Based in the city of Wuhu, west of Shanghai, Anhui Xinke New
Materials <600255.SS> has no apparent link to entertainment or
films. But it announced late on Sunday that it had bought an 80
percent stake in Midnight Investments, the holding company
behind the studio, for 2.39 billion yuan ($350.71 million).
Under President Xi Jinping, China has been broadening its use of
so-called soft power, and corporates have led the way with
global investments in soccer, skyscrapers as well as movies.
Just recently, China's property-to-entertainment conglomerate
Dalian Wanda Group bought Dick Clark Productions, the company
that runs the Golden Globe awards and Miss America.
Apart from Wanda - which is seeking to attract Hollywood to its
new multibillion-dollar studio in the eastern Chinese city of
Qingdao - China's Fosun International and Huayi Brothers Media
Corp have also invested heavily in film.
The latest to join this bandwagon is Anhui Xinke, whose main
business is to process copper and make electric wires and
cables. Earlier this month, the firm established the Wotaiji
International Media Ltd unit to acquire media assets.
"I think this is a case of Chinese companies that have cash and
are looking at overseas investment opportunities, and realizing
that staying within their own sector does not offer a lot of
room for growth," said Benjamin Cavender, senior analyst at
China Market Research Group in Shanghai.
The global copper market has been mired in a years-long bear
run, plunging around 40 percent over the past three years.
Prices of the metal have, however, recovered 20 percent so far
in 2016 on hopes of U.S. infrastructure spending and firming
demand from top consumer China.
Cavender said companies like Anhui Xinke were likely keen on
following the example set by firms such as Wanda with
investments in crown jewel brands that will allow them to
diversify their revenues and create a global brand.
But it will not be easy as "film production is very different
and requires its own set of management skills that the buying
firm likely does not have in-house," he said.
Midnight owns Voltage Pictures, which has produced more than 150
Anhui Xinke was not immediately available to comment, but it
said in the statement that the acquisition would enable it to
strengthen its position in the domestic and international film
business, and would significantly boost its profitability.
(Reporting by Jackie Cai and David Stanway; Editing by Himani
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