Top Chinese film executives believe that venture funds are withdrawing from China's film industry and predict that many Chinese film companies will go bankrupt within next two years.
The executives shared their concerns at the second China Film & TV Leadership Summit, a forum held during the 21st Shanghai International Film Festival.
Wang Changtian, president of Beijing Enlight Media, said the film industry has already passed the peak of high valuation. "In the long term, it is certainly optimistic, but in the short term it is certainly not," he said, "We have been labeled as 'mercenary' and everyone is seriously misled." According to Wang, many film companies will go bankrupt and out of business in the next two years.
Currently China has more than 20,000 film companies vying for a piece of the cake.
He continued by saying there was an over-growth in the box office last year -- where people also witnessed the highest grossing films in Chinese history. "But the image of the industry fell to a low point," he pointed out.
"Many people questioned the practices of the film industry. Some people in the industry lavish money on first class flights and parties. Such behaviors irks investors. Now venture capitals' are withdrawing from the business. The shortage of funds in the entire society has led to difficulties in the financing of many film and television companies, and many companies will have no funds to start their projects." Wang said.
Wang Zhonglei, co-founder and CEO of Huayi Brothers Media, said, "When the venture capitals' understanding of this industry conflicts with its profit-pursuing nature, they will leave for sure. The bubble busted and things definitely went cold, but it is not necessarily a bad thing," the Huayi executive stated, "We should recognize that capital will help the industry. Now investment can be given to the most capable companies which are really focused on producing good contents."
Zhang Zhao, chairman and CEO of Le Chuang Entertainment, added words from his experience of a financial crisis at LeEco, the parent company of Le Vision Picture (former name of Le Chuang).
"I felt more confident after the LeEco crisis. We had released four films even when our staff weren't even receiving their salaries," Zhang said, "We should let the bubble burst but I believe the ones which are sincerely producing good content will not be knocked down and overwhelmed by a withdrawal of capital from the industry. Strategic funds are still of great help for us. The industry can also walk through the crisis if companies only focus on content."
"The entire valuation of the cultural industry has been pushed up, which is actually detrimental to the industry," Alibaba Group Chairman and CEO Fan Luyuan added, "The most important thing in this industry is talent. If all the talents are capitalized, the hunger for talents will decrease. Everyone should calm down."
But Wang Changtian also stressed, at the moment, China's film companies have indeed encountered widespread skepticism. "The outside world's doubts about the film industry are all based on some erroneous and one-sided understandings. The industry will be greatly hurt and affected by this. I hope we can have some opportunities to correct such misunderstandings," he said.
