The rarity of quality work, low income from television broadcasts and the insufficient development of related merchandise has put 85% of Chinese comic and animation companies in the red

September 5, 2013 Leave a comment

Lack of quality puts China’s animation industry in a rut

Staff Reporter

2013-09-05

The rarity of quality work, low income from television broadcasts and the insufficient development of related merchandise has put 85% of Chinese comic and animation companies in the red. Meanwhile in Japan, legendary animator and manga artist Hayao Miyazaki announced his retirement on Sept. 1. His final feature film — The Wind Rises — set a box office record of 4.3 billion yen (US$43.22 million) within 16 days, a healthy earning in a gigantic market. According to data compiled by the Ministry of Culture, China’s output value for 2012 touched 76 billion yuan (US$12.4 billion), up 22.23% year-on-year. Nevertheless, the figure still lagged Japan’s 1.67 trillion yuan (US$273 billion) market scale.In 2012, domestically produced animation totaled 395 films and a combined 222,938 minutes, the largest amount worldwide. But this impressive amount did not generate profits for the industry and many companies had to rely on government subsidies.

One of the reasons for this may be attributed to the low buying price of provincial television stations, which pay merely dozens of yuan per minute and even broadcast them for free on municipal television stations.

Moreover, a great swarm of low-quality animations have drowned the development of related merchandise.

A Japanese book focusing on the comic and animation industry pointed out that only a significant number of quality work can sustain the downstream business, adding that downstream merchandise is capable of creating value ten times more than what can be generated upstream.

Citing Disney Pixar’s Toy Story as an example, Chen Shaofeng, a scholar at of Institute for Culture Industries at the Peking University, stated that after the movie hit theaters, 25 million toys were sold and nine sets were built in Disneyland. The total revenue from authorization fees and merchandise sales alone was pegged at over US$10 billion.

However, the capability of designing and selling products connected to animated films is lacking in China.

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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