China's 'Hollywood' shines in business

Entertainment celebrities attract not only huge crowds of fans but bring about opportunities for the development of the service sector. This has been perfectly demonstrated by Hengdian, a town in East China's Zhejiang province.

Many Chinese people know of the Hengdian World Studios. However, its parent, Hengdian Group, was originally established as an industrial enterprise and its business mainly deals with industries including electronics, pharmaceuticals and chemicals.

Launched in 1996, Hengdian World Studios was founded by Xu Wenrong, a primary school dropout who became a legendary entrepreneur and the owner of Hengdian Group.

The company formed a relationship with the film and TV industry by chance when director Xie Jin called for the building of shooting sets for the film The Opium War in 1996. With Xu's approval and support, Hengdian Group created a 19th-century Guangzhou street scene covering 319 mu (21.3 hectares) in just more than four months, which has developed into the world's largest film studio.

Hengdian Group invested more than 7 billion yuan ($111 million) in the construction of the set. It boasts 28 large-scale scenic spots and 11 indoor studios. The outdoor scenic spots include buildings featuring the architecture of the Ming and Qing dynasties (1368-1911), an imitation of the Palace of the Qin Dynasty (221-206 BC), a Guangzhou street scene, a Hong Kong street scene and a riverside scene featuring Tomb Sweeping Day (Ching Ming Festival).

A move that distinguished Hengdian World Studios from other studios in the country came in 2000, when Hengdian World Studios Co, the operator of the studios, made it free to shoot outdoor scenes there. This attracted a significantly growing number of cast and crew to China's "Hollywood".

Over the past eight years, a total of more than 900 crew have visited Hengdian studios to make movies and TV dramas, including some from foreign countries. The number of extras recommended to crew through the extras union under the company's control exceeded 4 million in recent years, according to the Hengdian Chinese Film Industrial Park, a national organization founded in 2004 to promote the development of the film and TV drama industries.

The teams that visit Hengdian for the variety of shooting locations created a huge demand for the service sector in the town, boosting its growth. The tertiary industry in the town of Hengdian generated more than 6 billion yuan in revenues last year, accounting for one third of the town's gross domestic product. The job opportunities created in the service sector exceeded 36,000, said Zhu Guoqiang, deputy director of the administration committee at Hengdian Chinese Film Industrial Park.

Tourism, catering and hotel services, costume-making and rental for film equipment and props constitute the majority of the service sector in the town.

What these industries share in common is that they are all driven by the TV and movie business in Hengdian.

"Initially tourists visited Hengdian studios primarily out of curiosity about how TV plays or films are made. Now they choose to come here because we offer performances," said Zeng Yulin, spokesman for Hengdian World Studios Co.

The live performances at the studios acted as the development engine of its tourism industry. For example, a show that demonstrates the beauty and power of tai chi was introduced in 2007 and has blossomed into a must-watch experience for tourists. The improvement was guided by Chen Weiya, the deputy chief director of the opening and closing ceremonies of the Beijing Olympics in 2008.

By the end of March 2011, the show had been performed more than 1,800 times, entertaining 4 million people. Statistics from the industrial park showed ticket sales of the show generated more than 100 million yuan in 2010, and additional purchases driven by it amounted to several hundred million yuan.

There are 14 featured shows scattered at different scenic locations around the studios. They derive from the characteristics of the location or are inspired by the films or TV dramas shot there.

"All the shows at Hengdian studios are performed for limited periods. We are continuously creating something new," Zeng said.

That's why every time a tourist comes to Hengdian, he or she will have a different experience, he added.

In order to promote its travel business, Hengdian World Studios Co established its own marketing company for tourism in 2003. So far 46 branches that focus on marketing have entered a large number of cities nationwide.

These branches build partnerships with local travel agencies and provide them with the latest tourism policy and products in Hengdian to increase the number of visitors.

Advertising on buses is another way to reach potential clients. From 2004 to 2009, the studios invested more than 50 million yuan in commercial advertisements on 1,000 buses in cities including Shanghai, Nanjing, and Fuzhou.

The number of tourists over the past few years witnessed an almost continuous rise. They climbed from 4.78 million in 2007 to 8.41 million in 2010 with a decline to 5.84 million in 2009 because of the global financial crisis that year. As many as 10.8 million tourists at home and abroad visited the studios last year, creating a year-on-year growth of 28 percent. The revenue and profit of the company saw a 51 percent and 68 percent growth respectively from a year earlier.

"A small grocer once sold more than 170 boxes of mineral water on May 1," said Zeng of Hengdian World Studios Co. Zeng is also the editor in chief of Hengdian Tourism Magazine.

Behind the tourism boom is an on-going conflict between visitors and film and TV crews, said Zhu of the administration committee at Hengdian Chinese Film Industrial Park, the first national film industrial area approved by the State Administration of Radio, Film and Television.

"It is impossible to remove the conflict completely but we could try to mitigate it by adding more indoor studios and developing more performances," Zhu said.

Hengdian plans to add nine indoor studios costing 200 million yuan. The project started in July 2010. So far four of them have been completed.

It also plans to recreate the Shanghai Bund as one of its scenic spots. Currently, most scenes in movie and TV dramas featuring the Shanghai Bund are being shot in Shanghai Movie Amusement Park in Chedun township, Shanghai.

"This project has been under way for a couple of years. Currently the architecture design drawing is under consultation," Zeng said.

In addition to increasing the number of indoor studios and enriching the shooting scenery, the company will focus on developing performances for tourists, Zeng said.

Hotel services have also experienced rapid growth in recent years, promoted by the development of the travel industry.

"In September 2008, the accommodation rate at Tourism Hotel was just 30 percent. Now the figure has risen to more than 75 percent on average," said Zhou Yingping, deputy general manager of Hengdian World Studios Hotel Management Co, who used to work as the general manager of the hotel.

"Tourist groups have to make a reservation a month in advance in the peak season. Individual tourists have to book a room a week before they check in," said Zhang Xuefang, general manager of Dongyang Hengdian World Studios Tourism Building Co, the owner of Tourism Hotel.

As well as tourists, crews are also the main clients of hotels. Zhou said that there are at present about 40 crews shooting in the studios and there have been 50 at the same time.

Currently, the hotel accommodation capacity of Hengdian contributes more than half that of Dongyang, its governing county-level city, with the total number of beds exceeding 15,000. However, its potential remains big because, during the peak travel season, some tourists stay at hotels within an hour's drive from Hengdian.

"While arranging the accommodation, we will always give crews priority in checking into local hotels," said Zhang.

Tourists might spend the night in Yiwu or Yongkang, both of which are governed by Jinhua city in Zhejiang province, she said.

Hengdian World Studios Co has already launched a plan to build five-star hotels. At present the highest-level hotels in the town are four-star.

"The construction is expected to begin next year but we have already started the staff training program for the upcoming five-star hotels. Staff selected to join the program will have to spend half a year at the Tourism College of Zhejiang and half a year in Shanghai five-star hotels as interns," Zeng said.

As the largest base in China for the rental of film and TV production equipment and film props and the hiring of extras, Hengdian exports a variety of resources related to the industry to other areas where filming is being undertaken.

For example, 80 percent of the vehicles used in filming at Zhejiang Xiangshan Movie & TV Town, one of the country's 10 largest studios, came from Hengdian.

In Beijing-based China (Huairou) Movie & TV Industry Zone, about half of the crew staff are from Hengdian, including scene designers and carpenters, Zhu from the industrial park said.

Deng Li'ai, a Hengdian-based costume designer and producer with more than 10 years of experience in the industry, said that most orders she receives at Hengdian are small ones such as 20 to 30 suits, although she did receive a large order of 1,000 suits last year.

Many film and TV drama crews have chosen their costume suppliers in big cities such as Beijing and Shanghai before they come to Hengdian studios. Additional orders they make here are intended to deal with unexpected new situations, Deng said. "This explains why the orders made here are always small ones."

Deng opened her own costume workshop in 2010, after 10 years working with crews as a costume designer and producer. Her business earned 700,000 yuan in revenues last year, of which 300,000 was profit. The main clients last year were crews, including 15 costume drama crews. This year the orders from crews fell back sharply because of a limit on costume drama production imposed by the State Administration of Radio, Film and Television.

"So far, orders from crews are only valued at 20,000 yuan compared with 1 million yuan's worth of orders from photo studios in Yiwu," said Deng.

As a local resident in Hengdian, Deng still thinks positively about the market's potential and believes that there will be more commercial opportunities in the future.