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Mainland China's animation industry faces many challenges in its efforts to succeed internationally. Kaimana the Shark © BeTop Multimedia (www.betoptech.com).

Mainland China's animation industry comprises 5,400 companies, according to official estimates, with many located in the animation centers of Beijing, Shanghai, Shenzhen and Hangzhou. These studios face many challenges in the short run, from censorship to a lack of viable financial models. But many are trying to position themselves to succeed internationally. "Basically, the Chinese animation industry is in an exhilaratingly chaotic state," says Isaac Wu, international account manager at BeTop Multimedia, a CG animation studio.

Studios vary widely in size and scope. They include large, well-established, government-financed studios such as Shanghai Animation Film Studio and the animation department of China Central Television (CCTV); a handful of privately financed companies specializing in contract work for the international market; many medium-to-small companies focusing on commercial and series work for the approximately 1,000 television stations in China; and numerous entrepreneurs specializing largely in Flash animation.

China has a long history in animation, with its heyday in the 1950s, but the Cultural Revolution in 1967 put a damper on creative expression. The country became a key provider of outsourced animation for the U.S., Europe and Japan in the 1980s and 1990s, at which time the government began relaxing some of its control over the industry. By this time, however, Chinese animation had fallen behind the rest of the world creatively, and foreign animation started to take over the domestic airwaves.

"The industry got kind of a kick in the gut from the Cultural Revolution," says Kevin Geiger, president and CEO of consulting firm Animation Options, who is working with a group of independent Chinese animators on a feature film project, The Road to Home. "Then, as they were getting back on their feet, anime conquered the market like Godzilla."

In the heyday of Chinese animation, the country was known for a pen-and-ink style reminiscent of traditional Chinese painting, but it doesn't have a signature style today. It remains recognized primarily for 2D animation, although more and more studios are starting to offer 3D (including 2D/3D combinations), vfx, gaming and Flash as well.

Xing-Xing Digital, founded in 2004, illustrates the diversification of the industry. Many of its key employees are from the West or have Western experience, and it does work-for-hire projects, coproductions and proprietary development in 3D animation, vfx and Flash. It currently is working with Disney China on a webisode pilot starring Mickey, Goofy and Donald for Chinese audiences, has produced vfx for live-action films including Vantage Point, Red Cliff, The Changeling and Forbidden Kingdom, and has done lighting and texturing for several CG feature films.

Xing-Xing Digital's employees are from the West or have Western experience. Here studio president Lifeng Wang presents a speaker from Rhythm and Hues. © Xing-Xing Digital.

Dominance of Television
The bulk of animation work in China is for television. While TV revenue tends to be miniscule, revenue streams are predictable and consistent and costs are manageable. Some of the success stories include The Adventures of Little Carp, Journey to the West (The Monkey King), and 3,000 Whys of Blue Cat.

Many of the highest-profile properties come from the government-supported CCTV or Shanghai Animation, or are produced by one of the TV stations such as KAKU (owned by BTV), Toon Max TV or Aniworld TV. Blue Cat is among the independently produced programs that have performed well.

Although China has a vibrant industry for live-action movies, animated films are less frequent. A recent 2D film that did well domestically was Storm Rider: Clash of the Evils, based on a comic book. It took in 25 million yuan RMB ($8.62 million) at the box office, representing one of the highest-grossing Chinese animated films ever. (Kung Fu Panda generated 96 million yuan RMB, or $14 million.)

Other notable Chinese animated films include Thru the Moebius Strip, a 3D movie from Global Digital Creations (GDC), and Lotus Lantern, which generated box office of 20 million yuan RMB ($2.92 million) in 1999.

"Today's audience has lots of choices when it comes to films, and investors are well aware that the audience is getting used to seeing the Miyazaki/Pixar/Dreamworks quality," says Brian Ho of Sky Wonders Studios. "I would say doing animation films with our existing skills and know-how will be a very challenging venture, unless you are talking about hitting a fan-based, branded property like some comic titles."

A few Chinese film producers are trying to succeed on the international market. The producers of The Road to Home, for example, have hired Animation Options as a means to gain expertise, international know-how and creative consultation. The concept has been approved by The Ministry of Culture, a prerequisite to completing the film, and it has generated interest from international distribution partners.