Alibaba Pictures Invests in Hangzhou Cinema Company

  • Alibaba Pictures is buying an 80 percent stake in Hangzhou-based Hangzhou Xingji
  • Alibaba Pictures is making the investment despite projected losses of RMB 400-450 million for the first half of 2016.
  • The company is taking on large and established players, including Wanda Cinema, the world’s largest movie theater operator, and China Film Co., which went public earlier this month. 

Alibaba Pictures is entering the fray of China’s cinema market by buying a local, Hangzhou theater chain.

Alibaba Pictures, the entertainment arm of the Chinese e-commerce giant, is investing RMB 100 million (US$15.2 million) for an 80 percent stake in a movie theater operator in its hometown of Hangzhou, as it takes on rival Dalian Wanda.

The company will acquire around 61 percent of Hangzhou Xingji from shareholder Hangzhou Kunwei for RMB 39 million ($5.9 million), as well as invest RMB 61 million ($9.2 million) in the company, according to a filing earlier this week. That amounts to an 80 percent equity interest once the deal is complete.

Hangzhou Xingji owns, operates and manages the Hangzhou Star Cinema, which houses eleven theaters, including one 4D cinema and one China Film Giant Screen (CFGS) theater.  The company’s profit grew 416 percent to more than RMB 563,000 after taxes last year, the statement said.

The news comes a month after the company announced it was partnering with Wuhu Gopher Asset Management on a new $300 million film and TV fund. That investment comes in the face of mounting losses for the company, expected to be RMB 400-450 million for the first half of 2016.

Alibaba Pictures Launches $300M Investment Fund

Competition in China’s cinema industry continues to heat up with new players entering the field.

Last week, Wanda Cinema Line, China’s biggest movie theater operator, confirmed it in talks with CJ CGV, South Korea’s largest movie theater chain, with industry watchers speculating the two companies are considering joining forces in China.

Wanda to Partner with South Korea’s CJ CGV?

That followed a deal earlier this month between Wanda Cinema Line and IMAX to construct 150 theatres in China over the next six years.

Wanda Cinema Line, China’s largest cinema chain operator, is a subsidiary of property and entertainment conglomerate Wanda Group, which is controlled by China’s richest man, Wang Jianlin. The tycoon told Reuters on Tuesday he plans to close two, billion-dollar film industry deals in the U.S. this year.

China Film Co. and Shanghai Film Group, two major state-owned enterprises also floated this month, and have indicated they intend to use the funds raised in their successful initial public offerings to build new cinemas.

Alibaba Pictures has previously invested in several high-profile Hollywood projects, including Star Trek Beyond and Mission: Impossible — Rogue Nation. Star Trek is due to hit cinemas on September 2.

Other movies the studio has invested in include Ferry Man (摆渡人), Three Lives Three Worlds Ten Miles of Peach Blossom (三生三世十里桃花), and Ao Jiao Yu Pian Jian (傲娇与偏见).