The Bottleneck in the Development of China's Animation Industry

2008/4/1By Ginny Han, China IP,[Copyright]

In recent months, a beautiful landscape has quietly appeared in the avenues and alleys of China. Anyone who has seen the movie Chang Jiang No.7 (CJ7) must be familiar with the cute extraterrestrial dog, "Qi Zai." This animated puppy has a plush golden head, big round eyes, a little light green body, and antennules.  However, director Stephen Chow is not happy with the booming sales of CJ7.

  In an interview with the Chinese Business Morning View, an associate of the China Film Animation Co., Ltd., distributor of CJ7, said, "Generally, the avenue for the sale of the ‘genuine version' of Qi Zai is cinemas' advance booking via the company. It is hard even for the cinemas to succeed in booking the goods because the goods are in short supply. Therefore all of ‘Qi Zai' sold on the street or on the internet is pirated without question." Counterfeit copies of "Qi Zai" have emerged in huge numbers. Stephen Chow commented through his lawyer that all derivatives of CJ7 are infringing goods.

  However, Stephen Chow is not the only victim of piracy. The Beijing Greenwood Graphic Design Co., Ltd. (Greenwood) is an animation studio with a 16-year history. Their cartoon series The Scholar Cat is very popular. Mr. Wang Chuan, art director of Greenwood, said, "Currently, we possess over 3,000 minutes of cartoon movies with independent intellectual property rights. The company's business would be in good condition if there were no pirated broadcasts and pirated copies. However, at present, our profit in many aspects is next to nothing."

  According to the Xinhua News Agency, the production value of the global digital animation industry reached USD 280 billion in 2006. The lost profit caused by illegal copies in the animation and game industries has amounted to more than USD 600 billion. In countries such as the United States, Japan, and South Korea, the production value of animation products, along with their derivatives, even exceeds that of the automobile industry. In a survey from the YanKee Group, in the United States, the global animation market has experienced enormous growth over the last two years. It is expected that the Asia-Pacific region, especially China, will become a major market for the animation industry soon. Recent years have witnessed the amazing development of China's animation business. In Beijing, several industrial parks have included special sections for "animation" and the Daxing animation industry plans to invest RMB10 billion towards the building of a new media center in China. Does that mean that the spring of China's animation industry is around the corner?

  China has experienced a history of animation spanning more than 80 years since the first animation Uproar in the Studio in 1926. In 1964, Mischief in Heaven was well received at home and abroad. It won many awards such as the special award for short subjects at the 13th Karlovy Vary International Film Festival, and the best film of the 22nd London International Film Festival. However, Mischief in Heaven's achievement in art does not bring about the splendor of China's animation industry. Lu Shengzhang, a professor at the Animation School of the Communication University of China (CUC) is quoted as saying that, "In the planned economy, animation in China was considered a cause combining education with recreation. However, and in the meantime, other countries blazed a way of marketization and the animation industry in these countries gradually developed into an integrated industrial chain including commercial movies, derivative products and theme parks. Hence, we have lagged behind."

  In 2000, China's first commercial animated feature film, Lotus Lantern set a box office record of RMB 25 million. Since that time, China's animation industry has gradually attracted the attention and recognition from various circles of society. However, this animated film costing RMB 12 million could not escape piracy. Within three days after it's theatrical release pirated copies were sold by DVD peddlers in front of theaters and cinemas in many cities. Additionally, in 2003, the Shanghai Animation Film Studio (SAFS), the producer of the Lotus Lantern, filed a lawsuit against Beijing Peony Four Stars Record Co., Ltd. for manufacturing and selling unauthorized videos of Mischief in Heaven, claiming damages of RMB 100,000.

  According to Xinhua News Agency, the sales amount of Mischief in Heaven around the country is still very big and is four times greater than the genuine versions. Moreover, the cartoon images of Monkey King in Havoc in Heaven can be seen everywhere. How many of them are authorized by the SAFS?

  Piracy is not the only obstacle for the development of the animation industry. In 1997, the Greenwood's Scholar Cat Teaches Chinese, part one of a 52-episode animated TV series was introduced, and received several awards including top prize for the 1998 Asia Animated Television Series. Soon the second part, Scholar Cat Teaches History was born and achieved great popularity. Now both sections of The Scholar Cat have become a regular collection of the cartoon channel on Beijing Television Station. The books and VCDs associated with The Scholar Cat have also become the target of piracy. In addition, Mr. Wang Chuan is also greatly concerned with the preemptive registration of their trademarks. They found that The Scholar Cat word mark was maliciously registered for clothes, shoes, and caps. The series was jointly financed and produced by Greenwood and Beijing Television Station. Due to the weak awareness of IPR protection, both parties failed to clearly specify ownership of The Scholar Cat, consequently resulting in uncertainty.

  Confronted with embarrassment, piracy, and poor profits in the domestic market, some animation companies have begun exploring new ways of protection. Greenwood is an example; it exports its animated cartoons abroad with the cooperation of foreign enterprises and uses foreign income that guarantees its survival. Mr. Wang Chuan believes that there would be no problem for sales in the domestic market as long as their products also entered the international market.

  Greenwood's practice is based on its understanding and rich experience of the animation industry. However, this practice is generally not feasible for start-up animation companies. Presently, most animation studios in China are still in the fledging stage. Hong Ying Universe Co., Ltd. and Wang Film Productions Co. Ltd., Cuckoos NEST Studios, are the two big animation studios in Taiwan.

  Frame Force Animation Studio (FFAS) is a professional 3D animation production company. Though it has only a three-year history, Ms. Belle Zhang, the founder of the company, has realized that the work of others will never substitute for creativity. She said, "Our objective is to produce our own films, cartoons, and games in the near future." FFAS co-develops animation with internationally famous companies, specializing in the field of character animation. Though FFAS does not own the copyright of the animation product, they have injected their own incredible and creative ideas into the products.

  With the continuous expansion of the FFAS's international business, Ms. Belle Zhang is becoming increasingly aware of the importance of IPR in animation. In an effort to keep its animated projects from losses, FFAS enters into a confidentiality agreement with the cooperative enterprises providing maximum protection. They also sign confidentiality agreements with the employees who participate in the animated project, closing all external networks and USB interfaces and inspects its mailbox system on a regular basis. IPR protection has become part of the FFAS's culture. Through regular IPR training, the employees awareness is raised constantly. They believe that the confidentiality agreement that they executed with the company is a discipline for their words and deeds. However, how many people working in animation hold the same opinion?

  As reported by the Xinhua News Agency, currently in China, 447 colleges and universities have created animation cirricula. In 2005, 64,000 undergraduate students majoring in animation or animation-related specialties graduated and 466,000 students studied the animation fields at colleges and universities. The animation industry is in need of integrated talent. A four-year college education is far from adequate. The geometric increase of talent in China's colleges and universities makes it difficult to guarantee the students' mastery of professional skills. It is even more difficult to guarantee the education in IPR.

  According to China Youth Daily, Mr. Zhao Wenjiang, Deputy Director of the Production Center for Youth Program in CCTV, said, "The animation industry in China only has 50,000 to 100,000 openings." The gap between supply and demand in animation talents will inevitably lead to low starting salaries for newcomers to animation. At present, the salary for a new animator is about RMB1500. However, he may be compensated generously in the tens of thousands of Yuan if he discloses confidential information about his company. The confidentiality agreement appears weak in the face of such a temptation. In fact, animators have not been subject to criminal prosecution for disclosing trade secrets, which weakens the deterrence of the law.

  "China's animation industry has just started and various problems may arise." Professor Lu explained, "Though the airing time of domestic cartoons has been increased from 5,000 minutes in 2000 to 80,000 minutes in 2007, there haven't been occurrences of such widely popular cartoon series as Chibi_Maruko_Chan or Mickey Mouse & Donald Duck. Thus, for China's animation industry, there is still a long way to go. There is no reason for it not to develop well because China has a profound cultural background and vast consumer market. The key is how to find a way to professional marketization."

  The animation industry has the reputation of the "rising sun industry" of the 21st century. Moreover, the broad market prospects of China's animation industry are catching the eyes of numerous animation artists at home and abroad. However, we should be aware of the problems in the development of China's animation industry. Only after the resolution of these problems, will there be hope for the development of this industry.
                                                                              (Translated by Zhang Meichang)

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