Wang Jianlin Has Turned In the Homework a Crowd of Stars Backed Three Years Ago — He May Just Be Borrowing Hollywood's Limelight Again

Chinese audiences, used to the formula of culture as the stage and economics as the show, will recognize this for what it is: a Wanda real estate project. For Hollywood outsiders hoping to break into the Chinese market, it may look more like a golden opportunity.

On September 30, 2016, Wang Jianlin turned in a small piece of the homework he had promised.

That day Wanda held the opening ceremony for the Oriental Movie Metropolis in Qingdao, with the singer Vitas brought in to anchor the guest list. He drew plenty of cheers, but next to the event three years earlier this ceremony was a much quieter affair. Once it ended, the Oriental Movie Metropolis officially went into operation.

To call it homework, you have to go back to the spectacle that stunned Hollywood three years ago. On September 22, 2013, a red carpet was rolled out in Lingshanwei, a still-desolate stretch of eastern Huangdao District in Qingdao. Leonardo DiCaprio came — a man who won't even fly to China to promote his own films. Catherine Zeta-Jones came. Tony Leung came. Zhang Ziyi came. Dozens of Chinese and foreign stars turned up to lend Wanda their faces, and for many of the Hollywood names it was a first trip to China. Wanda's flash-the-money style made the Oriental Movie Metropolis the talk of the entertainment industry. Even The Hollywood Reporter was taken aback by the scale of the red-carpet show: "Hollywood stars, agents and even a company executive or two flocked to the seaside city like tourists." And this crowd of the biggest-name tourists on record was there for one thing: to build noise around the plan Wang Jianlin was about to announce in Qingdao.

Riding that star power, Wang Jianlin announced that Wanda Group would invest 50 billion yuan to build the Oriental Movie Metropolis in Lingshanwei, which would become "the only mega film-and-television industry project in the world combining filming, production, exhibitions and tourism."

Three years on, Wanda's film and television industrial park has delivered the first phase — 15 sound stages and 11 workshops for building sets and props — and will take in its first Hollywood blockbuster, Pacific Rim 2, in October. Set against the grand vision Wang Jianlin laid out three years ago, the results look modest. Wang did not even come to Qingdao himself; a group of executives from Qingdao Wanda Oriental Movie Metropolis Investment Co. pressed the ceremonial start button. Next to the show of three years ago, it all felt thin.

Then again, Wanda may simply no longer need to spend that kind of money, because by now nobody doubts Wang Jianlin's ambitions in film and entertainment. Three years ago, to the foreign press, Wang was a mysterious tycoon from the East — "the richest investor among China's publicly listed companies", a real estate boss. The only reason Hollywood looked his way was that he had bought AMC Theatres, then the second-largest cinema chain in the United States, in 2012. A rich man buying Hollywood assets was nothing new.

Now Wang Jianlin's name turns up in Hollywood coverage again and again. A Reuters report described him as having gone from "real estate tycoon to entertainment mogul." Gao Qunyao, vice president of Wanda Cultural Industry Group and CEO of its international business division, has made The Hollywood Reporter's list of the 100 most powerful people in Hollywood.

In three years, Wanda and Wang Jianlin have become a fixture in Hollywood, with a bigger part to play in world cinema.

That bigger part comes mostly from Wanda's aggressive expansion in the surrounding businesses. In early 2016 Wanda bought Legendary Entertainment in the US, then the American cinema chain Carmike Cinemas and Europe's largest chain, Odeon & UCI. In a Reuters interview, Wanda said its next acquisition target would be one of America's "Big Six" studios — and it had already tried. This June Wanda moved to buy 49% of Paramount and got as far as substantive talks, only to give up when infighting broke out at Paramount's parent company, Viacom.

"Culture industries, film chief among them, are Wanda's future." Wang Jianlin has said so more than once. But that is a statement of intent. For Wanda Group as a whole, Hollywood and the film business may be a small part of the company — or rather, the part put on display.

In the Wanda Group work report Wang Jianlin delivered last year, film production, distribution and exhibition together brought in 10.2 billion yuan, of which production and distribution combined came to barely more than 2 billion. The real estate business, with Wanda Plaza at its center, is still Wanda's most important business: last year alone it brought in close to 200 billion yuan.

The core of Wanda's commercial real estate model is what it calls "using sales to subsidize leasing." By building a Wanda Plaza, Wanda creates a new commercial district or secondary city center in one corner of a city, which pushes up prices for the housing and offices around it. Most of Wanda's revenue comes from selling those apartments and offices, and that money subsidizes the Wanda Plazas and Wanda hotels.

Because the apartments and office buildings are sold off in one go, no single project gives Wanda enough long-term capital to fund what comes next, so it has to keep starting new ones. From 2011 on, the number of new Wanda Plazas built each year rose from 17 to 50 in 2016. The average development cycle for a Wanda Plaza, from buying the land to opening the doors, is 22 months, and the fastest take 18 — while the construction alone on an ordinary commercial property runs more than 20 months.

Understand how fast Wanda made its money and how it gets that money back, and the real purpose of what happened three years ago comes into view. It also explains why the busiest room in a park that claims to match Hollywood's competitiveness is an exhibition hall that looks exactly like a sales office. From a little after nine in the morning, buyers stream in to ask about apartments, and beside the scale model sit the bank staff you find in any sales office, ready to process the paperwork on the spot.

The Qingdao government clearly likes the name "Oriental Movie Metropolis" too. Qingdao had in fact been floating the idea of film, television, culture, entertainment and tourism since 2002. It appeared in a planning and design report submitted by Australia's COX Architecture and the Shenzhen Urban Planning and Design Institute, and after that the phrase "China's Hollywood" kept surfacing in reports and coverage from the Qingdao city and Huangdao district governments.

From 2002 to 2013, Qingdao spent ten years selling the concept of "China's Hollywood." It was not that no developer had put forward a plan in those years — but the project seemed to become credible only once Qingdao met Wanda.

That year, revenue at Wanda's commercial real estate business grew by almost a third. That year, Wanda Cinema Line became the first cinema chain in China to take more than 3 billion yuan at the box office. That year, Wanda Pictures announced it was starting the film Mojin: The Lost Legend. Wanda looked like the answer to every fantasy Qingdao had about building a "China's Hollywood."

And so came the big event of 2013, the long list of names, and Wang Jianlin's ambitious plan.

"The appearance of Hollywood's biggest stars proved that Wang Jianlin had stirred up a massive wave in the world's film and entertainment industry in an extremely short time," Forbes wrote of him. The Wall Street Journal ran a headline on the Qingdao scene along the lines of "Wang Jianlin Aims to Create a Chinese Hollywood."

Only The New York Times raised doubts: "The filmmaking side of this grand plan seems to be dwarfed by the commercial real estate around it. Mr. Wang said he plans to build eight resort hotels, a huge shopping mall, a 300-berth yacht club, numerous apartment buildings, a seaside restaurant, and even a celebrity wax museum and a theme park."

Under the 2013 plan, the 5.4-million-square-meter park was divided into eight zones: a film and television industrial park, a convention and exhibition center, an auto show, a Wanda City theme park, a hotel cluster, a yacht center, an international hospital and a bar street.

Three years have passed — 16 months longer than Wang Jianlin usually needs to build a Wanda Plaza. Most of the supporting facilities are still under construction.

Beside the Oriental Movie Metropolis sign, built to imitate the "Hollywood" letters, stands a huge billboard: "Oriental Movie Metropolis Phase One Residences, 85-115 m²." Inside the exhibition hall, wide canvas banners announce with pride that Qingdao Oriental Movie Metropolis has led Qingdao's West Coast for four years running in floor area sold, units sold and total sales value — a "triple crown."

On the real estate website Fang.com, Qingdao Oriental Movie Metropolis lists at 14,000 yuan per square meter, against an average of 9,361 yuan across Huangdao District.

Luckily, housing prices are not something Hollywood crews have to weigh. But to get Hollywood to leave the beaches it knows in California and shoot in Qingdao, on the western shore of the Pacific, the Oriental Movie Metropolis will have to offer terms tempting enough.

California's beaches, as it happens, hold less and less appeal for Hollywood, and the flight of Hollywood from Hollywood is growing clearer. Film L.A. looked at 109 American films released in 2015: 71 were shot inside the United States, but only 19 in California. Of the 25 highest-grossing films worldwide, only 3 were shot in California, while 6 — including Star Wars: The Force Awakens, the biggest earner in North American history — were shot in Britain.

What pushes blockbusters out of Hollywood and around the world is not industry or technology. It is money.

California has tax incentives of its own, but the conditions are severe: in 2015 not one new film with a budget above $100 million qualified for a tax credit. In California, what a production spends on actors, directors and writers is also excluded. In Britain that spending qualifies for rebates, and post-production costs draw a further 20% subsidy. For a film the size of Iron Man 3, shooting in California rather than Britain could mean a $50 million difference.

Locations, technology and money — that is what Hollywood crews want in China. According to Patrick Dempsey, vice president of the Oriental Movie Metropolis film and television industrial park, all three are covered: the equipment at Wanda's movie metropolis is world-class, the technology has Hollywood behind it, and Wanda and the government have jointly issued financial incentives.

In truth, Wang Jianlin probably cares little about what Hollywood wants, just as he cares little about making much money renting sound stages to these crews. As he sees it, Qingdao's "Oriental Hollywood" has to become a real link in Hollywood's supply chain, and the chips he lays down have always been simple and blunt: Wanda's capital and the Chinese film market.

Hollywood's industry chain has three main links — production, distribution and exhibition — and Wang Jianlin has built his position in each of them by buying. Wanda started with exhibition, and today it is the largest cinema operator in the world. In production, it bought Legendary Entertainment and has invested in a long list of Hollywood films; the Oriental Movie Metropolis is one more chip on the production side. What Wanda needs most now is a company that can distribute globally — one of the "Big Six" Wang Jianlin keeps coming back to. After failing to buy Paramount, Wanda struck a partnership with Sony instead, and has not ruled out investing directly in Sony Pictures later.

Wanda is also using the Chinese market to pull Hollywood in. At home it controls the largest distribution network, and for a Hollywood that cares more about China every year, that is a powerful lure. Shoot at the Oriental Movie Metropolis and you get Wanda's help in return — hard to call that anything but a good bargain.

Which is exactly why the Oriental Movie Metropolis will not follow the hardscrabble Hengdian model, pulling crews in with free locations and sound stages and then living off the tourism those crews and sets generate. Set against Wanda's global film footprint, the Oriental Movie Metropolis is not that important. And once that footprint is complete, it will hardly want for productions — at the very least there is Pacific Rim 2, a Wanda-owned Hollywood film, shooting there. The apartments, meanwhile, have already sold, and on the Chinese mainland that is the most profitable part of the Qingdao Oriental Movie Metropolis.

Even if 100 films a year end up shooting here, as Wang Jianlin plans, it would not amount to much. Going by 2016, China makes 600 films a year and takes less than 60 billion yuan at the box office. In Wanda's business, that is not a big number.

The concept of a Wanda "Oriental Movie Metropolis" in Qingdao, though, is plenty good enough. Through it, Wang Jianlin has fitted together the two big lines of business in his hands: housing and film.

The thing to keep straight is this. Chinese people, used to the formula of culture as the stage and economics as the show, will probably see it for what it is — a Wanda real estate project. For Hollywood outsiders hoping to break into the Chinese market, it may look more like a golden opportunity, and someone will always be willing to try.

Over three years, what Wanda needs has changed, from selling apartments to owning the whole chain. What Hollywood needs has not changed at all. Wanda has simply never cared much about that.