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Beijing Review Exclusive
Special> Coping With the Global Financial Crisis> Beijing Review Exclusive
UPDATED: October 17, 2009 NO. 42 OCTOBER 22, 2009
Star-Studded Shareholding
China's top private entertainment company walks down the red carpet to dive into the stock market
By LIU XINLIAN
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With a total staff of 300, HBMC realized net profits of 68.1 million yuan ($10 million) in 2008 and 31.6 million yuan ($5.3 million) in the first half of 2009.

Streamlining stardom

The 2004 production year saw an unknown actor become famous overnight. Wang Baoqiang, an average young man from a peasant family in central China's Henan Province without a history of any professional training, performed as a migrant worker in Feng Xiaogang's film No Thief.

In 2007, Wang became a contract actor for HBMC. With the success of several TV series and movies, Wang now has become one of the first-tier stars on the Chinese mainland.

"HBMC is a star-producing machine. They put a rural boy like me into the machine, and a star was created," said Wang.

In Wang Zhonglei's eyes, HBMC's whole industry chain, covering talent management to film production and distribution, made all this possible.

"HBMC has a rich crop of stars who provide a full choice for TV series and films to choose from. For those stars, we produce plenty of opportunities for them to increase their exposure to the public and popularity," said Wu Yi, one of HBMC's producers.

Stars have always been the core resource behind HBMC's success. In the past two years, its contract stars have more than doubled.

"The entertainment industry is an industry of stars. An entertainment company without outstanding stars will not be a good one. I hope HBMC will have 200 to 300 stars in two or three years," said Wang Zhongjun, Chairman of HBMC.

The important strategy to keep these stars is the incentive-sharing mechanism, which is also the reason investors see a megastar-packed prospectus.

One of the studios under the leadership of Feng Xiaogang produced two best-selling movies in 2009, accounting for 40 percent of HBMC's total income in film. And while HBMC's cooperation with Feng dates back to as early as 2000, their cooperation is sure to solidify—Feng holds a 2.28- share account with the company.

Only the strong survive

After years of film production, Wang Zhongjun found that investments and costs continued to rise. In the 2000 movie Sigh, the 6-million-yuan ($881,060) investment was regarded as huge. Now, a movie costing 8 million yuan ($117,470) is dubbed a low-budget movie, said Wang.

"Making blockbusters is vital to us," said Wang, adding that it is also the reason why HBMC has conducted frequent acquisitions and mergers in recent years.

"We are forced to learn how to play with finances," he added. As early as 2005, HBMC acquired loans from the Shenzhen Development Bank for its movie The Banquet, and in 2007 it gained loans from the China Merchants Bank for Assembly.

Enticing bank loans for film production accelerated capital circulation and dispersed the risk on each film, said the HBMC chairman.

In his view, seeking financing by listing on the stock market is superior to bank loans.

"It will further accelerate HBMC's development," said Wang.

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