Poly Theater in Beijing. Poly Film Investment Co Ltd has established strategic cooperative partnerships with leading property developers including Greentown and Shanghai-based Greenland, which means it has priority in negotiating with them for cinema construction. [Photo /  China Daily]

BEIJING - Although the Chinese film industry celebrated a milestone last year with box office receipts reaching a record 10.17 billion yuan ($1.54 billion), commercial property developers were raining on its parade by seeking a bigger slice of the profits.

The two industries have been cooperating since 2002, when the China Film Group Corporation struck a deal with Citic Shenzhen (Group) Co to invest in the construction of New South Movie City Inc.

The mutual benefits were obvious. Cineplexes are believed to be a catalyst for the prosperity of surrounding commercial facilities, such as shopping malls, because they attract lots of people.

However, the rampant expansion of cinemas driven by the burgeoning Chinese film market in recent years has left commercial property developers doing better than cinema investors.

Box office receipts increased from 6.21 billion yuan in 2009 to 10.17 billion yuan last year on the Chinese mainland, registering a year-on-year growth of 63.9 percent, according to the State Administration of Radio, Film and Television.

In 2010, the number of cinemas increased by 313 and the number of screens exceeded 6,200 compared with 4,723 in 2009, official figures showed.

"There used to be three to four investors bidding for a cinema project several years ago, but the other day I went to Changsha and they told me more than 30 different groups were battling over just one proposal," said Qin Hong, chairman of Stellar Group, one of the leading private film companies, speaking in early November.

Many of these competitors offered bids that were totally unrealistic and unlikely to recover the investment, let alone make a profit, because there exist many uncertainties in the market, Qin added.

Liu Debin, general manager of Poly Film Investment Co Ltd, said: "We once offered a quotation price of 1.5 million yuan as a year's rental in a bid for a cinema project of 4,000 square meters in Mentougou district in the city, but ultimately we failed because others offered more.

"Investors without any industry background and professional knowledge are increasingly streaming into the cinema sector, creating crazy competition within the industry."

Property owners inevitably choose the investor offering the highest price even though he or she doesn't have any experience in the market, Liu added.