Caijing "财经" On Foreign Investment In China's Entertainment Industry

The latest issue of Caijing "财经" magazine has an interesting article about the infusion of foreign venture capital into the Chinese film and entertainment production industry. The film market is growing robustly, and the most active foreign investors so far are IDG, through a new media fund they launched in partnership with Hearst, SIG, and Sequoia China  (红杉资本. They just closed a new $500M growth fund in May 2007). Foreign investment in China's film industry is still very regulated and the policy makers can be especially capricious.

Among the interesting tidbits mentioned is that Sequoia China has apparently closed up to a $10M investment into Polybona (保利博纳. Variety backgrounder), one of China's largest private film distribution companies. And Jason Jiang, founder and CEO of Focus Media, participated in Huayi Brothers recent $20M round.

In addition, the article mentions that Sequoia China investee Great Dreams Cartoons (宏梦卡通) is discussing a merger with Sunchime Cartoons (三辰卡通). In fact, according to the CEO of Great Dreams, Wang Hong (王宏), there may be a merger underway of the top three animation companies (one an animation channel) in Hunan Province--Great Dreams, Sinchime and Aniworld (金鹰卡通) to create an animation powerhouse. It is worth noting that Mr. Wang of Great Dreams told the reporter that the Hunan Provincial Communist Party Committee and the Hunan Provincial Government appear to be the driving forces behind this strategic consolidation of Hunan's animation industry. Since Hunan dominates China's Animation industry, this deal would have national impact.

Sequoia China likes the Chinese animation industry. They are also investors in UUpark(蓝雪数码), the company behind Leon the Frog (绿豆蛙). According to this article, UUpark intends to make Leon the next Hello Kitty, and Sequoia and SIG invested $1.5M into the company in late 2006.