Animation Business in China - An Uncertain Outlook

The future for China's animation industry is uncertain.

Since the late 80s, China has been a choice location for outsourcing 2D cartoon series to due to its low cost. But since a couple of years back, the number of outsourced projects to China has decreased, and the future for China's animation industry is uncertain as homegrown animation products are also not bringing in the cash.

At of this moment, the China economy is rising at a meteoric rate and wages are also increasing due to higher standards of living. The higher wages and increasing costs are discouraging some companies from outsourcing their work to China. In the wake of countries like India, Thailand and the Philippines competing for a piece of the outsourcing pie, China struggles even more as it loses some ground due to the language barrier. Most outsourcing companies hail from English speaking territories and the Chinese are more lacking in English than their Indian and Filipino competitors.

Due to this, China animation companies figured that they had to stop depending on outsourced work and start creating their own intellectual property. If the foreigners could make their billions through animation, why couldn't they?

After all, they have the expertise and experience garnered through years of outsourcing work right?

Well, not quite right. The problem is - they are technically sound but creatively weak! 90% of the cartoons produced by homegrown companies are so bad at their concepts and story-telling that even local broadcasters refuse to broadcast them. And of the 10% that are accepted as the 'cream of the crop', only some are good enough to sell to the rest of the world. And by rest of the world, I mean just a handful of territories.

Enter the Chinese government, who came up with policies to grant monetary incentives to Chinese companies who produce their own original content in an effort to encourage better production quality. But creativity is something cultivated by decades of media exposure and cultural freedom - both of which China is lacking in. It did not help that the Chinese government restricted the broadcast of foreign content on local TV stations, effectively restricting the dissemination of creativity that these foreign content bring. The monetary incentives did encourage more companies to create their own original content, but did little to increase the quality of the content. They could at best sell to China provincial TV stations (which paid very little or nothing at all) and some low-paying countries around the world, hardly recouping their investments.

The animation companies then looked at licensing opportunities for the characters that appear in their cartoon content as a secondary source of income. However, piracy is rampant in China and many manufacturers and consumers do not respect intellectual property rights. With a population of 1.4 billion people, the merchandising potential is enormous if this situation can be improved! Strangely though, they seem to respect foreign intellectual properties much better. Walt Disney, Looney Tunes and some Korean brands are apparently enjoying healthy sales over there.

At this moment, China animation companies are fighting a tough battle for their survival. Many have collapsed amidst failed venture funds and mounting debts. The ones that are surviving are doing just that - surviving. A small handful appear to be doing fine due to a healthy inflow of outsourced work. But how long can the outsourced work keep coming in? And when the tap finally stops flowing, will the China homegrown animation products finally mature enough to make it to the world market and grow secondary income through licensing and merchandising?

Only time will tell.

You can visit the Mediafreaks blog to pick up more tips on design and animation.

This article was contributed by Aldric Chang - a creative businessman who is active in music composing and production, internet marketing, casual games production, animation production, cartoon production and character licensing. His 3d animation studio - Mediafreaks - is focused on producing high-end animation work for documentary producers, advertising houses and cartoon animated series - with projects ranging from the animation of dinosaurs to the visualization of natural disasters and something as chic as 3d jewelry animations.

You can also visit the Mediafreaks Animation Showcase Site for an extravaganza of the coolest and funniest free animations on the net.

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