Group troops' joint adventures

"Shanghai is a great movie city. It's a very good market, with the highest box office in China. It has better theaters than other cities and was the first place to have multiplexes," says Li Chow, Columbia TriStar's general manager in China. "It is open not just to Hollywood movies but other kinds of foreign films, too."

At the hub of the movie biz in the city is the Shanghai Film Group. Xu Pengle, vice president of the state-owned org, says Shanghai is where Chinese and Western cultures meet.

He adds its status as a financial and business center is speeding the development of its movie biz and that the full potential of the local market has yet to be realized.

"Box office in Shanghai totaled RM256 million ($32 million) last year, ranking it first among Chinese provinces, but given Shanghai has a population of 14 million, the market is far from being fully exploited. That is its main attraction for foreign investors. The citizens of Shanghai have great consuming potential. Also, they are well-educated and have great taste in films," Xu says.

In recent years, Shanghai Film Group has embarked on a number of joint ventures with foreign companies.

The first was an exhibition company set up with Warner Bros. Intl. Theaters, which has ambitious plans to open multiplexes across China.

"Paradise Warner Cinema in Shanghai ranked the first among all cinemas in China last year in terms of box office revenue, and the cinema in Nanjing that opened last year is fast becoming the hottest cinema in that city," Xu says. "Warner's management experience and the base we have built in China are an effective combination."

It has also set up a home entertainment outfit, China Audio Video, with Warner Bros., which is selling low-priced DVDs to try to undercut the pirates.

And it has linked up with Korea's CJ CGV to build multiplexes in the country through joint venture Shangying CGV.

Shanghai Film Group is also co-producing contemporary drama "The 601st Phone Call" with Warner China Film HG Group, a joint venture between Warner Bros., China Film and the Hengdian Group.

It has links to the Emperor Group in Hong Kong and has sent delegations to festivals from Korea to Argentina in its efforts to bond with partners around the globe.

"The government is considering making the cultural industry a pillar of Shanghai's economy and will formulate a tax policy favorable to overseas investment," Xu reports. However, he warns that the industry in China is in a state of flux, and says the regulatory system, including that governing censorship, is prone to change, which could prove to be an obstacle to the industry's development.