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China's Wanda looks outside to build soft power

Andrew Kam Man-ho, former Hong Kong Disneyland managing director, shown here speaking at a press event Feb. 15, has joined the Dalian Wanda Group. (Photo by Jennifer Lo)

DALIAN, China -- Dalian Wanda Group is enlisting support from outside the company as it seeks to transition from a pure developer to a services powerhouse, aiming to cultivate the soft power that Chinese companies so often lack.

The real estate titan said Tuesday it will team with top film studios to produce 11 Hollywood blockbusters over the next three years. Top officials from Sony, Warner Bros. and 21st Century Fox joined Wanda Chairman Wang Jianlin at a signing ceremony in Los Angeles.

China "is destined to become the largest film market, and if you want to profit from this market, you will have to understand the Chinese audience," Wang said at a presentation after the ceremony. "You have to please them, and win their hearts."

Cinema empire

Wanda is building a massive, 50 billion yuan ($7.4 billion) film and entertainment complex in eastern China's Qingdao, Shandong Province. The Qingdao Movie Metropolis, slated to open fully in 2018, is to feature not only a movie theater and a theme park, but also state-of-the-art equipment and sound stages for filmmakers. Wanda hopes to create a Chinese Hollywood that will attract visitors as well as further propel the country's film industry.

Wanda's ability to draw such big-name studios owes to acquisitions over the past few years that have made the developer a major player in the global cinema industry. The company bought AMC Entertainment Holdings -- the second-largest theater operator in the U.S. -- for $2.6 billion in 2012, and announced this year a deal to purchase Carmike Cinemas, another major American chain. Wanda recently acquired U.K.-based Odeon & UCI Cinemas Group for 921 million pounds ($1.13 billion).

Completing all of these deals will give Wanda, already China's top film exhibitor, a whopping 13,000-plus screens across China, Europe and the U.S.

China is a tempting target for film producers as a bright spot in a sluggish global market. Studios likely hope that teaming with Wanda will boost box-office revenue. Wanda also would benefit from blockbuster films that lure audiences to its theaters.

The Chinese company has acquired U.S. filmmaker Legendary Entertainment, known for works such as the American "Godzilla" reboot, and partnered with Sony. By getting more involved in the production process, Wanda aims to help create films with greater appeal to Chinese audiences, thus selling more tickets at its theaters.

Borrowing from Disney's playbook

Film is not the only industry where Wanda is flexing its muscle. Andrew Kam Man-ho, former managing director of Hong Kong Disneyland, has been tapped as vice president of Wanda Cultural Industry Group, the unit in charge of its theme park business. Wanda aims to glean service and management expertise from Walt Disney that it can then turn against Shanghai Disneyland, its biggest rival.

Kam quit Hong Kong Disneyland in March for "personal reasons." His resignation surprised the market as it was under his watch that the park finally turned to profit after seven years of losses.

Wang has mined the Chinese finance industry and U.S. tech sector for talent as well. Dong Jianyue, former chairman of Guangfa Bank, and John Liu, former president at Google Greater China, were recruited for top positions in Wanda's finance and internet businesses.

A set of an ancient war drama staged at Wanda's theme park in Hefei, Anhui Province.

While acquisitions drove growth in Wanda's film operations, the theme park business has expanded organically. The company plans to build 15 Wanda City parks in China by 2020 -- complete with hotels, condominiums and shopping centers -- to draw Chinese consumers with a growing interest in leisure activities.

But the company has experienced a few stumbles. The Wanda City that opened in Nanchang, Jiangxi Province, in May created a stir when a character bearing a striking resemblance to beloved Disney icon Snow White was spotted there. Characters resembling Kumamon, the official mascot of Japan's Kumamoto Prefecture, and Minions from the Universal Studios movie of the same name were seen strolling around a shopping center at a park in Hefei, Anhui Province, that opened in September.

Wanda's own characters lack charm, and the parks' parades and attractions arguably could be called imitations of Disney's. The service also is not up to snuff, with staffers seen yawning as they deal with customers.

Wanda is pivoting to the service sector as China's slowing growth leaves the real estate market's outlook uncertain. The key role of the theme parks in this shift makes Wanda's lack of talent there all the more of a headache. The company hopes to bridge the gap with help from outside, but training employees and developing the creativity to devise unique ideas cannot be done overnight. Wanda will need more time before it can pose a genuine threat to Disney.

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