Wanda Exits The Qingdao Film Metropolis: What Next

I wrote the below post regarding the Qingdao Film Metropolis project in April of 2018. After we ran the post, I received threats of legal action and threats of violence against both me and my family. That led us to take the post down but now that Wanda has completely pulled out of the Film Metropolis project, we have decided this is a good time to reissue the original post together with a short follow-up on what has happened at the project subsequent to its official opening.

Below is my original post, with names deleted to protect Wanda staff who were very helpful to me and who may have suffered for that:

After years of preparation, the Wanda Film Metropolis will formally open on April 28 [2018]. I met Wanda staff last week at the site for a preview of what will be revealed at the opening.

The commercial part of the project includes: a large retail mall, three separate amusement parks (theme park, water park, movie theme park, all indoor in order to be able to operate year round), at least 6 separate hotels, two large exhibition centers, a large marina and a massive number of condos. As noted, nothing except the condos have formally opened for business.

The movie studio project is conducted under the heading of Wanda Studios: Qingdao (青岛万达影视产业园）operates separately from the commercial portions of the Film Metropolis. You can check out the studio complex on their beautiful website at www.wandastudios.com [still live].

Since websites and reality are often different, here is what I saw on the ground in Qingdao.

a. Projected opening data is April 28. Management expects to begin formally renting out studios soon after opening. They indicate that some of the larger studios have already been used for Chinese domestic film productions.

b. The entire studio project is 2500 mu (400 acres). This is very large for China. The location is on the same side of the main road as the main sales buildings, away from the ocean, running up to the mountains to the west. This is different location from what had originally been proposed. So for us folks who have been following the project for years, it takes a bit to find the studio complex.

c. 30 separate studio buildings have been built. Another 10 are under construction. Construction will be complete in October. The individual studios range in size from 10,000 square meters to 1,500 square meters. Each studio has a full sound stage, attached dressing rooms, full support set up (electronics, lighting, ventilation, etc). Ceiling height is 18 meters. The studios were designed by a London architect and are built to meet an international standard. Management indicates that normal Chinese studios are built for about 2000 rmb per square meter. These studios are built at 10,000 rmb per square meter.

While I am not familiar with film studios, I have done construction projects all over Asia and the U.S. I did my normal construction analysis, and the construction and facilities build out appears to be excellent. The claim that the studios are build to an international standard seems justified. Management claims this is the largest studio facility in the world. The claim seems also seems reasonable to me.

d. The studio complex has a main headquarters building that can house a staff of 1000 persons. The cafeteria can feed 1000 persons at a shift. Current staff is 200. The cafeteria complex is not being used. Presumably all of this will get into gear when formal rentals start in May of 2018.

My impressions are:

a. Nothing at all is going on at the complex at this time. So there is no way to predict what will happen down the road.

b. No one knows who owns the land and facilities. No one knows what is the financial objective. Wanda is, however, in full management control.

c. Management states that they want to attract foreign movie projects. The elegant English language website is evidence of this. However, at the site, I did not see any evidence of any attempt to deal with any language other than Chinese and or for provision of services to any company arriving from outside China. But, I don’t need help with Chinese, so it is possible that these services are available and I just was not exposed.

d. The major logistics issue is that the studio complex located far from Qingdao in a beautiful coastal location that is in the middle of nowhere. That means: no carpenters, no electronics technicians, no retail supply of equipment (no wood, no nails, no paint, no electric drills, no lights, no speakers, no recorders, no cameras, no nothing). The explanation of management is that the film producers will bring in all the equipment AND workers that are needed. I have done construction and engineering projects in China in places where you cannot even buy a nail or a screw. It can be quite frustrating. It is not clear that the management understands this issue and has made any concrete plans to deal with the issues.

e. Having said the above, the studio buildings themselves are quite impressive. It is kind of strange to tour all that expensive stuff and then not see a single project that is actually in operation. The concern is i) will anyone come and ii) if they come, how will the logistics be handled? However, management is confident, on the “build it and they will come” philosophy that is typical in China.

It is a great thing to see this project finally come to fruition. We wish them well.

My update is as follows:

A full update on the status of the project has been published on several Chinese websites. A good version with nice photos can be found here. For obvious reasons, I have not personally visited the site subsequent to its May 2018 opening.

As this very thorough article reveals, much has happened since its opening in May. As related to my post, the key events are as follows:

1. Wanda has completely pulled out of the project and will no longer manage the film studio or the amusement/retail/tourism/condo phases of the project. All management has been shifted completely to Sunac China, the real estate developer that purchased Wanda’s leisure/amusement division in 2017. Wanda staff had indicated to me that Wanda was committed to remaining in management control so as to maintain Wanda’s dream of creating an Asian Hollywood. With Wanda’s departure, the locals in Qingdao are confused and uncertain about the future of the Film Metropolis.

The project is currently under the control of Sunac and the local government. Sunac is a real estate developer and the government is a typical Chinese local government. Neither is noted for its vision in the area of film. For Sunac, the emphasis is on condo sales and other real estate related activities. For the local government, the emphasis is on film projects in other areas of Huangdao. This is typical: local governments in China tend to abandon failed projects started by their predecessors.

2. As predicted by Wanda staff, the film studios are quite active. However the concerns I expressed in my post remain:

a. There is no indication any completely foreign production companies have shown any interest.

b. The domestic film studios have been provided with substantial financial incentives. However, those incentives will soon be exhausted and there is no current plan for a replacement. It is not clear that any Chinese film studio would be financially capable of making use of the film studios at the stated “rack rates.”

c. As I noted in my post, the studios are located in a rural area. As I suggested, no local sourcing of materials or skilled workers has developed. Film studios have been forced to source in Qingdao city or more commonly in Beijing. This is a hardship for the studios and it means there is little benefit for the local economy. The locals with whom I have spoken report not knowing what is going on in the film studio complex: it is basically sealed off from the local economy.

d. Sunac and the local government have taken over complete control of the film studios. Wanda no longer plays any role. The new owner’s future plans are not clear, particularly after the subsidy program terminates.

3. Wanda either abandoned the Film Metropolis project or it was been pushed out. Either way, Wanda is gone and Sunac is now working to “De-Wanda” the project. The plan is to remove the Wanda name from every phase of the project but the new name and the new direction from Sunac and the local government remains unclear.

We will report back if we learn more.

We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.