Huayu: Starting from joining the mainstream entertainment industry in 96

Chapter 322 (320): Sinking

In December, the cold wind in Beijing swirled with scattered snowflakes, pattering against the glass curtain wall of the China Film Group building.

Inside a spacious and solemn conference room in the building, however, a lively scene was unfolding.

The air was filled with the aroma of tea, the smell of smoke, and a restless atmosphere called "ambition".

The expansion meeting of "China Film Group Corporation's Joint Cinema Circuit" is underway.

At the head of the long conference table sat Han Sanping, vice chairman of China Film Group. His expression was calm, and his gaze swept over the representatives from all parties present, finally landing on Wang Sheng beside him, where he gave a barely perceptible nod.

As the head of Shengying Media, the co-creator of this emerging cinema chain, and its second-largest shareholder, Wang Sheng was naturally one of the key figures at this meeting.

A huge national map hangs on the wall, densely marked with red dots for "China Film Grand Cinemas" that have already opened or are under construction, like pebbles thrown into a lake, initially creating ripples in the channel transformation.

But today's meeting is no longer about these "pebbles" concentrated in provincial capitals or core cities, but about how to weave this network more densely and deeply, sinking into the vast hinterland with greater potential.

"The initial results are evident to all. The performance of 'The Proposal' in our own theaters proves that the model of modern multiplex cinemas combined with high-quality domestic content has huge market potential."

Han Sanping's opening remarks were concise and powerful: "But we cannot stop. First-tier cities and provincial capitals are the bridgeheads. The next step is to penetrate into economically developed second-tier cities, extend our channels, and solidify our market presence!"

The vice president in charge of strategic planning presented a report: "Based on preliminary research and data model analysis, we have selected the first batch of provinces suitable for expanding cinema operations to lower-tier cities. The core principles are: a strong economic foundation, a vibrant private sector, strong consumer spending power, and a robust demand for cultural consumption."

His laser pointer moved across the map, highlighting several areas with the highlighted dots:

"Shandong Province is the first to be affected. Apart from the provincial capital Jinan, Qingdao, as a separately planned city, has a very developed economy, port trade and tourism industry, and has a huge potential audience."

Yantai and Weifang, as important industrial bases and coastal open cities, possess considerable consumer spending power. Furthermore, Linshi, as a central city in a revolutionary base area, has a large population base and also offers potential for market development.

The spot of light moved southeast.

"Jiangsu Province is of paramount importance. Its economic strength is evident to all, with many strong cities. In addition to Nanjing, Suzhou is the economic leader, with a concentration of electronics industry and foreign investment, and a high level of consumption; Wuchang is also an economically strong city with a vibrant private sector; Changzhou and Tongling also have strong economic strength and urban scale. By establishing a presence in these cities, we can effectively cover the entire southern and central Jiangsu region."

"The same applies to Zhejiang Province. Outside of Hangzhou, Nanjing is an important port city and manufacturing center with a huge economic output; Lucheng is the capital of private economy with abundant private capital and advanced consumption concepts; in addition, the city cluster around Hangzhou, such as Shaoxing, Jiaxing, and Huzhou, can also effectively absorb the radiation effect of the provincial capital."

“The situation in Guangdong Province is similar, but more unique. Guangzhou and Shenzhen are self-evident, as we already have a presence there. But Dongguan, as the ‘world’s factory,’ is home to a large number of migrant workers and high-tech enterprises, with a large young population and strong demand for entertainment. Foshan is showing a clear trend of integration with Guangzhou, with a strong manufacturing base and affluent citizens. Cities on the west bank of the Pearl River Delta, such as Zhongshan and Zhuhai, also have strong economic strength and an open mind.”

Wang Sheng listened to the report with a calm expression.

These analyses are largely consistent with his judgment. In 2000, after more than two decades of reform and opening up, China's coastal provinces had begun to see results in "enriching the people," and the consumption potential of these economically strong cities had indeed reached a stage where they could support the operation of modern cinemas.

"What about funding and equity structure?" asked the director of the Su Film Factory, a question that was on everyone's mind.

Han Sanping looked at Wang Sheng, signaling him to explain.

Wang Sheng and his team were the main designers of this complex capital operation model.

Wang Sheng looked at everyone and said calmly, "The principle remains unchanged. 'China Film Shengshi Cinema Line Co., Ltd.' must hold at least 30% of the shares in each newly built cinema, thanks to its pilot qualification, brand output, and financial assistance."

This is the cornerstone of ensuring unified management, unified scheduling, and unified service standards. It's also the guarantee that our network will not fall apart.

He paused, then looked around at everyone: "For the remaining 70% of the shares, we encourage and need the participation of local forces. Among them, powerful departments such as the local cultural system, propaganda system, and broadcasting system can take a share, with the specific proportion to be coordinated by the local government. This will help us obtain policy support, implement the project quickly, and integrate into the local cultural ecosystem."

“However,” Wang Sheng changed the subject, “many organizations are not financially well-off. Therefore, we must, and inevitably must, leave enough room for social capital.”

We aim to attract local, capable, and willing private enterprises to invest and contribute capital. They not only bring substantial funds but also help us overcome various local obstacles that may arise in daily operations. We must skillfully leverage the power of these local stakeholders and utilize it for our own benefit.” He summarized, “The ideal equity structure is as follows: China Film Shengshi holds over 30%, relevant local system units collectively hold 30%, local social capital holds 20%, and the film studio holds 20%. Operational rights must be uniformly exercised by our subsidiary, Shengshi Cinema Management Co., Ltd., to ensure that the brand and services remain consistent.”

A murmur rippled through the room.

The equity structure is almost identical to that of each cinema before.

Local authorities with real power must be brought in, otherwise they won't even be able to get the permits to open a cinema.

Local film distribution and exhibition companies are nothing to fear; they have no real power. The higher-level authorities only want political achievements, and adding a new modern multiplex cinema is considered a political achievement, which aligns with the people's aspirations for a better life.

Social capital is hard to define; it includes local bullies and the privileged class, among others.

……

Following the conference was a more crucial and confidential private meeting.

In Wang Sheng's temporary office, he had a closed-door meeting with the director of Zhejiang Film Studio.

The director of Zhejiang Film Studio showed great enthusiasm for opening a film studio in Lucheng, but also frankly admitted the difficulties they faced: "Mr. Wang, you may know about the situation in Lucheng. The private economy is developed, but the relationships are very complex. Our studio's influence there is limited."

Wang Sheng smiled slightly, picked up his teacup and took a sip: "Director of Zhejiang Film Studio, regarding funding and ground-level matters, perhaps I can recommend someone."

"Oh? Mr. Wang, please go ahead." The director of Zhejiang Film Studio leaned forward slightly.

"Chen Guangfu is a local entrepreneur from Lucheng. He started his business in hardware and has considerable financial strength and extensive connections in the local area."

Wang Sheng slowly recounted, "Four years ago, I provided 'customized' services for his daughter's wedding, so we're old acquaintances. He's quite decisive and knows how to assess situations. A few days ago in Hangzhou, he specifically sought me out to express his strong desire to invest in a cinema."

"It would be most appropriate for Mr. Chen to lead a consortium of business friends in Lucheng to take on the social capital portion of the Lucheng Cinema project."

They are familiar with the local environment, which can effectively reduce upfront communication costs and subsequent operational risks.

Regarding the specific shareholding ratio and investment amount, Director Zhu, you can take the lead in negotiating with them. Shengying and Zhongying Shengshi, in principle, support this plan.

The director of Zhejiang Film Studio nodded slightly.

With Wang Sheng's introduction, the foundation for cooperation was established.

Local bigwigs like Mr. Chen are the key to solving the problems of the Lucheng project.

"That's wonderful! Mr. Wang, this is truly a timely help!" the director of Zhejiang Film Studio said hurriedly. "With your introduction, this matter is already half successful. I will go back and immediately organize people to contact this Mr. Chen and start the feasibility study and site selection work for the Lucheng project as soon as possible."

Wang Sheng nodded: "You and your team can handle the specifics. We'll discuss any issues that are difficult to coordinate. We hope the Lucheng project can become a model for our cinemas to expand into the heart of Zhejiang's business community."

"Definitely, definitely!" The director of Zhejiang Film Studio readily agreed.

……

Freezing three feet is not a day's cold.

The issue of penetrating lower-tier markets will likely not yield results until next spring, and there are many challenges to be faced. This will depend on the local connections of the provincial film studio directors.

(End of this chapter)