The film market is one of the biggest sectors of growth in the Chinese media landscape, China Media Capital chairman Li Ruigang told the Abu Dhabi Media Summit today.

“The film market has been becoming more and more attractive, both in terms of box office, movie theaters and movie production,” Li said. “There are more than 10,000 screens in China. And the audience is also increasing, box office is up more than 30% [in 2011, year on year].” He said he thought the growth would stay steady at such a rate. “There is the demand from people who are willing to spend money to see films in the theatre. Also the government is eager to promote the movie industry, especially for the past few years. ” To meet the demand, there needs to be more “high-quality content” on offer.

Li, the influential former president of Shanghai Media Group and one of the most forward-thinking and international-friendly Chinese media executives, founded CMC in 2010 as the first media investment platform in China. The outfit has already made big deals like an investment in Star TV’s Chinese operations as well as an estimated $350m deal with DreamWorks to create Oriental DreamWorks.

In a conversation moderated by Screen, Li noted that the first project under the new DreamWorks deal would be the co-production of Kung Fu Panda 3. “The joint venture is the first of its kind,” he said, noting that the deal would start with a slate of films targeted at both the Chinese market and international markets. Animation will take the lead, and live action films should come in following years. Merchandising and distribution will follow production, and the company will also build an entertainment destination in Shanghai. He said emphatically that wouldn’t be a theme park but instead include “a lot of attractions…cinemas, theaters, restaurants.”

New media start-ups are booming right now, but he said: “In the next two years I think we’ll consolidation of this market.” That will include the consolidation of fragmented local players into those with more regional or national ambitions.

He said that younger media consumers in China “are spending more and more time on computers,” even while they watch TV. While it’s positive to see consumers embracing more platforms he noted: “We need people to learn that content isn’t free online.”
Li also predicted that youth embrace of e-commerce would start to kill off some traditional retail outlets, not just in media but across all sectors.

Other growth industries that CMC hopes to invest in are sports (and sports media) and live entertainment.

As for foreign investors hoping to partner in China, he noted: “Probably the most important thing is ‘Do you have the vast understanding of local culture?’ And do you have the ability to successfully localize your business model?” He said that foreign investors would need to get to grips with local regulatory issues, and thinking about how “to bring best practices into China.”

He said that outside investors shouldn’t expect China to change overnight: “We will have another government soon, but I don’t think we’ll see big change in the media circle. The change in Chinese media will be smooth and gradual, at its own pace.”