Portfolio expansion

An IMAX cinema in Beijing. China agreed to import 14 US films in 3D or IMAX formats every year in addition to the current quota of 20 revenue-sharing foreign films. Chai Jijun / for China Daily

The latest news from Huayi Brothers is its co-investment in a movie-themed commercial zone in Haikou, Hainan province.

The zone, covering nearly 1 square kilometer and featuring scenes from classic movies made by the company's top director Feng Xiaogang, as well as restaurants, stores, cinemas and hotels, was named after the director and also marks the company's first move into commercial real estate.

Haikou is not a stand-alone project. Huayi Brothers is planning to spend four to five years building another movie-themed park in Suzhou, Jiangsu province, even though the coming Disney resort will be just a two-hour drive away.

"China has not had any real movie-themed parks before. We will develop them based on adventure films or children's movies to create a place for family entertainment," the 42-year-old president of the company, said, projecting full confidence in the project.

Some analysts express doubts whether the local movie industry is able to handle diversified business. They point out investing in films is already a high-risk enterprise with an 80 percent failure rate. Huayi Brothers' ability to keep making money is a hot topic of conversation in China's entertainment circle.

The corporation's first quarter report for the financial year starting in 2012 did not make happy reading. Net profit dropped by 21.57 percent year-on-year. Revenue from online games and music saw a huge fall of more than 50 percent.

Huayi Brothers' revenue dropped by 16.73 percent year-on-year in 2011, its fiscal report said.

In the face of criticism, Wang accused his detractors of bias.

"The industry has seen rapid expansion," he said. "There are problems because the strategic administration of many companies is comparatively weak compared with their US counterparts. However, Huayi Brothers is taking care over its plans. We just need some time. How can you expect a new business to become profitable overnight?"

Wang said Huayi Brothers intends to continue diversifying its business.

It set up a joint venture in Hong Kong to launch the special administrative region's first Mandarin movie channel in February in what Wang hopes will be a Chinese version of HBO that will eventually cover the whole world.

In May, the company entered the premium fashion industry in association with Septwolves, a menswear firm in Fujian province, by staging an haute couture fashion show.

It is also the second-largest stockholder in Ourpalm Co Ltd, a mobile terminal game producer that was listed on the A-share market in May, showing a steady performance so far.