BOC loan program helps small production firms

Updated: 2011-11-07 16:34

By Yan Weijue (

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Liu Jinli is all smiles as a bank has just approved a 20 million yuan ($3.15m) loan; and he will receive the funds in two days.

Liu, a deputy general manager at a film & TV production company in Hengdian Chinese Film Industrial Park, like most in his profession, spent a large amount of time worrying about financing, a universal predicament among small and medium-sized film & TV enterprises, as they rarely obtain financial support from banks due to the difficulty in evaluating their intangible assets and valid collateral.

"Film & TV companies like us generally work with a small quantity of fixed assets, whose estimated value sits at zero," said Liu. "I never thought I could successfully be awarded with a loan from the bank one day through 'Ying Shi Tong Bao'."

He is alluding to a new credit product of Bank of China's (BOC) Zhejiang branch, which allows enterprises to apply for loans by using copyrights of film and TV programs and accounts receivable as the pledge.

"Ying Shi" means film and TV in Chinese, and "Tong Bao" is an ancient Chinese copper coin.

Based on the credit product, Liu Jinli used a sales agreement with a TV station worth 30 million yuan as the pledge, and received a 10-month, 20 million yuan loan, first one in six years for him, from the BOC Hengdian branch.

"The BOC policy is not only a financial aid," says Li Hongliang, vice minister of the Propaganda Department of Dong Yang county, "but also a confidence boost."

Policy support promotes economic stride

Since the introduction of "Ying Shi Tong Bao" in August 2010, the BOC Dong Yang branch has issued 370 million yuan in loans for small and medium-sized film & TV production companies in Hengdian Chinese Film Industrial Park, or Hengdian World Studios, in Hengdian town, Dong Yang city of Zhejiang province.

Meanwhile, the Dong Yang government has been exploring a variety of preferential tax policies for the development of the park. In 2004, when the park was established, the government issued a series of preferential tax policies in line with the State Council's call for positive subsidies from local government to small and medium cultural enterprises.

To be specific, it set up a special five-year fund to subsidize cultural enterprises in the park. The money came from over 50 percent of the tax revenue turned over to the city. New cultural enterprises that serve public interest, in fields like newspapers, film projection, culture performance, are free from business income taxation for three years. Those who import advanced equipment and technology will enjoy the exemption policy on tariffs and importation value added tax. If they still have financial troubles, they can apply for immunity from land and housing tax.

The policies have achieved remarkable results. In the past six years, enterprises in the park have brought in 8.9 billion yuan in operation revenue, with 633 million paid in taxes. Scores of companies leapt to national fame with excellence in film production and other cultural industries. Among them, Huayi Brothers is one leading example.

A subordinate film production company with a registered capital of 5 million yuan in 2005, Huayi Brothers has become the country's entertainment giant with its business in the media industry, investment and operating movies, TV shows, talent agencies, music, and entertainment marketing fields. In September 2009, it received approvals to be listed on the Growth Enterprises Market (GEM), China's Nasdaq-style market, from the China Securities Regulatory Commission with a registered capital of 126 million yuan. The tax it paid also soared to 56 million yuan in 2009 from 60,000 yuan 2005.

Polybona Film Distribution, another film studio in the park, was successfully listed on the Nasdaq in December 2010, with six more in preparation to go public.