Flurry of IPOs, increased share of GDP expected over next five years

BEIJING - More than 100 companies in China's cultural industry are expected to go public in the next five years, accounting for a much bigger part of the total GDP, as the government designates that sector a pillar industry, government officials and industry experts say.

The cultural industry, which includes the press and publications, movies, radio and television, and online gaming, was again mentioned in the Central Economic Working Conference this week as a key sector for development in the 12th Five-Year Plan (2011-2015).

Experts see its inclusion in the plan as a way to accelerate its growth and bring about more listed companies.

"Some 120 to 150 companies may seek public listing in or outside of China in the next five years, when the capital market will become more closely connected to the industry because of the policy," said Chen Shaofeng, vice-dean of the Institute for Cultural Industries at Peking University. He added that going public will help consolidate the market and eventually foster giants in the industry.

Currently, 19 companies in the sector are listed in China's A-share market, their market value accounting for just 0.47 percent of the total, which stands at 31.21 trillion yuan ($4.69 trillion).

"The percentage will at least double, with more seeking public listing," said Wu Yi, an analyst with Guotai Junan Securities Co Ltd.

Liu Yuzhu, director of the Department of Cultural Industries at the Ministry of Culture, said that the cultural sector, as a pillar industry, should take up at least 5 percent of the total GDP in the future.

The added value of China's cultural industry reached 840 billion yuan last year, according to the National Bureau of Statistics, accounting for less than 2.5 percent of the total GDP in that period.

While the industry will receive more government support, such as guiding regulations and an improved investment and financing system, Chen from Peking University warned that the way to develop the cultural industry is different from what China is good at.

"In China, 60 percent of the cultural industry's industrial output is related to the material instead of the content of the product. Note, however, that methods for developing the manufacturing industry don't work in the content-oriented cultural industry."

He said that the value of intellectual property rights should be given greater emphasis and the country should also introduce a system to stimulate makers of original cultural works.

Qi Pingjing, president of China International Book Trading Corporation, the country's largest exporter of books from China, said that favorable policies will help cultural companies develop.

"Take book export, for example. Publishers are earning less money nowadays as they are faced with the decline of paper books and the rise of the yuan. If there were government support, such as subsidies, that could help struggling companies overcome the difficulty."

China Daily

(China Daily 12/16/2010 page17)