Economy
Culture industry gets shot in the arm
(China Daily)
Updated: 2010-08-12 11:53
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SHANGHAI - The city has geared up to hatch new listed companies in its cultural industry by providing the sector with more financial support, a move in line with a central government plan to promote sector.
"Our company has paid 100 million yuan ($14.76 million) in guarantee money to small- and medium-sized enterprises (SMEs) in the sector in the first half of this year to reflect the government's determination to boost the industry," said Liu Xiangyang, head of Shanghai Dongfang Huijin Guarantee Co Ltd, a fund backed by the municipal government.
The fund paid 73 million yuan in guaranteed capital during 2009, and Liu expects that figure to reach 200 million yuan this year.
SMEs in China's cultural industry, if compared with large firms, typically lack the fixed assets to get bank loans and find it difficult to attract venture capital due to high investment risks.
"We're doing better work this year to help the promising SMEs in the sector to get cash and finally go public," Liu said.
The fund, the first of its kind in the country with a registered capital of 40 million yuan, was set up in 2008 to help channel more bank loans into cash-strapped cultural SMEs.
Shanghai-based China Media Capital, the country's first private equity fund focusing on the cultural and media sectors, has also injected capital to several Shanghai-based cultural firms for their sustainable growth.
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Shanghai is "rushing to help those qualified companies go public as soon as possible to boost the industry", deputy head of the city's publicity department, Zhang Zhijing, said last week.
Output of the culture industry totaled about 356 billion yuan in Shanghai in 2009, accounting for 5.63 percent of the city's gross domestic product.
The city's move is line with central government guidelines made last September to foster the country's culture industry by giving the sector more financial support. The guidelines aim to encourage more qualified companies to float shares on China's main board and merge with listed companies.
Chen Shaofeng, deputy head of the institute for cultural industries at Peking University, predicts the number of listed companies in the country's cultural industries to reach 120 within five years.
"We will see a bunch of companies in the cultural industries go public in the next few years and there will also be many mergers and acquisitions among listed companies," said Chen.