TCB in RMB: Alibaba Forges a Stronger Alliance with Pokemon

Our weekly round-up of dealflow looks at Alibaba, Shidai Cinema, and Huajiao.

Alibaba forges a stronger alliance with Pokemon

Alibaba Pictures, the film arm of China’s e-commerce giant Alibaba, launched an immersive experience park in Hangzhou, where Alibaba is headquartered. This offline move strengthened the alliance between Alibaba and the Pokemon Company to jointly develop their Pokemon merchandise business in China.

“China’s merchandise market is full of potentials. As Pokemon’s first step into the China’s market, we must find a partner that has both strength and power,” said Susumu Fukunaga, executive director of the Pokemon Company.

On the same day, the Chinese trailer of Pokémon the Movie: Volcanion and the Mechanical Marvel was released. When the film hit China’s cinemas later this year, it will be China’s first Pokemon film in two decades. The animated film was originally released in Japan in 2016.

Although the Pokemon films were never officially shown in China’s cinemas, the iconic Pikachu and its friends have already accumulated millions of Chinese fans.

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Alibaba Pictures signed a range of merchandising deals with Pokemon last year to make clothing, home appliances, and other Pokemon items available on Alibaba’s official retail channel Tmall. During a recent shopping event initiated by Alibaba Pictures, the turnover of Pokemon-related products on Tmall hit RMB 20 million (US$3 million) within three days. Chinese merchandise market is valued at around RMB 184 billion ($27 billion), according to Zhiyan, a Beijing-based consulting firm.

China’s securities regulator says no to Shidai Cinema

A planned initial public offering by Zhejiang Shidai Cinema Line, the ninth largest cinema operator in China, was rejected by the China Securities Regulatory Commission (CSRC) on Wednesday, raising concerns about the floundering performance of this state-owned cinema giant.

Backed by local state-owned enterprises in Zhejiang, Shidai Cinema operates 219 cinemas with 1,422 screens across the country. The cinema operator received a total of RMB 1.5 billion ($22 million) in film ticket receipts last year. But at the same time, the film chain’s net profit saw a slump of 22.57 percent to RMB 43 million ($6.3 million), which is partially due to the rapid expansion of Wanda Cinema Line and other big Chinese cinema operators. The cinema number of Wanda alone in China grew by about 100 percent in the past two years, reaching 348 in 2016.

CSRC also noted Shidai Cinema’s over-reliance on the government subsidies. In 2016, 28.84 percent of Shidai’s net profit came from government subsidies. The number was 36.89 percent in 2014.

Live-streaming platform Huajiao secured a new funding despite rigid inspection a top

Huajiao, China’s seventh biggest live-streaming platform backed by China’s anti-virus software giant Qihoo 360 Technology, officially announced on this Thursday that it secured a series B financing of RMB 1 billion yuan ($147 million).

The deal occurred amid a nationwide inspection of 50 major live-streaming platforms by the country’s Ministry of Culture that aims to weed out the “illegal” content that is “vulgar, obscene, violent, or harmful to the psychological health of minors.”

Huajiao is one of the platforms being punished. In the beginning of May, the Ministry said it gave Huajiao “administrative penalties” for “creating fake live-streams that spread rumors and disrupted social orders.”

Huajiao raised an A round funding of RMB 300 million ($45 million) last year.

Great Wall Movie buys controlling stakes of travel agencies

China’s leading TV drama producer Great Wall Movie And Television Co., Ltd. announced last Friday to buy a 51 percent controlling stake of nine travel agencies from Wentao Fund and Wulue Fund, for RMB 216 million ($32 million). The nine travel agencies in total serve 1.4 million tourists each year.

Great Wall aims to expand its entertainment business by entering into film and television studio tourism. But Great Wall isn’t the first Chinese film company that pivoting its strategy to tourism. Between 2013 and 2014, cinema titan Dalian Wanda Group acquired 12 travel agencies in a row. But shortly afterwards, Wanda acknowledged failure in integrating the travel agencies by merging Wanda Tourism, Wanda Group’s offline travel agency, with online trip platform Tongcheng in 2016.