Animation is booming, not blooming
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China Daily, January 27, 2012
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China's animation industry is still in its infancy but it's a very chubby baby, fed by investors pouring in capital and by favorable government policies.
It has been productive, too. In 2003, the industry turned out 12,000 minutes of original cartoons. In 2010, the volume was more than 220,000 minutes, according to data from the State Administration of Radio, Film and Television.
Last year's total production is expected to surpass 240,000 minutes.
But analysts say little remarkable progress has been made. They blame a lack of clear guidelines for development of the industry and blind investment in expectation of huge returns.
While more than 10,000 animation enterprises are operating in the market, few have made a profit or found the right way to run their business, said Li Yang, director of the expert committee on the industry's development under the State Council.
And among the nearly 22 weeks' worth of original cartoons produced in 2010, "there have barely been any really excellent ones, which actually turns out to be a huge waste of money, time and manpower", he said.
He based his conclusion on the calculation that the average cost of one minute of cartoon is about 10,000 yuan ($1,585), which put the 2010 total cost at 2.2 billion yuan.
Money in
Starting in 2004, both the central and local governments released a series of policies to support the development of animation as an industry. Incentives included offering subsidies and tax reductions to animation enterprises, setting up funds earmarked for the industry and increasing the broadcast channels for cartoons.
Animation revenue in China in 2010 was 20.8 billion yuan, of which 5.5 billion came from broadcasting channels. EntGroup Consulting Group, a domestic entertainment consultancy, estimates that total revenue will reach 200 billion yuan in 2015.
Despite the lack of animated masterpieces, investors still see great potential.
Creative clusters
Along with rapid expansion of animation companies came the emergence of animation industry parks and bases, where companies set up shop for a cluster effect.
The parks fostered different development models based on regional industrial features and legacies.
The Shenzhen National Cartoon & Animation Industry Base opened in May 2006 and is certificated by the State Administration of Radio, Film and Television. To date, 82 companies are stationed there, and their focus is largely on original business.
The entry threshold requires an enterprise to hold independent intellectual property rights in at least one of its products.
"Original and creative power is what we value most," said Peng Taimin, office director at the base. "In recent years the proportion of sales revenue directly generated from copyright increased from 5 percent to 20 percent, which demonstrates the improvement of original brands quality."
Annual revenue at the base reached more than 600 million yuan in 2010, and is expected to approach 1 billion yuan when last year's numbers are in. Eighty percent of the total comes from downstream on the industrial chain, through derivative products such as toys and T-shirts based on cartoon characters.
"In the next three years, the figure will continue to rise as the market condition grows better and more projects are being developed by the enterprises in our industry base," Peng said.
Broadcasting of animated films and cartoons will become more prevalent, Peng said, bringing increasing attention to their producers, more deals and more revenue.
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