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China to Create Major Entertainment, Culture Hub in Beijing

China Hollywood Studio - P 2013

The tax-free "culture zone" is modeled on the "special economic zones" that made the country a manufacturing super-power in the 1980s and 90s, and will include TV and film facilities.

A Chinese state-backed media conglomerate is planning to create a new $800-million, tax-free arts and entertainment facility in Beijing, in the hopes of giving the country’s gradually-growing culture industries a jolt.

The new, so-called “Beijing Freeport of Culture” is the creation of Beijing Gehua Cultural Development Group, a conglomerate owned by the Beijing municipal government. Located next to Beijing Capital Airport, the Freeport culture zone will include film and television production facilities, fine art storage, and offices for companies involved in a range of creative businesses, from luxury goods to software design, according to a report.

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Gehua’s ambition is to plant the seeds for a culture industry hot bed in the Chinese capital that boasts elements of Hollywood, Silicon Valley and New York’s Chelsea District all in integrated in one commercial compound, said the . The company hopes to attract upwards of 50 companies – half foreign, half domestic – to do $8 billion (50 billion yuan) worth of business at the Freeport by 2016.

Such specially designated tax-free economic zones were integral to China’s opening to global capitalism in the 1980s and 90s, when demarcated business districts were set up in the southern city of Shenzhen and the Pudong section of Shanghai, to foster the country’s then nascent manufacturing sector. But this will be the first time China is attempting to implement the tax-free, infrastructure investment model of "economic zones" to the facilitate growth in the slipperier, and less predictable arts and culture sector.

Boosting cultural influence abroad has been a pillar policy initiative of the Chinese government for years, as the country looks to bring its “soft power” more in-line with its newfound economic might.

While China’s film market surpassed Japan last year to become the world’s second largest, with box-office sales of $2.7 billion, foreign films — largely led by Hollywood blockbusters — accounted for more than 50 percent of the yearly revenue haul for the first time. Chinese domestic films have made a stronger showing in recent months — road comedy and Stephen Chow’s both pulled in more than $200 million domestically — but exports continue to flounder internationally. After setting an all-time domestic box-office record of $202.6 million, earned just $57,000 during its limited run in North America.

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Guahau, which is closely linked to China’s culture ministry, is hoping the new economic zone will both lure creative talent from abroad into the Chinese capital and create the conditions conducive to stronger cultural exports for the international market.

"The government and our group had the idea to export culture to the world," Wang Yudong, general manager of Gehua told the at the company’s headquarters in Beijing. "Already, there’s a government policy for free-trade areas. We’re just applying it to culture."

Guahau’s ambitions have not been received without some skepticism in Beijing though.

Ji Tao, a researcher with the Auction Research Institute of Central University of Finance and Economy in Beijing, told the that he thinks it is foolish to assume creative industries will sprout the same way low-cost manufacturing did in China’s special economic zones in the 1990s.

"This is a new concept made up out of nothing," Mr. Ji said. "A Freeport is for industrial products, which need to be processed with raw material inputs. But culture isn’t like this."

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Guahau is major player in various areas of Chinese media and entertainment. The brand is best known to Chinese consumers for its cable and home Internet subsidiary, which is the dominant web service provider in Beijing. The company also has a TV and animation production businesses and helps manage major events for the government, such as the 2008 Beijing Olympics and Beijing Design Week.

In 2012, Guahau secured Sotheby’s as its first foreign partner at the cultural Freeport. Sotheby’s was given an 80 percent stake in a new, jointly-held auction company that will operate out of the facility, according to the . The Sotheby’s China deal marks the first time a foreign auction house has been given an opportunity to co-own its own operations in China.

So far no foreign film and TV companies have been linked to the project, but it’s understood Guahau will be actively recruiting new partners throughout the year ahead.

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