Chinese Animation Has Money Now, and It's No Longer Content to Be Japan's Student

Much as in its dealings with Hollywood, China is still the one learning — but with a huge market and a lot of capital behind it, what it says now carries more weight.

Chinese companies have finally entered the "anime production committee" in force.

The production committee is one of the core institutions of the Japanese animation business, a kind of joint backer. When a project starts, the animation studios, TV stations, game companies and merchandise makers that believe in it form an alliance, build the work together from nothing, and each handle the show's business in their own field, so the risk is spread out. This has been the mainstream model in Japanese animation since Neon Genesis Evangelion (EVA) in the early 1990s.

That model is now shaping how Chinese and Japanese studios work together. Last July, U17's anime Young Bee《雏蜂》 opened in Japan with a Japanese dub cast that included the well-known voice actress Kana Hanazawa — more or less the start of the current wave of Sino-Japanese animation collaboration.

After that, the production committee began coming up more often. Bilibili had also joined one that year, for the "instant-noodle anime" (a short-form format) Suzaki Nishi《洲崎西》. But it did so under the name of its Japanese subsidiary, put in relatively little money, held a correspondingly low position on the committee, and made little noise about it.

When Dragon Heart Chronicle《龙心战纪》 premiered exclusively on iQiyi this April, the video platform announced that it was an important member of the show's production committee. As one of the funders, iQiyi was in from the start, and its suggestions changed parts of the plot and some character traits to better suit Chinese viewers' tastes.

There are plenty of other examples from this year: Youku Tudou Animation's Soul Buster《侍灵演武》, Happy Elements' Star Dream Journey《星梦游记》 and Haoliners' One Lesson, One Exercise《一课一练》.

Among the many companies doing this, Tencent Animation & Comics has been the most aggressive.

That has to do with the rights it accumulated early. Tencent Animation & Comics began as a platform for original comics, and a year after it was founded it signed a large licensing deal with Shueisha, one of Japan's three big publishers. Manga such as Naruto and One Piece had a concept of copyright attached to them in China for the first time — even if public awareness of copyright was still very weak then.

In 2015, Tencent Animation & Comics reached a deal with Kadokawa to import and publish light novels, and a year later bought 41% of Kadokawa's Chinese arm, Guangzhou Tianwen Kadokawa. This March it announced a licensing deal with Kodansha, another of the big three. Those deals became the experience and the leverage it later used to pursue Sino-Japanese production.

Reikenzan《从前有座灵剑山》, which premiered at the start of 2016, came out of that background. In a sense it was a collaboration on every front: it is hard to pull the two sides' contributions apart. The story was serialized on Tencent Literature, and a Japanese company was brought in to make it. The staff credits show most of the technical work went to the Japanese studio DEEN, but Chinese staff took part throughout the script, the storyboards and the character designs. Li Haoling of the Chinese studio Haoliners was general director; Japan's Yukio Suzuki was executive director.

"We worked out the early script together, and the novel was something we took from China Literature (Tencent Literature) and condensed. We'd go over the outline with the director. Japan really is better at the key-animation stage, so more of that went to the Japanese side," said Li Xiaoting, content director at Tencent Animation & Comics and the show's general producer. The two sides talked constantly, she said: on the busiest days they exchanged 38 emails, and over one season they sent more than 2,000.

So far Tencent Animation & Comics has made three Sino-Japanese anime: Reikenzan, The Outcast《一人之下》 and Apostles of Time and Space《时空使徒》. At its industry conference last week, the company showed a Chinese-language trailer for a fourth: Space Detective《宇宙警探》.

Space Detective is adapted from the manga of the same name by Akira Amano, the author of Reborn!, serialized in Shueisha's Jump+. Tencent Animation & Comics sits on the show's production committee at the same level as Shueisha, Yomiuri TV and the animation studio Pierrot — which means it can take part directly in making the content, and can propose and demand changes.

All of this rests on money. Tencent, iQiyi and the rest can reach the core stages of Japanese anime production, and can carry so much of it on their own platforms, because huge amounts of capital are pouring into China's animation industry.

What that capital buys is especially visible in anime and comics.

The author of Corpse Brother《尸兄》, also known as My Name Is Bai Xiaofei《我叫白小飞》, now earns about 1 million yuan a year from the comic alone. The per-minute cost of an ordinary animated series has climbed from 8,000 yuan to 20,000 yuan. Alibaba, the money behind Youku Tudou, and Tencent have both taken stakes in AcFun and Bilibili, with investments routinely in the hundreds of millions of yuan. And according to the China Original Animation Big Data Report from CBNData, there were 31 financing deals in animation content in 2014, and 71 in 2015.

"Once capital comes in — and capital always finds where the potential is — it speeds up the growth of creators, of works, of the whole industry chain," said Cheng Wu, vice president of Tencent Group, who built Tencent Animation & Comics from nothing. "More than four years ago, when we were just starting, China's animation industry was very weak. Piracy was everywhere, works were hard to finish, and even legitimate ones struggled to get promoted or to get any response from the market."

"Four years ago we talked about how creators could survive. Now we talk about which studio just raised another round, and who invested in whom. The change is obvious," Li Xiaoting said. "It feels like there's too much hot money."

Four years ago, drawing comics or making anime still couldn't feed a person. One Hundred Thousand Bad Jokes《十万个冷笑话》 had only just been animated, and U17 wouldn't really make money from it until the film came out around 2015. A page of comic art paid about 100 yuan, before tax and before it was split among several artists and assistants. Mi Er, who wrote The Outcast — which launched this August and claims more than 300 million views for the comic and more than 100 million for the anime on Tencent Animation & Comics — was still working as a cook.

What many people haven't noticed is that the same change is happening in Japan. For Japanese studios, Chinese projects are good value. Hideaki Anno, director of Neon Genesis Evangelion, has said the Japanese industry raises its commercial revenue by squeezing its animators, and Chinese money has eased that a little.

Last September the Japanese animator Noriyuki Fukuda wrote in the email newsletter Living as an Animator《作为一名动画人而活》: "One key-animation frame in Japan goes for about 4,000 yen. Lately Chinese companies keep coming to Japan to hire Japanese animators at wages far above the domestic level ... recently quite a few TV anime productions have raised it to 5,000 yen a frame."

"Ten years ago Mr. Toyoo Ashida predicted that Japanese animators' wages were too low, and that at such wages other East Asian countries could simply buy up our animators. What that really meant, I now think, is: 'In the end the employer of Japanese animation will be China.'"

His piece was full of worry and resignation, about the industry and about his own position in it. But the inflow of Chinese money is a fact.

To a degree, China is still learning. To Japan — which has the whole production pipeline, the core crafts of key animation and storyboarding, and a commercial system to match — this looks more like teaching a rich student.

"China's animation pipeline isn't standardized. Decades ago one Japanese animation company split off many small ones, so their process and their standards are unified. Say key animation is being made for a show inside Japan: the technical specs, the standards, may all come from the same set. That isn't the case in China, where every company has its own pipeline, its own standards and its own way of training people," Li Xiaoting said.

Toei, Japan's old film and television company, and Mushi Production, founded by Osamu Tezuka, the father of manga and TV anime — along with the studios that later split off from them — cover nearly every well-known Japanese animation company today. Sharing a pipeline makes it easier for them to talk internally and to work with outsiders. Chinese companies have no such thing, so getting several of them to make one show is difficult. Learning that pipeline and that model is the main reason Chinese companies are studying Japan.

Chinese capacity also lags far behind. "On our projects with Japan we put out 24 minutes a week. The last episode of The Outcast that we just released was 45 minutes. That is simply not possible in China. A weekly episode at all is hard; 20-odd minutes a week is harder; 45 minutes a week is out of the question." Purely Chinese-made anime runs a few minutes an episode, a dozen-odd at most — the One Hundred Thousand Bad Jokes series is the best example. In Japan this kind of "instant-noodle anime" is an alternative business model or a marketing tactic. In China it is what companies are forced into.

So Tencent Animation & Comics, like many Chinese companies, both makes shows with Japanese animators and studies their mature model as a student. Its scale lets it put out work at a striking pace: three Tencent-Japan anime went live this year alone, a speed and volume no other company in the industry can match.

But a player like Tencent is not only a student. No student gets a vote on the committee. Tencent's capital is buying Japanese creative capacity, and building itself a voice in the process.

The two countries' roles in animation are changing. China used to be the one doing the work for Japan. As early as 1979, Shanghai Animation Film Studio was taking subcontracted jobs from Toei. Once a show's storyboards and key frames — the key animation — were finished in Japan, the labor-heavy parts, filling in the frames in between and coloring them afterward, were sent to China.

That kind of outsourcing boomed at the end of the last century. As in other manufacturing, China's cheap labor was exactly what a labor-intensive craft like hand-drawn animation needed. A 2003 report found that close to 80% of Japan's animation outsourcing went to China, and that a single key-animation frame cost only 40% of the Japanese price.

The share has dropped in recent years. According to the Association of Japanese Animations, China was no longer the country signing the most overseas contracts with Japan in 2014, and the number has fallen year by year as simple outsourced work shifts to Southeast Asia and other places where labor is cheaper.

All that surplus talent needs projects of its own — work to absorb the labor, and, in the process, a bigger domestic market.

In that sense Tencent stands where everyone else stands. Everything Tencent Animation & Comics has made has problems of some kind. Reikenzan, the industry's first collaboration of this type, drew plenty of mockery for its flaws. Most of it was aimed at scenes with poor visuals and animation that "broke down"; some people suspected the Japanese side had subcontracted the work to yet another studio.

The real cause was a rushed schedule. Because it was the first project with Japan, Reikenzan had only three months of preparation, against the six months or more a Japanese production usually gets. DEEN complained on Twitter that the animation meeting for episode 9 was held only two weeks before it aired, and that with other projects running at the same time, only two animators were handling that episode's key animation at one point.

The Chinese side had its own grievances. "It's not that Japan has no good teams, but not all of them are good. There really are a lot of bad ones who think a Chinese project can be tossed off," Wang Xin, director of The Outcast, wrote on Weibo.

At the moment, every Sino-Japanese anime is at best average by Japanese standards, and in some the marks of a Japanese studio subcontracting again are obvious. Everyone still depends on Japanese production technique, and on that, Chinese companies have little say.

Tencent has plenty of experience working with the Japanese side and started early, but what it has released is still several notches below what audiences picture when they hear "Japanese anime." That does its own brand no good.

Worse, Chinese anime made in Japan may not pull in viewers the way everyone assumed. On Bilibili's ranking of domestic anime, Tencent Animation & Comics' Spiritpact《灵契》 sits fourth — and it was not made by the Japanese side. One Lesson, One Exercise, which Haoliners handed to a Japanese studio, is the best-performing Sino-Japanese show, at fifth.

The top three — Rakshasa Street《镇魂街》 season two, The Illustrated Jianghu: The Enforcers《画江湖之不良人》2, and Year Hare Affair《那年那兔那些事儿》 season three — are entirely Chinese-made, and every one is full of Chinese material: Three Kingdoms generals, Tang-dynasty constables, modern Chinese history. That is one of the most common charges against Sino-Japanese anime: they look too much like Japanese anime and have little Chinese character of their own.

Whether learning from Japan is the right idea at all, and whether the Japanese model even fits, are open questions. Japan's own anime and manga industry has been picked over at home: Hayao Miyazaki has attacked it for making the same thing over and over and for becoming the property of otaku; Hideaki Anno has pointed to low pay and dated technology. Japanese anime's influence is fading worldwide, and Tencent Animation & Comics, which has gone furthest in copying the Japanese model, may be spending time and money on lessons that stop paying.

Moving a model that works in Japan to China brings its own trouble. Reikenzan, the first Sino-Japanese anime, released a DVD with bonus extras, as most Japanese productions do. Tencent Animation & Comics called it a simple experiment on the domestic market; the DVD sold a few hundred copies. Not even Tencent has found an effective way to make money from anime.

Then there is the pan-entertainment pitch. A recent live-action web series based on The Illustrated Jianghu: The Enforcers finally brought a wider audience to an anime that started back in 2014. More people seem to know and follow ACG (anime, comics and games) culture and animation, but in the mainstream it is still a niche.

"ACG culture is still fairly small next to the mainstream. It's a subculture. Compared with film and television, it's weaker at making stars, at generating talk, at making money," Cheng Wu said. "Across the whole pan-entertainment layout, in terms of the overall division of labor in society, the hardest part to organize on a large scale is actually film and television." Cheng Wu was the first to propose "pan-entertainment," back in 2011; he is also CEO of Tencent Pictures.

Japan's version of this is fully built out. Live-action films adapted from manga have become a trend there: Bleach, Assassination Classroom, JoJo's Bizarre Adventure — in the end even Gintama went along. Eight of Japan's top ten films at the box office in the first half of the year were animated or live-action manga adaptations.

China is still feeling out the rules, and live-action adaptations of comics have only just begun. Last year U17 announced plans to turn three of its major comics — Young Bee, Brain Terminal《端脑》 and Rakshasa Street — into live-action films. Tencent set up Tencent Pictures last September, and at its first anniversary this year said it would adapt Star Pioneer《拓星者》, a science-fiction comic from the Tencent Animation & Comics platform, into a live-action film.

On pan-entertainment, probably no Chinese company can compete with Tencent. Within its layout, the four business groups under Tencent Interactive Entertainment — animation and comics, literature, games, film and television — can work together easily. On top of that, Tencent has enormous amounts of user data and channels as powerful as QQ and WeChat.

Games above all. As the medium that makes money best, games are the route most Chinese anime now take. One Hundred Thousand Bad Jokes did it; Year Hare Affair did it after. Tencent has now said it will turn Ace Inspector《王牌御史》, an anime it produced in 2013, into a mobile game. For a company that runs games well, that is a profit model worth waiting for.

Tencent has done this before: the games adapted from Naruto have held up well on the App Store. The bad news is that other games adapted from Chinese anime have done poorly, whether from a veteran like The Legend of Qin《秦时明月》 or a newcomer like Year Hare Affair.

Still, how far Tencent's skill at games can close the gap between Chinese anime and the good foreign kind is an open question — especially since the general impression of Tencent's games isn't very good to begin with.

Capital carries risk and demands returns, and that is the problem everyone in the animation business shares. None of the many companies that have entered, Tencent included, has produced a good answer yet. No one knows whether the road Tencent Animation & Comics is on is the right one. In an industry this young, arriving early may be no better than arriving late. The business lacks even basic talent, such as key animators; audiences' spending habits and sense of copyright still have to develop; and censorship policy remains unpredictable. None of that is Tencent's to fix.