This year at Annecy’s MIFA animation marketplace, the conversation about Chinese animation was anything but the same old story.
At Annecy this year, the Chinese animation industry continued to be one of the hot topics. With huge Chinese box office numbers for recent releases of films like Monkey King: Hero is Back and Monster Hunt, the conversation about “successful Chinese animation” is changing. It’s no longer about how foreign companies can gain entry and distribution into the Chinese marketplace – it’s about the surge of Chinese investment in content and in China’s push to create world class IP. At the very top of the food chain are the big investors like the Wanda Group, which is building a $9 billion film studio and theme parks entertainment complex a là Disney. Gary Wang, the founder of Tudou, opened Light Chaser, a new animation studio with the hope to become the Chinese equivalent of the U.S. animation giant Pixar. Their first fully CG animated film, Little Door Guards (formerly titled The Door Guardians) is slated to hit Chinese theatres this coming January 1, 2016. And Oriental DreamWorks, the joint venture created by DreamWorks Animation SKG and China Media Capital (a private equity firm based in Shanghai) is gearing up to launch their first co-production, Kung Fu Panda 3, in early 2016. At Annecy, however, it was clear that even the midsize and smaller studios in China are keen to get into the theatrical box office action for what looks to be the start of big change in the Chinese animation industry.
China has produced few home-grown blockbuster animated features. While films like Boonie Bears to the Rescue and its sequel, Boonie Bears: Mystical Winter, both grossed over $40 million in the Chinese box office, making these some of the high grossing Chinese produced animated films ever, animated features such as The Pleasant Goat, Big Wolf 6, and Balala the Fairy garnered moderate box office returns by comparison. And none of these films have competed successfully in terms of quality, creativity, or box office revenues against foreign blockbusters – not even within China itself. The reason for this has a lot to do with the way Chinese animation has been funded. By and large, Chinese broadcasters and movie theaters have traditionally paid very little for animated content. The 2013 Chinese Animation Industry Report by the Beijing Film Academy reported that Chinese TV channels regularly paid less than $50 per minute of animation, even though the average cost of an animation production was around $2,000 per minute. With little regulation over copyright protection, piracy in China is prevalent, so the potential to generate revenues from consumer products has been marginalized for most except those studios with deep pockets, established licensing partners, or both.
So how then are content owners in Chinese prodcos making ends meet? One reason: The Chinese government has been subsidizing and investing in the animation industry, creating massive animation industrial parks and all kinds of animated productions. While this has made China one of the largest producers of animation in the world, it has not been a good thing for quality and creativity. In a recent article for the China Economic Review, Stefanie Zhang, a Chinese producer with children's animation studio Little Airplane Productions and a former animation consultant, said, "The government has subsidies for all kinds of animation productions, which is very terrible, because the more you produce the more money you will get." The article cites that, when returned to China several years ago after working in Taiwan, she found local production houses taking RMB 1,000 (about $160) subsidies from the government for each minute of animation they made. She estimated most spent only around RMB 300 of that on production, pocketing the rest. This type of inefficient subsidy helps explain the high volume and generally low quality of animated content on the MIFA floor at Annecy this and every year.
With the theatrical market in China growing at such a rapid pace, however, all that is changing. According to the MPAA, 15 new cinemas are opening every day in China and, in the first half of 2015, box office receipts jumped 50%. Chinese box office revenues have largely been generated by Hollywood blockbusters. So for most Chinese prodcos attending Annecy and other international markets, their mission is clear: Chinese animation studios plan to create animated content –primarily features but also TV series – that will resonate globally. Kun Wu, chairman of Shiao Animation Co. Ltd in China, says, “We at Shiao are more interested in animated features, although we also produce and co-produce TV series. China has different broadcasting systems for animated features and TV series. TV series are very hard in terms of the brand building effect and it is also harder to find suitable profit patterns as TV license fees in the territory are low, similar to the situation overseas, whereas the rise of successful animated features has been huge over the past years in China. That said, the same mantra applies here as overseas [i.e., the content/story has to be good]. Animated features simply offer better marketing and branding opportunities as well investment returns, naturally due to the huge population in the country.”
How exactly they will achieve this is still evolving. The prevailing strategy seems to be a mix of co-producing with overseas producers to develop original ideas together, investing in projects that are developed but that can be easily adapted for the Chinese market, and/or hiring in talent from the likes of Hollywood in order to create original content that will work in China and around the globe. At Annecy, Isabelle Hao, producer at Heilongjiang Animation based just outside of Beijing, said, “We are looking for partnerships with international companies.” With the hope of sharing their ideas and finding new creative ideas that can be adapted to the Chinese market, Hao went on to say, “Foreign ideas don’t always match the Chinese culture but Heilongjiang Animation wants to explore these ideas.” Shiao Animation, on the other hand, jumped in as co-producing partners for the third season of Canadian production “Leon” from Sardine. Wu notes, “The overseas animation industry is much more mature and much more developed . . . . with regard to content, overseas animation producers are more experienced, and working with international producers is in turn a valuable learning curve. Animation studios like ours can only benefit from this.”
Other studios have taken a different approach. Instead of co-producing with foreign partners, they are importing talent. Dan Smith, an Emmy award-winning producer with a BFA at Cal Arts in Film and Character Animation, was recently hired by Golden Oaks Pictures in Nanjing, China, to write and produce all-new feature film projects. With an office in Los Angeles and studio in Nanjing, Dan serves as the creative producer for the company. “I was trained at Cal Arts and then I worked with Disney's story training. So I feel lucky to be able to help my studio in China make great stories for the world market.”
It seems that many Chinese prodcos want to learn what they can from the West and adapt it for their marketplace. Chris Henderson, a Los Angeles-based independent animation producer, was hired by Beijing based animation studio Xing Xing Digital Corp to consult on their up coming original IP, Smart, an independently produced CGI film with a $22 million budget intended for a global theatrical release. “I was told that they would have a Chinese producer essentially shadow me throughout the entire production to learn what a U.S. producer does. This was, they said, so they won't have to hire another U.S. producer for future projects . . . . I told them I would be happy to have a shadow and explain things, but that it's probably going to take them more than one picture to learn what it took me 30 years to learn.”
But matching Western talent and partnerships with Chinese prodcos and productions can be challenging. Aside from the necessity of getting approvals from rigorous government censors, Smith says, “The biggest obstacles from a creative standpoint are finding the right studios who understand animation and who loves animation as much as we do. Most studios in China only do outsourcing and are still learning how to tell stories and create great characters. Finding a studio in China that is really passionate about animation is the most important thing.” But recruiting talent, he says, is difficult. “It's very hard to find talent in China - it's a different world there. Chinese people don't like to move for a job so you need to recruit locally. And even if you are Disney or DreamWorks you still have trouble getting talent to move for the job. What we found is that you really have to know the culture of China in order to find good talent and then get them to move to your city. At our studio we have learned from this and have adapted. And we also supplement by hiring freelancers from China and around the world.” Smith goes on to say, “There are very few good storytellers in China. However I was lucky enough to meet Thom Lu, a great director and writer. He and I have put together an international team of writers and story artists. The Chinese tend to make storylines overly complicated and it's my job to work out what the heart of the story is and simplify it. It takes time, but in the long run, I have found that the collaboration works.”
As Wu notes, “The biggest challenge we have when entering a co-production with Western partners is that the majority of the time Shiao joins the co-production when it’s already at the mid-production stage, hence missing out entirely on the all-important development and the pre-production stage [i.e. at the early stages of design, content and scripting], which makes it hard for the content to match Chinese marketing requirements. Being unable to participate in the early phases of the content creation and the marketing research stages of an international co-production means that it is consequently harder to adapt/bridge ‘tastes’ and meet the requirements of the Chinese market. Therefore, marketing the co-production project in each territory is tough. For a project to work successfully, ideally there has to be some Chinese relevance, and the challenge is to get the right balance, as early on as possible, between what works overseas and what works in China to accommodate both markets.”
The common industry perception has been that Chinese audiences are looking to the West for storytelling. According to Henderson, that’s not entirely the case. “Not exactly true,” he explains. “The Chinese want to learn, and then adapt to the Chinese market, and what works in West doesn’t always resonate with the Chinese audience. I learned a lot working with the Chinese team about the need for collaboration between the Western and Eastern teams with regard to storytelling. Western audiences expect to see stories that are typical of our storytelling, stories with a beginning, middle and end. I was shown some very popular Chinese films so I could understand that having a ‘solid structure’ was less important for the Chinese . . . . I was surprised to learn about this, but we did come to agree that films with U.S.-led story teams have a better chance to play for a global audience. So, we agreed to have the U.S. director and story team take the lead on this part of the project.”
In contrast to overseas studios, which highly value the creative process, a passion for animation seems not to have been fostered in China the way it has been in the West. Smith says that “most Chinese companies don't work anything like the West, because they are not run by creative or even entertainment-type people. They are run by old school Chinese business people from manufacturing, construction and/or government. Consequently, they don't care about the art of animation or the creative development process in the same way the West does. So they don't always understand what it takes to make great stories and great characters. However, this weakness has been recognized by the Chinese and more studios are now starting to make their own projects and import creative storytelling talent where they are lacking.”
Henderson also observed that Chinese studios tend to be run like a factory with employees treated as machines. “Employees are operating on a strict nine-to-six schedule with one hour for lunch. They are on time and on the clock . . . . And there is no urgency to meet deadlines, overages are detailed and itemized, and there is no room for the creative retakes.”
The deal-making process can also be a challenge. According to Smith, “Most people in the West believe that the Chinese don't tell the truth and can't keep a deadline. This can be true, so it is essential to do your homework and make sure you know the right people in China to work with.” Henderson has also run into cultural obstacles. “Often times, the negotiations start after the contract is signed,” he says, “and many Chinese business leaders don’t respect the Western style of doing business. I always recommend working with a studio that has a Western sensibility.”
Brenda Wooding is a veteran animation industry production executive whose company, Kid Glove Creative, specializes in development and pre-production financing as well as services for IP owners seeking to maximize their global production and distribution potential.