Shining Star: A Chinese screen company's tale of struggle and triumph

Features

The Chinese film industry is growing by a remarkable 15 cinema screens per day, and two-thirds of those screens are being made by Anhui Star Screen Co. LLC, a privately owned Chinese company and the largest screen manufacturer in the world. It is based in the province of Anhui, with two locations in two cities—Wuhu and Ma-an-shan, 15 minutes’ driving distance apart. The two plants cover 26 acres in total, and house a total of 10 production lines. Their domestic market share is now more than 80%.

What follows is the story of how this Star was born, came near death, and was born again.

A Trip to Star Screen
October 30: After a one-hour high-speed rail journey from Shanghai, I was picked up at the curb of Nanjing South Train Station by Su Yan, domestic sales manager of Star Screen. With her sunglasses, she looked like a movie star. Su loaded my luggage in the back of her black BMW X6 SUV, jumped back in the car and quickly drove us away.

In addition to her job title, Su Yan represents the second generation of Star Screen, one of four daughters of co-founder Xia Xiaoyan. I met her and her sister Su Lu, the international sales manager, twice at CinemaCon. I did a story on them in Chinese for China Film News and felt strongly that this story should be shared with the readers of Film Journal International. That is why I made a special trip to their factories.

In the car, Su told me that she and her mother and chairman Gao Songbai had just returned from Yangzhou, where they attended the SARFT Science and Technology Committee 8’s seventh Film Professional Conference. They also returned with an award for their new product, the LDM portable screen.

Su was also eager to share with me the stunning data just released by Mao Yu, the deputy chief of the Film Bureau at the Conference, for the first three-quarters of 2014:
* China’s total number of cinema screens is now 22,420, up 31.88% from the same period last year.
* According to data released annually, the total number of screens was 8,800 in 2011. That figure rose to 11,835 in 2012, a 34.5% increase, and to 17,000 in 2013, a remarkable 43.6% jump. This year’s 31.88% increase was somewhat slower.
* Box office was 21.949 billion yuan ($3.586 billion) for the first three-quarters of 2014. It has already surpassed last year’s total box office of 21.769 billion yuan. Mao expects total 2014 box office to top 30 billion yuan ($183,600,00).
* Moreover, during the Oct. 1 National Day holiday week, 14 new films attracted a total of 32 million moviegoers, generating 1.1 billion yuan ($179,738,560), a National Day week box-office record.
* The Administration Center of Digital Film Content, SAPPRFT, has registered 300 rural mobile cinema lines (normally one or two persons per line) and 60,000 digital movie mobile playing systems. It has also set up 208 satellite receiving stations. The platform is capable of ordering more than 3,100 films and has completed 8.48 million showings. (The government has acquired the copyright of 4.98 million showings.)

Su carefully calculated the new numbers and confidently confirmed, “Last year we manufactured 5,700 screens, as China added more than 5,000 new screens. That means that 10 out of 15 new screens were made by us; the rest is replacement of old screens. So far this year, Star Screen has already made 4,000 screens, and there are two more months to go.”

Su predicted that the China cinema business has about three to four more years of rapid construction/development. Now it is all about cities—tier one, two or three, and even tier four cities—but “the future is in the countryside. Imagine one screen per village! T4 has received two billion yuan [over $326 million] at the box office.”

She reflected, “Twenty-nine years ago, no one had foreseen the company today and the Chinese film industry today. Not my mother, not Chairman Gao.”

Birth of a Star
1984: China imported its first 3D movie, Comin' at Ya! (1981), an American western barely known at home but a major hit in China. Inspired by the story and the amazing 3D effects and driven by market demands for brighter screens and 3D silver screens, Gao Songbai and three of his buddies spent their spare time and their own money experimenting with the creation of a 3D silver screen.

Born in 1942, Gao graduated from Anhui Normal University with a degree in Physics in 1965, and worked as an electronic engineer before starting his screen business. He also spent six years in Africa building textile factories, as part of the Chinese government’s foreign-aid projects. His knowledge of screens only extended to some classes in optics and sound at a local technical school. When he saw Comin' at Ya!, his day job was overseeing equipment purchasing at a Wuhu local printing and dyeing factory. His three partners had worked at an optical instrument factory.

Soon, Li Jianhua, a friend of Gao’s and also the head of local Wuhu Qiangli Canvas Factory, saw the team’s work. The Qiangli Canvas Factory was producing cotton-based knitting canvas screens as a third of their production. In addition, they already had a 3D silver screen R&D project approved, but lacked the talent and technology. Impressed by Gao and his team’s beta silver screen, the head of the Canvas Factory offered 20,000 yuan (roughly $10,000) to buy the team’s technology, each of the four partners receiving one-quarter. Three of them were let go. Li made a strong effort to transfer Gao from the printing and dyeing factory to Qiangli Canvas Factory—it was a big deal transferring from one state-owned enterprise to another in those days—and made him the head of a new subsidiary, Wuhu Qiangli Silver Screen Factory. Gao subcontracted the new silver screen factory with the canvas factory.

By the middle of 1985, Gao rented a couple of bungalows near the city, hired about a dozen workers, half from Qiangli and half from the village population of peasants, and Qiangli Silver Screen, the predecessor of Star Screen, was in business.

By the end of 1985, the first Wuhu 3D silver screen was produced. On March 2, 1986, the Anhui provincial government awarded this screen with a “New Product” certificate. Even today, Gao still views that date as his 3D silver screen’s birthday.

The first screen was sold to a local Wuwei movie theatre. Qiangli Silver Screen Factory made 100 screens in 1987 and 200 in 1989. By 1992, it was making 600 screens in the course of a year. In those days, one screen was sold for 10,000 yuan. Then, in 1992, the Chinese film industry began declining. Fortunately, Gao’s unexpected side business of installing light and sound systems was doing well.

With this downturn in screen sales, Li, the head of Qiangli Canvas Factory, decided to sell the Qiangli Silver Screen Factory to Gao for 300,000 yuan ($54,446). No one thought it was a good deal. However, Gao decided to take it, partly for sentimental reasons, partly with a hope the market would eventually return. With 300,000 hard-earned yuan put together by him and 16 other employees who decided to stay, he paid off the Canvas Factory.

Gao’s hardest decision was to quit the so-called “Iron Bowl” job from the state-owned enterprise, which paid him a monthly salary of 78 yuan ($38) with limited benefits. “Not having a job [with the establishment], you were not even considered a member of society,” Gao recalls. “You don’t even have your identity.” On August 26, 1992, Gao submitted his resignation letter to Li and lost three nights of sleep.

But then the Star was born.

Gao and Xia, along with a total of 17 partners, formed a new company, Wuhua Star Screen Company, with Gao owning 45%, Xia 30% and the rest 30%. They started operating like a shareholding company. Although they owned the name Qiangli Silver Screen, they decided to abandon the name and made a clear break from the past.

Star Rising: The Gold Duo
“He is in charge of technology, and I am in charge of management. I admire him for his dedication to work. Technology first, management second, No technology, there will be no good product. Once you have a good product, someone has to sell it. ” Xia Xiaoyan smiles, “Therefore, people call us ‘The Gold Duo.’”

To understand Star Screen, you have to know Xia, who is both outspoken and down-to-earth. Xia explains their logo: Star Screen in Chinese is Ying-Xing; the upside-down initial Y happens to be like the pictograph of a walking man carrying a sun on his back. “The stronger left stroke represents Gao, and the right stroke represents me, in a supporting role. For 28 years we have been supporting each other.”

Joining with Gao in 1986, with three years of middle-school education, a strong will to survive and a keen desire to work, Xia is primarily responsible for Star Screen’s sales. At the age of 65, Xia has two daughters, Su Yan and Su Lu, who witnessed the ups and downs of Star Screen at an early age and share responsibility for domestic sales and international sales.

“Being the first and only privately owned screen factory wasn’t easy. People looked down at you,” Xia says. In the early 1990s, she recalls, she traveled across half of the country to Haerbing, to participate in a film industry equipment conference. However, she was rejected by the organizer, the head of leading film projection company Haerbing Film Equipment Factory, despite support from other industry participants. “I almost wanted to cry. It was all about status—they didn’t even believe we were on an equal footing.”

The digitization of the film industry changed everything. Some 20 years later, the irony is that the industry bully, the state-owned Haerbin Film Equipment Factory, is no longer relevant to the film world. Instead, they are making currency-counting machines.

Xia also recalls that in early 1989, already a mother of four, in charge of sales for Southwest region of China, she stood on trains for 48 hours, because tickets for seats were sold out.
Xia has a motto: It is okay to endure hardship, but be sure to succeed. Be low-key as a person, but maintain high standards for work.

Turning Point Number 1
The company did just that. In 1992, at the Shanghai National Screen Comprehensive Technical Indicators Competitions, Star Screen beat three major competitors, Xi’an, Hebei and Qinhuangdao, and won the first prize. The other two major contenders, Shandong and Shanghai, pulled themselves out of the competition, stunned by Star Screen’s superior product.

That prize gave the Star Screen a major boost. Sales increased 20% yearly for the next couple of years. Though the Chinese industry was slowing down, Star Screen was able to maintain stable growth. At the same time, three major established state-owned screen manufacturers, Xi’an, Qinghuangdao and Shanghai, went under and eventually disappeared.

Turning Point Number 2
July 1997: Star Screen, as a privately owned company, approached China Film Equipment Corp. with a proposal and eventually signed a ten-year joint-venture agreement, with 1.5 million yuan from China Film Equipment and 3.6 million yuan from Star Screen. Xia told Li Maolu, the head of China Film Equipment Corp., “You have taken a political risk for us, and we will guarantee your economic risk. We promise to double your return.”

Xia recalls the pitch of Star Screen’s big believer and supporter Li Maolou, the head of China Film Equipment Corp., to Film Bureau chief Tong Gang for his approval of the joint venture: “China cannot live without film. China cannot live without film equipment.” Fifty days later, the deal was approved. With the joint venture and new capital, Star Screen was able to finish the construction of an expanded factory—and adding the words “China Film Equipment Corp.” in front of Star Screen certainly helped sales.

Near Death
2003: Gao was diagnosed with liver cancer. The Chinese film industry continued declining. China Film Equipment Corp. had a new head who was concerned about their 1.5 million yuan investment with Star Screen and decided to withdraw their funds. Gao received the news just after being discharged from the hospital and while his surgery incisions were still healing.

Star Screen honored their agreement and paid China Film Equipment in full, despite Gao’s poor health and the gloom surrounding the film industry. But, with annual dividends of 100,000 yuan for seven years and a principal of 1.5 million yuan, China Film Equipment did double their returns.

However, it was not without sacrifice for Star Screen; at the end of that year, Star Screen was 400,000 yuan in the red. They did not even ask China Film Equipment to share the loss. Some suggested that it was just government money, so don’t bother to pay it back. Xia disagreed: “Face is important. You cannot buy face with money.” No bitterness, only understanding of others.

From 1994 to 2003, with all the ups and downs, many of shareholders sold their shares and left the company. Gao and Xia remain the majority shareholders.

Born Again
Not only did Gao fully recover from his liver cancer, Star Screen as an entirely privately owned screen company embraced the historical growth of Chinese cinema. Thanks to the birth of the Chinese multiplex in 2003 and the digitization starting in 2006, Star Screen’s screen count was 1,000 in 2006, doubling to 2,000 in 2007, 3,000 in 2008, and 5,000 by 2013. In addition, they sold 20,000 rural mobile screens that were paid by the government. Now Star Screen’s sales are 100 million yuan ($16.3 million).

Product
Finally, we turn to Star Screen’s product. With two locations, ten production lines and 200 employees, their product includes Huge Screen, Silver Screen, Dome Screen, Circular Screen, Matte White Screen, Digital Screen and LDM-Portable (indoor and outdoor), all detailed at their newly updated website, www.yingxing.net.

Ask Gao which one is his favorite, and it’s like asking a father which child he loves the most. It would be silly, but I have an idea. The visionary takes delight in talking about his newly awarded LDM portable screen and expects its indoor version will sell well overseas, as well as Star’s Premium Large Format screen. He predicts a huge demand for Premium Large Format in the near future in China. And why not? After all, Large Format is a natural for such a big market.

Based in Los Angeles, Keping Qiu is a columnist with China Film News, an official weekly trade read by decision-makers in China. Her articles may be found at her website, www.chinema.com.