By Helen Sloan
May 25 2012
Chinese cinema and real estate business Dalian Wanda Group has bought out the US cinema chain AMC for $2.6 billion, in the biggest ever purchase of a US business by a Chinese company. Cinemas are just one part of the Wanda empire: the company owns 86 in China, along with department stores, hotels and other real estate. This purchase will add 346 AMC theatres, mostly in North America, to the Wanda portfolio, as well as the AMC brand, history and experience. It is a move that could also signal further co-operation between Hollywood and China, opening up more branding opportunities for both Chinese and international trademark owners in the movie world.
The deal has got clear benefits for AMC: the injection of cash from Wanda will help clear debts and rejuvenate some of its more run-down theatres. What the benefits are for Wanda are less clear-cut, however, and some industry commentators have suggested that it is the acquisition of the US brand that is the most important part of the deal for the Chinese company. Meanwhile, Wanda owner Wang Jianlin has got further expansion planned: he has stated that he intends to have 20% of the world’s cinema market by 2020, as well as building an international hotel brand. If he is to be successful, then the acquisition of a company with a long history in the home of cinema and a strong brand (albeit mainly in the United States) is not a bad place to start.
Cinema’s popularity in China is growing fast: 2011 saw a 30% increase in box office sales, making China the second largest audience in the world, although its attendance figures still lag far behind the United States. Hollywood is very keen to get a slice of this action and is increasingly active in China: the upcoming Iron Man 3 and the new James Bond film are to have scenes shot in China, and co-operation between Chinese and international film companies includes DreamWorks Animation forming a company in China with three local partners. Restrictions on foreign films have also been relaxed: earlier this year China increased the number of international films permitted to be shown in the country from 20 to 34.
This further melding of the movie business in the United States and China could have further benefits for brand owners from both countries. While product placement in films by global brands is nothing new, for Chinese companies it is a fairly recent development, but one that they are embracing wholeheartedly. The recent Transformers 3 featured Lenovo computers, Shuhua milk and fashion brand Meters/bonwe. With ever-closer ties between Chinese and US businesses, further opportunities for brand development and promotion is likely. If current trends continue, and Wanda is able to capitalise on the AMC brand as well as the huge appetite for film in China, Wang should find that his recent purchase was $2.6 billion well-spent.
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