Chapter 264: Returning Again

When Wei Dongling returned, Xiao Ran was overjoyed, as news had just arrived from Cannes: his new film, “True Colors,” had been selected to compete in the festival. This was truly a cause for celebration for Xiao Ran, as it was entirely the result of his own directing skills. Being chosen among global entries was sufficient proof of his ability.

For Xiao Ran, who had always longed for a film that was entirely his own, this was undoubtedly a tremendous affirmation. Now he truly understood why filmmakers fought so hard to win awards at film festivals.

In fact, “Spy Change” and “Legend of the Racing God” were both his personal creations. However, due to their strong commercial elements, Xiao Ran couldn’t consider them as truly personal works. What he wanted was a platform where he could fully express himself through a highly stylized personal film.

Currently, he wasn’t focusing on that; instead, he was at home reviewing reports from the mainland. Theaters on the mainland were being built one after another, while those that had been renovated were already completed. It had to be admitted that these theaters, in terms of equipment and overall quality, were worlds apart from before the renovations.

The equipment from Dolby Laboratories and DTS, controlled by Phantom, along with comfortable seating and multi-functional screening rooms, all cost the film company a fortune. Although Dolby and DTS were subsidiaries of Phantom, they still had to be purchased at full price, didn’t they?

Still, they couldn’t be compared to theaters on the mainland before the renovations—one was still in its infancy, while the other was already mature. Compared to theaters in the United States, Phantom had done even better. The theater chains under Film Theaters had invested heavily in renovations over the years, and it wouldn’t be an exaggeration to say they were the most comfortable and enjoyable theaters in the world.

Xiao Ran believed that the reason mainland cinema couldn’t keep up was largely due to state support and control, which prevented it from becoming market-driven or commercialized. In contrast, Hong Kong’s film industry, under Phantom’s leadership, had already become a highly mature commercial empire.

Besides that, theater conditions were undoubtedly crucial, which was why he invested so much effort in renovating and building theaters. Another factor was ticket prices. After thorough research, the film company set ticket prices on the mainland at two yuan each. Although it seemed low on the surface, the key was to encourage people to go to theaters. Once they developed this habit, piracy could be significantly curbed.

Since last year’s exchange program, mainland film studios had produced around thirty films, with an average investment of less than ten million yuan each. The largest investments were made by China Film Group for two summer blockbusters, at five million and six million yuan respectively. If they lost money, the losses would be enormous.

Interestingly, according to these records, these exchange students were unable to adapt to the production systems in the mainland even half a month after returning to work. The first issue was project approval—just getting the script approved could be extremely frustrating. As for equipment, it was even more ridiculous; the film studios couldn’t even provide the basic film stock and camera gear that the exchange students wanted.

Initially, Huang Qun planned to borrow the equipment from Xiao Ran, but Xiao Ran simply told him, “The best equipment in Hong Kong is available at Siwei Company. Although it’s a subsidiary, if Shadow wants to shoot a film, they still have to pay to rent it. You can go and rent it; they might give you a slight discount at most!” Hearing this from Xiao Ran, Huang Qun felt extremely embarrassed. In the end, the mainland film studios were unwilling to spend even more than the production cost to rent equipment, while China Film Group was determined to go all out and paid to rent equipment from Siwei’s mainland branch for those two big-budget films.

However, a problem arose: by the time the scripts, after passing the review by the film studios and the film bureau, were delivered, they had been completely altered. This infuriated many screenwriters who had come from the exchange program—they were used to creative freedom under Shadow’s influence and were shocked to see their scripts turned into something entirely different.

Something funny happened: last year, about a hundred exchange students returned to the mainland. After less than a month, the screenwriters began quitting one after another. Directors and other filmmakers were even angrier—during filming, the studio bosses dared to give orders, leading to more resignations. Those who managed to finish shooting despite enduring these frustrations were finally devastated during post-production. What kind of post-production was this? There was space, but the equipment was far inferior, extremely outdated. Yet, the film studios were unwilling to spend too much money having the work done at Siwei, so they had to make do.

When the final product was ready, the creators were horrified after watching it. It was utterly humiliating—they thought if their Hong Kong colleagues saw it, they would be laughed at mercilessly. The action scenes, due to poor post-production, turned out to be weak and ineffective.

Actually, these were just the experiences of a small group. The country placed great importance on this return initiative and invested heavily, hoping to bring some hope. Just for the films of these returnees, the country invested hundreds of millions through China Film Group.

The film studios did respond to the country’s call and tried their best to promote Chinese cinema. But just in terms of scripts, countless were rejected. Interestingly, some of these studios were stubborn enough not to send their films to Siwei for post-production. But most still sent them there for processing—though having technology alone wasn’t enough.

There are too many restrictions in mainland film production, as many filmmakers who resigned and returned to Hong Kong told Xiao Ran. They themselves couldn’t stand being told what to do by outsiders.

Xiao Ran wasn’t afraid at all of China Film’s two summer blockbusters. The fundamental atmosphere of the film market wouldn’t improve, no matter how many actors from Meiyin were brought in—it would be useless. Film studios are controlled by the state, which in turn controls the actors, so market-oriented improvements will never happen.

As for the box office performance of these films? It’s actually predictable. At least forty Hong Kong films flow into the mainland market every year, and these films, known for their entertainment value, have dominated the market overwhelmingly. Of course, later on, Huang Qun called Xiao Ran in a rather tactful manner, hoping that the Hong Kong film industry could stagger their release schedules and avoid deliberately competing with mainland films.

They did as requested, but the box office results were still poor. The heads of the film studios couldn’t understand why the same group of people could produce films with excellent reputations and box office success in Hong Kong but fail miserably in the mainland.

Xiao Ran still felt somewhat apologetic, as the hundreds of millions invested by the state were bound to result in losses. In fact, Xiao Ran knew all this would happen eventually. What could mainland films offer to compete with Hong Kong films? Especially when it came to actors returning from Hong Kong. Remember, top directors like Wei Changqing earn at least two million dollars as fees in Hong Kong.

In the mainland, two million is enough to produce a film. Wei Changqing, in particular, earns up to four million as a director’s fee. If they’re made to shoot films in the mainland, how much would their fees be? There are no real fees—just a salary system, and their annual salaries combined are still less than Wei Changqing’s fee for shooting a 15-minute short film in Hong Kong.

Those actors’ valuations run into hundreds of thousands or even millions. How can film studios afford such amounts? Without film commercialization, there’s no box office revenue, and without box office revenue, there’s basically no income. With no income, how can they pay?

With no room for growth and unable to support themselves, why would they continue acting? It’s better to just give up. What frustrated actors like Wei Changqing was that, under Meiyin’s leadership, the Hong Kong film industry saw another wave of salary increases. The highest-paid actor, Brother Fa, had his fee exceed twenty million. The trend was intense, but they weren’t involved and still had to shoot films to prove themselves.

The mainland ultimately couldn’t stop this wave of returnees. After finishing their films, the actors returned to Hong Kong, finding new employers—either Meiyin or Deppa. Last year’s wave of returnees gradually faded away like a farce.

This was precisely why Xiao Ran stopped worrying about it after considering things carefully. It was also why he insisted on raising actors’ fees. As history shows, Wu Yusen complained that Hollywood treats directors as workers rather than creators, yet they still hesitate to return for money’s sake.

What worried Xiao Ran for a while was determining where to set a limit on these fees. Currently, aside from the mainland, Asia has a market worth about three billion dollars per year, while Europe has a market of about two billion dollars. In Asia, Hong Kong films account for nearly 40% of the market, while in Europe, they account for nearly 30%.

The average investment for Hong Kong films in their initial release has now reached 40 million, leaving far less profit than before. Compared to prices in the United States, the salaries of film actors have basically reached Hollywood levels. After investigation and calculation, it was determined that maintaining the current salary base is necessary—at least until the mainland market expands further.

In fact, there is still room for salary increases. Currently, Hong Kong invests around 6 billion dollars annually solely in film production. If the North American market is included, Hong Kong films can generate at least 2 billion Hong Kong dollars in global box office revenue each year, with a considerable profit margin still remaining.

And don’t forget that movies rely not only on box office income. With the spread of VCDs in Asia, revenue from video tapes has gradually become more significant. Television broadcast rights are also sold for huge sums. For example, the rights to show “Jurassic Park” in North America around last Christmas were sold for 60 million dollars. The broadcast rights in Asia and Europe were purchased by Shuxiang Media for 400 million Hong Kong dollars.

So, there is still room for salary increases. However, Xiao Ran believes the situation isn’t clear enough—once the mainland lifts censorship restrictions, prices can rise at any time. Ultimately, the key issue still comes down to this.

This really troubled Xiao Ran, who couldn’t help but leave his desk in anger. He cursed bitterly, thinking to himself that he wasn’t in charge of Hong Kong films—why did he have to deal with all this mess?

After being depressed for a long time, Xiao Ran went to the balcony, looked up at the sky, and shouted a few times, finally calming down. It’s no wonder he was upset—just dealing with his own affairs at Shadow was enough trouble, yet he also had to plan the future of Chinese-language films. What a mess!

Xiao Ran smiled bitterly. hadn’t he brought all this on himself? For his ideals, he had to pay a high price. Facing the strong wind, he felt like a bird in the sky, forced to move forward in the direction he had chosen no matter how strong the wind was.

Xiao Ran wasn’t a bird—he had no wings. But Wei Dongling was his wings. Could Chinese-language films reach their goals? Could Shadow achieve global dominance? That remained unknown.

That afternoon, Shadow Group would hold a meeting with the heads of its film-related subsidiaries—quite interesting. On the surface, Shadow seemed to be just one of the seven flagship companies controlled by Xiao Ran, but in reality, Shadow Group controlled the shares of the other six flagship companies. Of course, Shadow’s shares were still held by Xiao Ran, Wei Dongling, and Fang Xiaoqiang as directors, while the company’s shares were distributed to other companies.

“A Dong, have you chosen the acquisition targets?” This was Xiao Ran’s question to Wei Dongling. Xiao Ran wasn’t very familiar with business history, but he vaguely knew that since last year, the global electronics, internet, and computer industries had seen rapid development. So, this was clearly a great opportunity to make money.

“Go to hell! I’ll take care of it. What can’t be done?” Wei Dongling glared at Xiao Ran with utter disdain and retorted, “What I want to ask is, are you ready with your money?”
Xiao Ran chuckled. During the time Wei Dongling was away, he had deliberately sold some of the company stocks controlled by Shadow Group to raise funds for the acquisition. Shadow Group owned a significant portion of stocks and real estate, so selling them was clearly a good idea.
Turning profitable investments into cash and using that money for other investments was undoubtedly efficient. At least that’s how Li Ka-shing made a profit of 70 billion Hong Kong dollars, as Xiao Ran remembered.
It’s no exaggeration to say that aside from a few very important company shares, Xiao Ran sold almost all the rest. Shadow Group, which had invested over 8 billion in these areas over the years, made a profit of nearly 30 billion Hong Kong dollars from these sales—just from Hassawi’s shares alone, it earned over 10 billion.
However, selling those shares was also a last resort. Xiao Ran didn’t want to increase the company’s debt, so he had no choice but to sell them to raise funds. Think back to when he took over Hutchison, which was worth nearly 200 billion, he already inherited its 6 billion US dollar debt. It was only through years of hard work by Shadow Group that they managed to reduce that amount.
Shadow Group had overcome the severe cash shortage caused by its large-scale acquisitions last year, but it still didn’t have as much cash on hand as before. Although it still had 10–100 billion Hong Kong dollars available regularly, this was clearly not enough for Shadow Group, which now operated on a scale of billions of US dollars.
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