With China’s movie theater industry exploding, Korean firms dive in

Posted on : 2007-03-06 14:04 KST Modified on : 2019-10-19 20:29 KST
China’s ticket sales see annual growth of 20-30%, says theater exec

"China’s market for movie theaters looks similar to South Korea’s about 10 years ago," said Korea’s MK Pictures executive Park Shin-kyu.

South Korean movie theater chains such as CGV, Megabox, and MK Pictures are rushing to open theaters in China by teaming up with local partners there.

Last October, CGV set up a movie theater with six screens in Shanghai in a joint venture with Shanghai Film Group. Showbox Mediaplex plans to open two theaters in Beijing by the end of this year.

MK Pictures, a South Korean film distributor, launched a theater with six screens in Jiangzhou in January and plans to open four more theaters by 2008.

South Korea’s film market has already passed the one trillion won (US$1.055 billion) annual ticket sales mark, while the movie market in China has only seen a total of 340 billion won in ticket sales annually. However, the pace of growth is faster in China.

"Between 2001 and 2005, movie ticket sales in China shows an annual growth rate of between 20 and 30 percent, by conservative estimates," MK Pictures’ Park said. According to data by China’s state-run movie promotion agency, the State Administration of Radio Film and Television, ticket sales jumped to 2.4 billion yuan (273.6 billion won) in 2006, compared with 1.5 billion yuan in 2004. The number of screens also increased to 2,723 in 2005, compared with 1,953 in 2003.

But though supply has increased, it still falls short of demand.

Population per screen in China is about 430,000, compared with about 30,000 in South Korea. While several Chinese companies operate movie theaters, South Korean companies have a competitive edge in the industry, given their past experience.

However, doing business in China is not easy. A foreign company is banned from owning more than a 49-percent stake in a joint venture. For this reason, U.S. movie studio Warner Brothers, which had entered China in 2003, withdrew in 2006.

Also, though the number of movies made in China has been on a steady rise, there is a shortage of movies to be screened. In 2005, 260 movies were made in China, compared with 212 in 2004 and 120 in 2003. However, China bans a theater from screening more than 20 foreign movies a year, excluding from those rules joint Chinese-foreign productions. Widespread sale of pirated DVDs prior to the films’ theatrical release date is another problem.

To differentiate with Chinese rivals, South Korean operators of movie theaters use luxury seats and high-quality screens. One venture cinema between CGV and a Chinese partner was recognized by the Chinese government as the nation’s best-quality theater.

"The important thing is service," said Kim Il-jin, a manager of CGV, adding that China could easily catch up with South Korea in terms of facilities. For example, CGV sells tickets for different prices at different times, such as weekends, matinees, and midnight screenings. It also provides live cultural performances in the lobby for queuing moviegoers. In addition, CGV issues membership cards with special benefits in order to woo loyal customers.

Lee Seong-won at Megabox said that a Chinese culture-tailored marketing strategy is also needed. For example, he said, Chinese patrons are not willing to reserve movie tickets through the Internet, as most are accustomed to paying only after receiving goods.

Please direct questions or comments to [englishhani@hani.co.kr]

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