic films:

One is the official promotional screening, which is basically not for profit;

The other is to cooperate with local screening organizations and adopt a guaranteed distribution method, but neither of these two methods can become the mainstream commercial film screening model for domestic films overseas.

The plan launched by CMC and Huashi Film this time hopes to adopt more market-based approaches to share box office revenue with overseas theater chains and cinemas, and in the selection of films, more emphasis will be placed on Chinese commercial films rather than simply using "art film exhibitions" and other forms to promote domestic films.

"We must strike high and take the formal route from the start," said Li Ruigang.

The bigger picture is to build an "international distribution system"

CMC's ambitions go far beyond simply sending a few movies overseas and making a little money. What the company wants to do more is to build a distribution system that covers the globe.

At present, the international distribution system is still controlled by the six major Hollywood companies. "If you want to release a film to Argentina, you may have to contact Warner." Therefore, "as the world's most important emerging film market in the future, where is our export?" Li Ruigang was puzzled. "We now have very good content," said La Peikang, "because of the channel problem, the pace of Chinese films going abroad is restricted."

Therefore, the establishment of the platform plays an important role in expanding the overseas market share of Chinese films. CMC and Huashi are currently choosing to bring more Chinese commercial films to the international market, rather than simply promoting domestic films through "art film exhibitions". "We must start with a high-profile and formal approach," Li Ruigang told Entertainment Capital. If a complete Chinese international film distribution system can be established through layout, films from other countries can also be distributed through this system in the future.

Secondly, if more and more domestic films are promoted overseas, it will enhance the international production awareness of film producers, allowing them to have a higher level of planning at the beginning of film preparation, which will undoubtedly promote the internationalization of Chinese films. Chinese films are developing so fast now, "We don't want to be the Bollywood of India, because we are not a film market for self-entertainment."

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.