In September 1998, fans were shocked after Dalian Wanda, the runaway leader of China’s football league, lost a cup semi-final to a lower division side. That was not because of the defeat but the unexpected appearance of the club’s owner Wang Jianlin in a post-match news conference. “Wanda will forever exit Chinese football,” the fuming tycoon proclaimed, blaming corrupt referees for rigging the match.
Last week, Wang made a comeback, selling all but 3% of Wanda’s 20% holding in Spanish club Atletico Madrid only to use the funds to invest in Dalian Yifang, a football club which just has won promotion to the Chinese Super League (CSL).
Only older fans may recall that the club was originally Wang’s Dalian Wanda, the domestic league champions from 1994 to 1999. It was renamed Dalian Shide after Wang sold the franchise to Xu Ming, a businessman who was later jailed on corruption charges related to the Liaoning city’s former boss Bo Xilai. Xu died in 2015 when serving time behind bars (see WiC307).
By breaking his 1998 vow, Wang will need to rebuild a newly promoted team to take on Guangzhou Evergrande, which has won seven CSL titles in a row. For many observers, this is a reminder of the off-field rivalry between Wang and Evergrande’s boss Xu Jiayin. Competition between the two property tycoons has been well documented. In 2015, Xu openly criticised Wang for investing in European football rather than putting his money behind the domestic game. To retaliate, Wang declared that if Guangzhou Evergrande continued to dominate the sport, “do not rule out Wanda returning to Chinese soccer for an arm wrestle”.
Wang’s return to the local football scene appears to be heavily driven by politics. Since last year the conglomerate has been selling down its overseas assets in the wake of regulatory pressure at home (see WiC395). Disposing of his Madrid stake is not only consistent with political reality but also suggests that Wang wants to get back in the good graces of Xi Jinping, who has been pushing China to become a football superpower.
Meanwhile, the rivalry between the two property developers will soon play out on the country’s cinema screens – literally.
Just two weeks after Wang sold a combined 12.8% stake in his own theatre division, Wanda Film, to Alibaba and Beijing-based Cultural Investment for Rmb7.8 billion ($1.2 billion), Evergrande has made an opposite move.
In mid-February, the real estate conglomerate announced that it had signed a partnership agreement with China Film Group, the country’s largest film distributor, to adopt the China Giant Screen (CGS) widescreen format in all of the 200 cinemas it plans to build over the next five years.
CGS was developed by a subsidiary of the state-owned film distributor. The homegrown technology aims to rival the IMAX widescreen standard. The Canadian-based big screen cinema group had struck a similar deal with Wanda back in 2016 to build 150 screens in China over six years.
The move once again shows Evergrande playing a smart political hand. “We have a government mandate to become the largest premium, large-format brand in China’s film market and we are confident of achieving that target in 2019. Our top priority is expansion, not profitability,” Lin Minjie, chairman of China Film Digital Giant Screen, told Bloomberg in an interview.
So how does CGS compare with IMAX? From a technical perspective, CGS screens are slightly smaller than the foreign rival. However, since the cost to install the CGS screens are lower and the format doesn’t have the same brand recognition as IMAX, the amount Evergrande can charge per ticket is also going to be lower, says thePaper.cn.
In its favour commercially CGS charges only a flat fee for each installation while IMAX demands a share of ticket revenue. Also, IMAX usually has a narrower range of films on offer at cinemas than CGS promises.
The ultimate goal is to export the CGS format as part of China’s broader push to promote its soft power around the world.
The race between CGS and IMAX in China has just begun. Wang must be praying he’ll get a better referee this time.
© ChinTell Ltd. All rights reserved.
Sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.