The China Opportunity
As China’s economy matures an increasingly diverse range of opportunities are beginning to emerge. China’s creative industries and sports sectors are a prime example of this trend. These opportunities aren’t without their challenges.
China unique landscape of regulation and market ‘characteristics’ make it a challenging place to do business though the country remains a potentially high reward market for British businesses who are willing to put in the hard work and time required.
China’s regulatory environment remains challenging for foreign creative industries companies (considerably less so for sports) with censorship and quotas an ever present barrier. The impact of censorship varies sector by sector with film and TV the most ‘burdened’ (though there are variances within film and TV depending on the content category) followed by games and publishing.
Quota systems are in place for film and TV content for online streamers, traditional broadcasters, and cinemas. Though clearly a trade barrier UK companies are still having a lot of success licensing content to China due to the strong demand for British entertainment.
Demand for Content
Fuelled by increased levels of disposable income and a stronger appreciation for ‘leisure’ time, the film, television, games, publishing, attractions, tourism, and sports industries have all seen significant growth particularly in the last five years.
Demand for digital content in China has rising sharply with the introduction of smart phone technology, construction of cinemas, a high rate of internet penetration as well as the near complete coverage by traditional and online TV broadcasters. This is reflected in the high growth rates of revenues: TV and Radio grew by 11.1% (annualized) between 2012 and 2017 and the film sector increase by nearly 50% in 2015 alone (though growth slowed to single digit growth in 2016 and 2017 and is limited largely to box office).
To further highlight this growth look no further than China’s games sector with revenues that grew by around 150% between 2012 and 2017. Games revenues for 2018 are expected to hit $37.9 billion making China the world’s largest games market (the US ranks second with $30.4 billion) both in terms of revenue and players (619.5 million).
The Major Players
With China’s creative industries and sports sectors fast expanding a number of strong, financially enabled, domestic companies have been established. These companies include both private and State-owned enterprises with the larger players often vertically integrated within their industry as well as with multiple divisions that cut across numerous sub-sectors.
In most cases, the larger or more successful companies are already actively engaging with overseas companies to acquire products and services (and often companies themselves) that are deemed of value to their business or commercially exploitable within the Mainland Chinese market. Major players include Tencent (games, film, TV, publishing), Alibaba Group (film, TV, publishing, sports), and Shanghai Media Group (film, TV, theatre).
China struggles to produce high quality content and looks to the UK as a primary overseas source for acquiring content its audiences expect and demand. British television is particularly sought after including drama (Sherlock), children’s (Peppa Pig) and factual (Planet Earth) content. Our games sector is also performing well with both small to large scale studios establishing relationships and deals. The Premier League garners a huge following in China and commands significantly higher licensing fees compared to its competitors. Other sports are also in demand with motorsports, snooker, and golf commanding large audiences.
Beyond content British creative services are also sought after ranging from post-production and visual-effects to advertising strategy and planning. British producers (film, TV, theatre) are also in demand as a growing number of Chinese productions either involve non-Chinese elements or are seeking a higher production quality.
CBBC Success Stories
Richard Dennis Associates (RDA), rights holder for the Aviva Premiership rugby in Asia, assisted by CBBC, secured a deal to broadcast Aviva Premiership matches on CCTV5+ (the second channel of China’s national sports channel CCTV5) to Chinese sports fans.
Titan the Robot, a live entertainment company, secured a one year agreement with Chinese conglomerate Forise International to produce live shows in China with support from CBBC.
Codemasters, one of the UK’s oldest and most iconic games companies specialising in racing games, has joined four trade missions (organised by CBBC) to China Joy and now has long-term agreements in place with a number of China’s major games platforms.
Onsight, a London-based post-production company, secured a contract to provide post-production services for a feature-length documentary on the life story of Chinese rock star Wang Feng through support from CBBC.
CBBC are either directly involved with all of the activities below or are familiar with the key UK organisation involved. Activities that are supported by UK Government travel grants are tagged with ‘TAP’. TAP funded events include a UK delegation.