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What are China's creative industries, really?

Jing Bartz, May 18. 2014

When a high-ranking Chinese media delegation met German creative industry representatives in Berlin this spring, both sides felt confused. The Chinese found the German creative companies too small, while the Germans thought the online games presented by the Chinese were too boring, even though they generated millions of euros in revenue on the Chinese market.

What are we talking about when we discuss China’s creative industries? They are certainly different from the creative industries in the UK, France or Germany. Although an official definition is still a work in progress, in 2012 the Chinese National Bureau of Statistics added “design” as a new creative sector, alongside press and publishing, TV and film, live performance, Internet and mobile communication, games, advertising, exhibitions and various production activities.

In 2014, mobile Internet is a hot topic in China. The 2012‒2013 Chinese E-book-Reading Survey Report, released by Nielsen Research in April, noted that mobile devices account for 91% of all reading equipment. China is probably the only country in the world where people read e-books primarily on mobile phones. For this reason, Amazon, which uses a uniform Kindle app globally, had to create a special app for Chinese mobile users when they launched Kindle in China a year ago. Amazon has now become a major force in Chinese e-book sales.

According to the Nielsen report, in 2013 72% of Chinese e-book readers were owned by 15 to 34-year-olds, and 27% by 35 to 64-year-olds, a 19% increase from 2011. This trend may explain why publishers are trying to produce more appropriate mobile content in addition to the dominant local young adult stories, and why online and mobile gaming companies are considering the development of more “serious games” to attract the well-educated Chinese middle class, when at leisure. In addition, Phoenix Publishing & Media Group, a leading publicly traded state enterprise in China, recently spent RMB 260 million (around € 30 million) to acquire two gaming companies, which allows the publisher to quickly access new content business.

Film is another economic driver of China’s creative industry. Official country restrictions cap the annual import of foreign films at 64 features, says Amy Liu, vice president of Chinese research and consulting company EntGroup and one of this year’s speakers at the StoryDrive Asia conference. While international film companies recognise the revival of the Chinese film market, a Chinese buyer at the 2014 Berlinale film festival offered a warning that only three Western genres truly have a chance in China: science fiction, romance and action. Entertainment seems to be the highest priority for modern Chinese cinemas. Can any other doors be opened for international companies? Amy Liu recommends the co-production model, as well as the provision of training for Chinese staff in areas of fund-raising, creative working and process control.

However, according to the 2012−2013 China Creative Industry Report[KN1] [KN2] compiled by BIZ Beijing and CPMJ, the Chinese box office reached RMB 21.5 billion (around € 2.5 billion) in 2013. This success can be partly attributed to Chinese real estate billionaire Wang Jianlin, who has developed Wanda Platza shopping malls in cities across China, each of which includes a 3D cinema. The combination of shopping, eating and cinema-going has developed into a popular urban lifestyle for young Chinese.

The heavy involvement of the real estate business is a typical aspect of China’s creative industries, one that strongly reflects government policies. If a construction project includes cultural elements, like a cinema or a bookstore, the entire development is eligible for a special land price and tax incentives. In many cases, municipalities even introduce targets and measures to stimulate the creative industries. This has been the case with the development across China in the last few years of 2,500 “culture and creative parks”, and the same number of theme parks. It is not surprising, therefore, that the property group Wanda has established a cultural arm: Beijing Wanda Culture Industry Group. With registered capital of RMB 5 billion and total assets of RMB 31 billion, the company is China’s largest cultural enterprise, according to a 2013 news report from China Daily.

Opinions are divided, however, regarding the profitability of this brand new business area: a recent survey by the Culture Industry Academy of Beijing University revealed that 70% of the new parks are making a loss, which can be attributed to a lack of strategic thinking and too much haste in forming cultural clusters. Chinese classics are currently being re-enacted in theme park form as well. One example is the Dream of the Red Chamber, for which, in 2012, a “global search for candidates” was launched, seeking actors willing to live and perform in the park. The most important criteria were to “have firm belief and deep fondness for Chinese mainstream culture, stick to mainstream values and willingly take on the mission of cultural transmission.” According to the Report on the Development of the Chinese Culture Industry (2014) issued by the China Academy of Social Sciences (CASS) in April, the amount of investment in the Chinese creative industries in 2012 was RMB 1.96 trillion (€ 226 billion), an increase of 28% over 2011. CASS warned against a structural surplus, however, as a serious imbalance can be observed in the investment boom, in which investments in fixed assets are 13 times greater than in intangible assets. Undervaluing intangible assets is a problem around the globe – are intangible assets not crucial to the creative industries?

According to Yu Dan, best-selling author and media studies professor, the Chinese creative industries suffer from a lack of creativity. She attributes this problem to China’s education system, which struggles to nurture creative talent. Her critics also blame it on a lack of awareness of intellectual property and insufficient legal protection. Yu Dan’s book Confucius from the Heart (2009) has officially sold six million copies, yet the estimated number of pirated versions is around 20 million. The authorities have been unable to control the ongoing piracy.

Mark Siemons, a journalist in Beijing writing for the German Frankfurter Allgemeine Zeitung (FAZ), has followed the development of the Chinese culture industry intensively over the last five years. Inspired by German philosophical theorists Theodor W. Adorno and Max Horkheimer, both members of the influential Frankfurt School, and formulating a critique of the culture industry, Siemons asked in an article last summer whether industrialisation is really a good thing for culture. Is it worth aspiring to a state where there is no differentiation between literature and marketing, propaganda and games?

In the midst of dynamic changes, China now probably has less time for philosophy. At the end of 2013, the Chinese government announced an ambitious target for China’s cultural and creative industries, to contribute five per cent of the country’s GDP in 2015, an increase of 3.48% on 2012. As part of this plan, more emphasis will be put on the integration of culture and technological innovation, an initiative that will further the development of products like WeChat, a text, voice messaging and social media app by Tencent Inc., that has gained 600 million global users. Over the next few years, the Chinese creative industries will offer an abundance of exciting opportunities for international companies. But to return to the question we asked at the outset, we will have to adjust our creative industry mindsets first, because this sector looks very different in China.

Learn more about the 2012‒2013 China Creative Industry Report The report was compiled by the Book Information Centre (BIZ), Beijing (an office of the Frankfurt Book Fair), together with the Chinese trade journal China Publishing and Media Journal. You can download it following this link.