Read about where to look for financing in non-Asian territories in Soft Money and Cold Cash Money Shopping for Animated Feature Films — Part 1.

Films are getting cheaper to make, sources of financing are multiplying and people are spending smarter.

China
The modestly budgeted ($1.44 million) Little Soldier Zhang Ga is the first modern Chinese animated feature and the first to be entirely funded from private investment. Students and faculty from the Beijing Film Academy (BFA), where enrolment has risen from 50 to 600 students in two years, are contributing to keeping costs down.

As with India, growth of the animation industry in the world’s most populated country is likely to result from broadcaster demand. State-owned CCTV, for example, one of the oldest, has 11 channels covering more than 90% of the 1.3 billion population. The government has announced the creation of several animation channels.

Warner Bros. Pictures also recently announced the creation of a joint venture in Beijing, Warner China Film Corp. in collaboration with state-owned exclusive importer/export of films, the China Film Group, and the nation’s largest private film/TV company, the Hengdian Group (annual revenue US$1 billion.) According to Variety, the new company will “…develop, invest in, produce, market and distribute Chinese-language features, telefilms and animation” with budgets in the US $1.5-$6 million range (for films.) One of the first projects under consideration is a Chinese-language animated feature. Warner Intl. Cinemas has also started building multiplexes here.

Hong Kong
(www.fso-tela.gov.hk/film_guarantee_fund.cfm)

For a period of about 20 years, the city-state of Hong Kong, with approximately six million people, regularly produced more films per year than virtually any western country, was second only to the United States in film export and dominated the east Asian market. The industry was never subsidized, existing entirely on an explicitly commercial basis. Films were made because of a love for film and an enthusiastic paying public.

Look for DragonBlade from Digital Content Development Corp. which also co-produced Butt-Ugly Martians (pictured above). © 2001 Universal Worldwide Television, Inc., Just Group Plc., Mike Young Productions, Inc., DCDC Ltd.

Among the changes with Hong Kong’s reintegration back into China (for the anecdote, only foreign affairs and defense are affected, otherwise it’s business as usual), however, the US$6.5 million Film Guarantee Fund (FGF) was introduced in 2003, administered by the Film Services Office of the Television and Entertainment Licensing Authority. A minimum of 19 films will be guaranteed at any one time. To be eligible, companies must be “creditworthy” and “have produced at least three films in the 10 year period between 1992 and 2001 for commercial theatrical release in Hong Kong. For newly formed companies with no track record, the same experience of the producer or the director of the film will count.” A completion bond must be in place before applying, production must not have begun, only one loan per film per company is possible and the production company cannot be related in any way to the local participating lending institution (PLI).

Curiously, the theme or content of the film will not be questioned. At least 50% of above-the-line talent must be permanent Hong Kong residents, 30% of the budget must be covered out-of-pocket by the production company for films under US$1 million or a minimum of US$290,000 for films over US$1 million. Loans cannot exceed 70% of the budget for films under US$1 million or US$675,000 for those over US$1 million and the FGF guarantees only 50% of the loan, a maximum of 35% of the budget or US$338,000, whichever is less. The Fund and the PLI are repaid from first penny and any losses come out of the producer’s equity. The production company “has to assign all of the rights of receivables of the film to and arrange a charge over all copyrights in favor of the PLI until the loan has been repaid.”