A Chinese company that started life as a metals firm and transformed into a film studio betting on the domestic industry’s bright prospects has gone bust as the sector slows.
Shenzhen-listed Jiangyin Zhongnan Heavy Industries Co. Ltd. said a local court in Jiangyin, East China’s Jiangsu province, where the company is headquartered, has declared the company bankrupt, it announced in a statement to the bourse on Tuesday.
The company has left a trail of unpaid bills and other bad debt amounting to some 2.84 billion yuan ($399 million) as it deals with its own financial struggles. Zhongnan posted losses of 141 million yuan in the first half this year, compared to a profit of 45.7 million yuan in the same period the year before.
Zhongnan, established in 2003 as a tube metal manufacturer, transformed into a movie studio through a slew of high-profile mergers and acquisitions.
In 2014, it purchased 100% of Beijing-based television producer Datang Brilliant Media Co. Ltd. for 1 billion yuan. The company later acquired 100% of film-maker Shanghai Qianyi Zhicheng Culture Media Co. Ltd. for 260 million yuan in 2015.
Zhongnan was one of the producers behind last year’s surprise smash hit “Dying to Survive.” It was among a wave of domestic firms drawn to the sector to tap the lucrative market that once lead an investment boom.
China has become the world’s second-largest movie market, growing rapidly in recent years as rising affluence in the country’s middle class has grown demand for high-quality entertainment.
But the industry has slowed since last year amid a weakening economy and a government crackdown on tax violations, following a high-profile case involving A-list star Fan Bingbing.
The headwinds have also hurt Zhongnan’s peers. Shenzhen-listed Beijing Enlight Media Co. Ltd., the film studio behind the recent animated hit “Ne Zha,” reported its profit plummeted 95% in the first half this year.
– This article originally appeared on Caixin Global.