Movie Incentives

Booming movie box office revenues have not only enticed more investments but also attracted the Central Government's attention.

On January 25, the General Office of the State Council released guidelines to consolidate and encourage the development of the movie industry. The guidelines said the development of the movie industry reflects the soft power of a country.

The guidelines promise financial support for domestic movie players, encourage expansion of digital cinema networks nationwide, enlarge the market share of domestic movies, increase financial support to the industry and cultivate movie industry professionals so that the industry will grow at an annual speed of 20 percent by 2015.

Wei Pengju, a culture professor at the Central University of Finance and Economics, said support for the movie industry was also an indicator that the Central Government will attach more importance to the whole cultural industry in the long run.

The Chinese movie industry has secured robust growth in recent years, but the majority of the market share was devoured by foreign moviemakers. China's box office grew at an impressive speed of 42 percent year on year in 2009, reaching 6.2 billion yuan ($907 million), according to the State Administration of Radio, Film and Television. However, foreign films like Tansformers II and Harry Potter took about half of the total revenue.

Hollywood movies have an overwhelming popularity in the country. Earlier this year, the U.S. blockbuster Avatar dominated Chinese cinemas with box office sales surpassing $100 million—the first movie to break the $100 million and the best ever performance in the history of Chinese movie industry.

GDP Bellwether

Coastal provinces continue to play a leading role in China's economic revival in the aftermath of the global financial crisis.

The top three provinces in terms of GDP in 2009 were Guangdong, Jiangsu and Shandong, the aggregate GDP of which accounted for one third of the whole country last year. Their year-on-year growth rates all outperformed the whole country.

Previously, the coastal areas were believed to have been hit the hardest by the world economic slowdown, as most are export-oriented and experienced a dramatic global demand plunge. But thanks to the massive government stimulus package, those provinces were able to successfully tide over the harsh times.

But the fastest growing provinces were in the central and western parts of China, which were less affected by the external fluctuations. In 2009, the economy of Inner Mongolia Autonomous Region surged 17 percent, and Tianjin Municipality jumped 16.5 percent year on year.

Retailing Eye on China

Major foreign retailers are nearly dominating the retail market in big cities across China and are spreading their networks to second- and third-tier cities.

To date, about 70 percent of the world top 50 retailers have a China presence, including the U.S. Wal-Mart, French Carrefour and Ouchan, and British TESCO.

China Industry and Economic News quoted a Mckinsey & Co. analysis report, which said in the next 35 years, 60 percent of China's retail market will be controlled by 35 multinational retailing groups, while major domestic retailers will control 30 percent. The remainder of the market share will be held in the hands of local and regional retailers.

Geely's Ambition

Geely Automobile Holdings Ltd., one of the leading private automakers in China, looks to establish its international presence by acquiring Ford Motor Co.'s Volvo brand and expand its production capacity by revamping its base in west China.

Geely agreed to buy the loss-making Volvo brand from Ford Motor last December, and was reported to complete the deal by May.

Yuan Xiaolin, a Geely manager in charge of the acquisition, said the company might pay $1.5 billion-$1.8 billion to buy Volvo and plans to boost annual production to 300,000 units. The company promised to retain Volvo's brand and operations in Sweden after the transaction, including its headquarters, production facility and research center.

In early January, Geely signed an agreement with the Lanzhou Municipal Government in northwest Gansu Province to revamp and expand its local base to produce 120,000 cars annually from a current capacity of 50,000.

Geely has been trying to rid itself of the low-end car image, but analysts said the company lacks sufficient research and development abilities, which are core to an automaker's competitiveness.

Calmer Seas

China Shipbuilding Industry Corp. (CSIC), one of the country's two leading state-owned shipbuilders, said its profit in 2009 jumped 18.5 percent to 7.39 billion yuan ($1.1 billion).

The Beijing-based conglomerate, which consists of nearly 50 industrial subsidiaries and about 30 research and development institutes in north China, also said its operating income rose 17 percent in 2009 to 120.9 billion yuan ($17.7 billion).

Li Changyin, General Manager of CSIC, said the company had overcome the impact of the global financial crisis, which crippled the global sea-based trade and caused a sharp decline in ship orders.

According to Li, CSIC had also been actively engaged in non-ship businesses including wind and nuclear power equipment manufacturing, accounting for 40 percent of CSIC's business volume.