Business

No bright lights for film firm's Nasdaq debut

By Kelly Chung Dawson (China Daily)
Updated: 2010-12-10 11:11

NEW YORK - Shares of Chinese film studio Bona Film Group Ltd dropped more than 20 percent during its trading debut on the Nasdaq on Thursday, as the company denied rumors it was interested in buying a stake in MGM.

Bona offered 11.7 million American depositary shares in its initial public offering (IPO). The shares opened at $8.50, in the middle of the company's expected range of $7 to $9 and closed at $6.60 on the first day of trading.

Liang Xu, Bona's chief financial officer, told China Daily in New York the IPO is aimed at getting access to the US capital market and "opening our books to US investors".

It will also make Bona more transparent in terms of corporate governance, he said. "That will give Bona the opportunity to become an ideal business partner for US counterparts who are aspiring to enter the Chinese market, and will offer a lot of opportunities for cooperation."

On the MGM reports, Liang said Bona's interest lies more in working with US talent, including directors, actors and writers.

He pointed to a joint production, Legend of Mulan, which paired Bona with Canadian and US investors, and starred the Chinese actress Zhang Ziyi.

"This is the perfect example of US resources and Chinese talent being married together," Liang said.

"We also invested in film production to acquire distribution rights in the Chinese market. This is the model we are looking at, moving forward."

Proceeds from the IPO, which Liang predicted will amount to about $100 million, will go toward acquisitions in China, securing distribution rights of films and for general corporate purposes.

About 50 percent will go toward acquiring cinemas across China, in a move to attempt merging cinemas and distribution in key box office cities.

Liang said cinema managers will not only oversee the daily business, but will work toward the growth of local distribution in various hubs.

Bona also runs a talent agency and will continue to pursue cooperation opportunities between China and the US, Liang said.

"We expect that within a mere three to four years, we'll see China become the second biggest film market only after the US," Liang said.

China's film market has grown significantly, with box office takings reaching 6.2 billion yuan ($930 million) last year, up from 3 billion yuan in 2008.

Bona recently produced a Chinese version of the American film What Women Want, recasting the story with international superstars Andy Lau and Gong Li.

Gong Li, who attended the IPO opening, said she thinks co-production between US and Chinese companies will see great growth in the coming years.

"China is the fastest-growing market in the world and most movies are local," she said. "Many US companies see it as a great opportunity to get into Chinese films, but I don't think it will be easy for them."

In 2009, the World Trade Organization ruled that foreign companies must be allowed to have a stake in the Chinese market. State-owned companies dominate the Chinese market.

"The market looks to be liberalized after March next year (when the ruling comes into effect) and we're hopeful that we will become beneficiaries of that ruling," Liang said.

"Opportunities exist for cooperation between the US and Chinese film markets and we are only seeing the beginning of this."