Facebook and DreamWorks make moves for growth in China (Forbes)

21 February 2012 13 h 24 min Comments Off

Social networking leader Facebook and animation giant DreamWorks Animation SKG (NYSE: DWA) have both made new moves in their drives to enter China, as both seek to tap a massive media market of hundreds of millions of customers who are finally showing signs of willingness to pay for their entertainment.

By Doug Young, Contributor

First let’s look at Facebook, whose sights are now focused on its high anticipated US IPO to raise billions of dollars. Local media are reporting Facebook has just registered dozens of trademarks in China, showing it still plans to make a serious bid to enter the market despite a less-than-friendly reception from Beijing last year. Of course, China watchers will also realize that Facebook’s action is probably a direct result of the recent saga in China involving Apple (Nasdaq: AAPL), which made global headlines after it lost a local lawsuit involving the rights to the name of its popular iPad tablet computers. But regardless of the reason for Facebook’s latest China move, it’s still clear the company wants desperately to enter the market, and it’s quite possible we could see some kind of bigger announcement on its China hopes soon to generate more hype for its  IPO.

In the meantime, foreign media are reporting that DreamWorks Animation, maker of the “Kung Fu Panda” franchise that has been highly popular in China, is set to announce the establishment of a Chinese studio in the next couple of days during visiting Vice President Xi Jinping’s scheduled stop in Los Angeles during his US visit. Reports about DreamWorks Animation’s China plans first emerged last September, when media said the company was preparing to set up a Chinese joint venture to make animated films and TV shows for the domestic market. Such a move looks very smart, as it will allow DreamWorks to produce cartoons for the domestic TV market, an area now essentially closed to foreign-produced products. Such a venture would also allow DreamWorks to circumvent strict Chinese restrictions on the number of foreign films that can be imported each year. One final interesting point in all this is that if DreamWorks really does form a joint venture, it would be the first such venture allowed by the Chinese since it informally halted such tie-ups 6 or 7 years ago. If that informal ban has ended, it’s quite possible we could see some of the other Hollywood studios try to set up new joint ventures in the months ahead as well.

Bottom line: Facebook and DreamWorks’ latest China moves reflect the growing draw of China’s media market, with more program-making joint ventures possible later this year.

Doug Young lives in Shanghai and writes about tech investment in China for Techonomy and at www.youngchinabiz.com.

SOURCE: Forbes (20/02/12)

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