China sees growth in cinema screens and box office sales

China's box office quadrupled between 2010 and 2015 and annual box office sales increased by almost 50% to ¥44.1bn ($6.7bn) in 2015, a trend expected to continue. The author of this article rejects the suggestion that the strong growth in China's film industry is due to the "lipstick effect"; the theory that during tough economic times, consumers will cut spending on excessive luxury items but still indulge in more affordable luxury goods such as premium lipstick, or movie tickets. The author suggests the growth is due to cinema accessibility, with the number of screens increasing by 8,000 to 32,000 screens in 6,000 or so cinemas last year, compared to 6,200 screens in 2010, as a result of investors' confidence and their desire to expand market share.

Is the domestic box office boom a lipstick effect? Updated: 2016-02-04 08:31 By Zhu Qiwen(China Daily)

A poster of Crouching Tiger Hidden Dragon II: The Green Destiny. [Photo/Mtime]

As frequent data underline the fact that China's manufacturing is slowing, it is convenient and common for almost all the world's economic woes to be laid at its door.

Some observers have even gone so far as to shrug off the Chinese economy's few bright spots like its soaring movie box office as merely another case of the "lipstick effect", which describes the trend for women to buy more affordable luxury goods such as lipstick during times of economic uncertainty.

But is China's box office really inversely correlated to the country's economic health?

A cursory glance at China's robust box office growth and the gradual decline of its GDP growth over the past few years may give credit to such a lipstick view. While China's box office quadrupled between 2010 and 2015, the growth of the world's second-largest economy has steadily slowed from 10.6 percent to 6.9 percent, the lowest in a quarter century. Therefore, it seems plausible to conclude that more Chinese people have gone to cinemas to seek temporary relief from the economic headwinds.

But a close examination of the two sets of statistics indicates that the assumption that the ongoing surge in the number of movie-goers in the country can be used as an inverse index to gauge economic health is a fallacy, because it simply flies in the face of the Chinese economic reality, which is far more complex and interesting than expected.

China's annual box office returns reached 44.1 billion yuan ($6.7 billion) in 2015, up nearly 50 percent over the previous year. And its movie market is a major one continuing to grow.

To support an inverse correlation between such a jaw-dropping growth and an overall economic recession, one needs to find clear evidence that Chinese consumers have significantly cut their spending on other luxury products to afford their love for movies.

Sales of luxury goods such as watches have fallen in recent years, but that has more to do with the country's anti-graft campaign than a change in domestic consumer spending power.

And anyone who suggests that Chinese consumers are tightening their purse strings will have to come up with an explanation for why they are still travelling and spending more than ever both at home and abroad. Chinese travelers made around 120 million outbound trips in 2015, up 12 percent from the year before.

As to the Chinese movie market, the reality is the number of screens increased by 8,000 to 32,000 screens in around 6,000 cinemas last year, because of investors' confidence and desire to expand market share. The country had only 6,200 screens in 2010. The continuously increasing accessibility in many small Chinese cities alone can easily contribute to a steady growth in the country's box office.

The revenue growth of each cinema is also largely determined by the number of blockbusters that can attract a disproportionate share of movie-goers. But what movie will be a blockbuster is anyone's guess given the bitter lessons many domestic and foreign producers have learned from their efforts to woo Chinese movie-goers.

As Kung Fu Panda 3, which is less American and more Chinese than the first two installments, premieres before the Chinese New Year, it is no surprise that such a film tailored for the world's second-largest movie market has delighted so many Chinese parents and kids and raised its box-office potential.

So, is there a lipstick effect that we should worry about? The answer from Chinese movie-goers is probably no.

Instead, a new theory is needed to timely measure the real progress of how the Chinese economy is maturing from one based on industry to one fueled by consumption.

The author is a senior writer with China Daily.

zhuqiwen@chinadaily.com.cn