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Wanda’s Ambitious Expansion in the Global Movie Industry

Jae Jung

Associate Professor

Bloch School of Management

University of Missouri-Kansas City

Kansas City, Missouri, USA

Devon Howe

Business Analyst

Bloch School of Management

University of Missouri-Kansas City

Kansas City, Missouri, USA

Published in The Case Journal in 2017.

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Wanda’s Ambitious Expansion in the Global Movie Industry

Introduction

Fueled by an exorbitant amount of cash and charismatic leadership, one of China’s largest

corporate machines had taken the world by storm and effectively changed the movie industry’s

very fiber forever. Dalian Wanda Group, a property development giant headquartered in Beijing,

China, caused a commotion in the U.S. when it acquired AMC Entertainment, the world’s

second largest cinema operator, in 2012. It was by far the largest acquisition by a Chinese firm in

the U.S., costing $2.6 billion. The combined operation of Wanda Group and AMC resulted in the

largest movie chain in the world in 2012. Yet, its AMC acquisition was just the beginning of

Wanda Group’s break into the global movie industry. Since then, Wanda Group rapidly acquired

major cinema operators in the U.S. and Europe. Further, Wanda diversified its interests as it

started negotiations with Hollywood production studios, such as Paramount Pictures and

Legendary Films. Wanda’s conquest of the global movie industry seemed far from finished in

2017. However, the vast amount of capital spent on acquisitions had investors concerned about

Wanda’s next steps? Was it time for switching gears toward the integration of acquired

companies rather than further acquisitions? Or, should it keep moving forward fast?

Wanda Group

At the very forefront of China’s rapid economic growth, there were few organizations that

rivaled the astronomical success of Wanda Group. The group went from being relatively

unknown to being recognized as a major player in the global business environment. Wanda

Group was ranked 385th in the Fortune 500 Global List in 2015, recording roughly $44 billion
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revenue.

Wanda Group had a very interesting start, and grew relatively fast. The group was founded

by Mr. Wang Jianlin in Dalian, Liaoning, China, in 1988. Mr. Wang served in the Chinese Army

during 1970-1986. He was well connected to the Communist Party of China, due to serving as a

deputy to the 17th National Congress of the Party. Mr. Wang took pride in his services as an

officer in various government-related committees and business communities in China. Mr. Wang

leveraged his connections very well, and secured at least $1.1 billion in state subsidies from the

Communist Party for Wanda’s business. In order to solidify political connections, he had sold

company stakes to some of China’s most powerful politicians, including relatives of members of

Politburo (the Communist Party’s policymaking committee) and the business partner of former

Prime Minister Wen Jiabao’s family (Berman, 2016).

The company’s initial focus was on the residential real-estate development market in

northeast China. Despite overwhelming skepticism on the profitability of residential

development in China, Mr. Wang Jianlin seized the opportunity to take over the Beijing Street

Urban Redevelopment program in 1989. The project was designed to redevelop residential

buildings, creating high-quality, premium housing for its residents. The venture was one of the

first of its kind in China and carried significant risks (Wanda Group, 2016b). Not only was

navigating the new, private market in China difficult, but developing housing that was both

affordable for Chinese consumers and profitable for Wanda Group was no easy task. As a

reference point, GDP per capita in China was just $307.47 in 1989.

Wanda’s early ventures did payoff. Building on its success in residential real-estate

developments in the 1990s, in 2000 Wanda Group started pursuing commercial projects.

Wanda’s commercial real estate projects were called Wanda Plazas, which were a culmination of
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shopping centers, entertainment venues, hotels, restaurants, and businesses (see Exhibits 1). The

Wanda Plaza projects yielded amazing results, and within six years Wanda Group was

recognized as China’s leading commercial development company, expanding its development

projects across China. Despite its explosive growth in the last decade, the Chinese real-estate

industry was expected to decline (see Exhibit 2). In part, e-commerce companies like Alibaba

had made brick and mortar shops less of an imperative for businesses, as China embraced

internet stores and e-commerce. More importantly, the industry experienced an oversupply of

properties in China, which would take several years to clear out.

Wanda Group established Wanda Cinemas in 2005, leading the company on an entirely

new path. Wanda Cinemas quickly grew to be the largest cinema operator in China, accounting

for roughly 14 percent of the Chinese cinema market. In 2014, the group recognized

approximately $866 million in revenue from its cinema business, up 32.4 percent from 2013

(IBISWorld, 2016a). As of 2016, Wanda Cinema operated 447 cinemas with 3,947 screens in

China. The company’s theaters attracted over 102 million viewers in 2014, and its strategic

partnerships with other commercial real estate developers helped bolster its presence all across

China. Wanda Cinema experienced robust growth from 2011-2015, and was predicted to

continue the trend (see Exhibit 3).

The group looked to further expand vertically into the movie industry. In 2011, Wanda

Group established Wanda Media for film production and distribution, which grew to become the

second-largest film producer (with three percent market share) and the fifth-largest film

distributor (five percent market share) in China in 2014. (Wanda Cinemas absorbed Wanda

Media in 2016.) In recent years, Wanda’s movie-related businesses generated about one-eighth

to one-tenth of the group’s revenue. Through its collaboration with the Qingdao municipal
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government, Wanda Group established an internationally competitive film development fund

worth $750 million to attract global movie production to Wanda’s Qingdao Movie Metropolis.

Wanda also invested ¥10 billion ($1.6 billion) to establish a joint venture with the Franco

Dragone Entertainment Group in order to create world-class theatrical shows. While property

development remained Wanda’s primary revenue source, the group had begun to develop

properties creating revenue from entertainment. Wanda City was its iconic entertainment

concept, which was a Chinese themed park positioned to compete with companies like Disney

(see Exhibit 4). The park contained numerous Chinese folklore and cultural items. As of 2016,

Wanda planned to open 25 Wanda Cities by 2025. Additionally, Wanda also entered the

department store market in 2007, hoping to capture some of the growing consumer buying trends

that China was experiencing at that time.

Throughout its history, Wanda Group was known for risk-taking. It was the first company

in China to participate in the urban reformation projects, developing real estate across China, and

investing heavily in the entertainment industry in China. Wanda Group regarded human

resources as its primary asset, annually investing billions of yuan into employee training.

At the end of 2015, Wanda Group consisted of four main business categories that were

Property, Movies/Entertainment, Department Stores, and Finance. The Property division,

including hotels, accounted for 65.6 percent of the company’s ¥290 billion revenue in 2015

(roughly $44 billion). The second largest business unit was Movies/Entertainment, covering

cinemas, film production, arts, sports, and theme parks; it accounted for 17.7 percent of its

revenue. Department Stores and Finance operations were about equal in size, with Department

Stores accounting for 7.9 percent and Finance at 7.2 percent (Harashima & Abe, 2016). The

capital power of Wanda Group was self-evident; however, the wealth of its chairman was
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extraordinary to say the least. Mr. Wang Jianlin was the richest man in China in 2016, with $31.3

billion in wealth (Forbes, 2017). With the capital derived from Wanda group and Wanda’s

Chairman, it was apparent that the group had significant financial resources. Due to Wanda

Group’s private company status, its financial details were not available for the entire group. Yet,

Wanda Commercial Properties, which generated two thirds of Wanda Group’s revenue, had been

highly profitable over the past 5 years, and it had contributed significant amounts to Wanda’s

capital power (see Exhibit 5). Wanda’s commercial property arm brought in revenue of ¥124

billion (or over $18 billion) in 2015.

Global Movie Industry

The global movie industry’s box office revenue had been steadily trending upward from 2005-

2016. However, the percentage change had been somewhat volatile (see Exhibit 6). This was

likely due to a steady increase in the average price of movie tickets (up 29 percent from 2006 to

2015) and the slow decline in attendance (especially in the U.S./Canadian markets). The industry

recognized approximately $38.6 billion revenue in 2016, which was roughly a one percent

increase from 2015. The U.S. and Canadian markets accounted for $11.4 billion revenue with the

rest of the world accounting for nearly $27.2 billion revenue (MPAA, 2017). Most of the

international growth was from the Asian Pacific area (see Exhibit 7). The U.S. and China were

the top two markets in the world, accounting for almost 50 percent of the revenue (MPAA, 2016)

(see Exhibit 8). Combined, they accounted for roughly $17 billion in box office revenue in 2015,

approximating half of the world’s box office revenue. Yet, the two leading cinema markets, the

U.S. and China, were very different. Market trends, economies, and the audience were just a few

differences. Few companies had even thought, let alone had tried, to tackle both markets.
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A common misconception about theaters was that the majority of the ticket price that

consumers pay would go directly to the cinema operator. Yet, that was just not true. A cinema

operator might only take in about 20-25 percent of the ticket price revenue for the first few

weeks a movie was in theaters, with the vast majority going back to the movie production

studios. Theaters divided their businesses into two segments. The first and largest segment was

admission/ticket sales, which accounted for around 67 percent of the business in 2016. The

second segment was food and beverage sales, which accounted for approximately 29 percent of

business. With the steady decline in attendance, movie theaters had been forced to rely on

increasing ticket prices and charging exorbitant amounts for concession items (Ulama, 2016).

Another challenge for cinema operators was burgeoning online distribution of movies.

Consumers were increasingly resorting to watching movies at home through on-demand

programs or downloading movies, while enjoying the convenience and price advantages which

theaters often lacked. As a result, producers had to develop technologies for seamless, digital

movie distribution, and the cinema chains had to offer more advanced cinematic experience that

would entice consumers to get out of their homes and visit cinemas. The latter effort had

stimulated the adoption of high-resolution films and projectors, computer-generated imagery

(CGI), 3D movies and upgraded audio system, which were all supported by advanced

technologies in movie production. More recently, various forms of “4D” technologies with

physical effects (using tilting seats, scents, strobe lights, and fog) became increasingly popular

(IBISWorld, 2016d).

Chinese Movie Industry

The Chinese market had emerged as a major hub for the global movie industry. The emergence
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was fueled by the increase of buying power as wealth per Chinese adult quadrupled from the

early 2000s to 2015. As of 2015, the Chinese middle class was the largest and fastest growing in

the world. Chinese consumers were expected to increase spending by an estimated 10 percent

each year from 2016-2026, and more so on luxury items including movies (Curran & Scott,

2016). People aged 25-34 accounted for the largest segment of box office revenue in 2015 (50

percent). These individuals not only had the financial capacity to go see movies, but also had the

time. The second largest segment were people aged 24 or younger, accounting for 22 percent of

the revenue in 2015 (IBISWorld, 2016a). These younger generations were spending at record

paces, compared to older generations. Chinese box office sales were forecasted to surpass the

U.S.’ by 2017, with an anticipated $10.4 billion in ticket sales (Doctoroff, 2016). In the first

three quarters of 2015, domestic Chinese films accounted for nearly 60 percent of the industry

revenue (IBISWorld, 2016a). Yet, the Chinese movie industry was forced to improve both the

quality of its story telling and the overall movie watching experience.

Although movie production studios had power in China, it was not to the same extent as in

the U.S.’ Hollywood production studios. The inescapable dues and fees that U.S. producers

charged had taken its toll on cinema chains across the world. However, the Chinese movie

industry had been increasingly vertically integrated, reducing the bargaining power of Chinese

production studios. A good example of the difference in bargaining power of movie suppliers

would be to compare the salaries of actors in each country. In the U.S., A-list actors would

receive, on average, around $20 million for acting in a movie, whereas in China A-list actors

would claim somewhere between $2-4 million on average (Cain, 2015).

The Chinese movie production industry was projected to continue growing at an annualized

rate of 8.6% leading up to 2021 (IBISWorld, 2016c). In order to continue its domestic film
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industry growth, China imposed strict policies regarding foreign cinema operators in China. Prior

to 2003, foreign investors were allowed to enter the market only via joint ventures with domestic

Chinese companies and were limited to own 49 percent of the joint ventures’ shares. Since 2003,

the Chinese government had allowed foreign companies to hold up to 75 percent of the shares.

As of 2015 foreign companies were still restricted from operating wholly owned foreign cinemas

in China (IBISWorld, 2016a). The Chinese Government allowed only 34 foreign films to be

released per year (Faze, 2016), making it extremely competitive to secure a slot. The Chinese

policy makers considered the entertainment and film industries as sources of soft power in the

world (Kim & Given, 2015). The cultural sector was one of the key aspects of China’s Five-Year

Plan, receiving massive investment (e.g., cultural development funds and tax incentives) from

the Chinese Government as well as policy support (Coonan, 2014). Chinese banks were also

encouraged to lend loans to Chinese movie production companies (Blanchard, 2014).

Further, intellectual property protection was a major threat to the Chinese cinema industry.

As ticket prices gradually increased in China, more consumers turned to pirated DVDs. In China,

countless stalls of pirated DVDs were available – including new releases and films that were still

in theaters. This was due to the lack of concern from the government and other cultural factors.

Punishment for IP infringements in China was virtually non-existent (Doctoroff, 2016).

However, as the Chinese film industry grew, so did the incentive for the Chinese government to

protect its domestic economy against piracy. China had begun to increasingly crack down on

street vendors and stores selling pirated DVDs (Langfitt, 2015). While this was welcomed news

to both Chinese movie theaters and foreign producers, the IP infringements was still a major

hurdle and continued to cut into the profits of market participants.

The concentration in the Chinese cinema industry was very low. With roughly 2,112
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enterprises in the market, the top four enterprises, Wanda Cinemas included, accounted for a

combined market share of about 34 percent in 2015 (IBISWorld, 2016a).

China Film Group. China Film Group was the second largest cinema operator in China in

2015, trailing the market leader, Wanda Cinema, by 0.3 percent with a total of 13.9 percent of

the Chinese market. The group was founded in 1999 as a combination of several companies.

China Film Group was a complete production chain, which included television and film

production, movie projection, and movie distribution, among other activities (IBISWorld,

2016a). China Film turned to Hollywood and began investing in American-made films. The

company partnered with Universal Pictures in their 2015 release of ‘Furious 7’ taking a 10

percent stake. China Film Group invested in other American productions and benefited from the

huge success of those films in both China and the rest of the world (Fritz & Burkitt, 2015).

Shanghai Film Group. Shanghai Film Group was another major player in the Chinese

Cinema/Film market and held 6.4 percent of the Chinese cinema market (IBISWorld, 2016a).

Shanghai Film Group was founded in 2001, focusing primarily on film and TV production and

exhibition. In 2015, Shanghai Film Group agreed to partner with Balian Group in a joint venture

(with 49 – 51 percent ownership split) to create a theater chain investment, which would help

further increase Shanghai Film Group’s presence in the cinema market (Bloomberg, 2016).

Guangdong Dadi Cinema Circuit. Guangdong Dadi Cinema Circuit was the fourth

largest player representing 5.4 percent of the Chinese market share in 2015. Guangdong Dadi

Cinema Circuit was established in 2005 and was invested in by Dadi Century Films. The

company began focusing heavily in second- and third-tier cities in 2013 and added 86 theaters.

By the end of 2015, the company had a total of 262 direct cinemas and had a presence in 286

cities throughout China (IBISWorld, 2016a).

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U.S. Movie Industry

For nearly a century, the United States was renowned as the mecca of the world movie industry.

The U.S. market remained a cash cow for the global movie industry, with slow and steady

projected growth from 2015-2020 (with average annual growth rate of 1.2 percent) (Statista,

2016a). The U.S. movie market was far more mature in 2016, compared to the Chinese market.

There had not been explosive growth in the U.S. market for over 10 years and trends were not

entirely impressive. Ticket sales had gradually slowed down over the years and more U.S.

consumers flocked to the internet for entertainment, or watched movies from home. U.S. theaters

were forced to stay abreast in the latest technologies and offer their consumers new movie

watching experiences. The U.S. market had observed a sudden obsession with 3D movies,

theaters offering full course meals, and other improvements to the theater experience.

U.S. consumers were significantly more cautious following the 2008 recession. In fact,

U.S. household consumption expenditure had steadily trended upward since the 1960s. The U.S

consumer market was still number one in the world for consumer spending with household final

consumption expenditure reaching $12.27 trillion in 2015 (World Bank, 2016). However, the

2008 global recession did have an impact on spending, causing U.S. consumers to cut back on

overall spending. Interestingly, a recent report indicated that U.S. consumers valued two items in

their spending above all else, coffee and at home entertainment. Pay television, which included

services like Hulu and Netflix, were considered very important to U.S. consumers - with 38

percent of those surveyed saying they would not forfeit those services (Consumer Reports,

2014).

The U.S. movie industry lacked vertical integration in 2017 although it used to be quite

vertically integrated prior to World War II. Since then, production, distribution, and exhibition
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had remained separate parts of the U.S. movie industry (Bakker, 2008). Due to this structure,

production studios, actors, and other suppliers had great influence on the U.S. theater industry.

The increased cost of making films had been directly passed down to theaters, which in turn was

passed on to the consumers (Campea, 2007). Actors’ salaries had steadily increased over the

years along with other aspects of the industry. Studios had the authority to determine who could

show their movies, and they leveraged those rights over movie theaters (Campea, 2007). This

attributed to, at least in part, the rising costs of tickets, despite the decline in attendance in the

U.S. Further, Hollywood was no longer only about making movies, but had to deal with

marketing them, developing products such as toys and games, and licensing/franchising

agreements. In 2014, movie studios in the U.S. reported spending nearly $200 million per movie

on marketing alone, which drastically cut into their profits (McClintock, 2014). It was primarily

the movie theaters covering the increasing production costs.

Although attendance had been steadily decreasing for some time in the U.S., sixty-nine

percent of Americans and Canadians said that they had watched at least one movie in theaters in

2015, which was a two percent increase from 2014 (MPAA, 2016). Of those viewers, 12-17 year

olds had the largest market share per capita with approximately 11 percent. Ages 25-39 had the

highest overall market share at 24 percent. All other age groups fell within 13-14 percent for

total market share per age group (MPAA, 2016).

The competition in the U.S. cinema industry was intense and was expected to further

increase. The industry was nearly twice as concentrated, compared to the Chinese cinema

industry, with the top four largest companies holding over 60 percent of the market share in 2016

(Ulama, 2016).

Regal Entertainment Group. Regal Entertainment Group was the largest movie exhibitor
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in the U.S., holding approximately 20 percent of the market share in 2015 (Ulama, 2016). Regal

Entertainment Group had a presence in 42 states in the U.S., operating over 570 theaters with

7,360 screens (Vault, 2016). The company claimed to be one of the most modern theaters in the

U.S., with the majority of its screens having digital projection systems and stadium seating. The

company had targeted midlevel cities and suburban growth areas across the U.S. It was also

involved in sales and marketing for specific films and concession products (Vault, 2016).

AMC Entertainment. AMC held just under 20 percent of the U.S. market share in 2015

(Ulama, 2016). AMC focused its efforts on major urban cities throughout the U.S., which helped

the company earn top market share rankings throughout important U.S. markets. In 2010, AMC

acquired Kerasotes ShowPlace Theaters, which caused a decrease in operating income but later

yielded significant gains due to the additional screens. AMC Entertainment was the largest

IMAX exhibitor in the world. At the end of 2014, 49 percent of the screens were 3D-enabled

(Ulama, 2016).

Cinemark Holdings. Cinemark Holdings was the third largest movie exhibitor in the U.S.

with 341 theaters and 4,576 screens. Additionally, the company expanded its operations into

South America, and was the most geographically diverse cinema company in the region

(Cinemark, 2016). Cinemark Holdings was founded in 1984 headquartered in Plano, TX. In

2015, Cinemark held 14.1 percent of the market share in the U.S. Cinemark developed a

premium auditorium called ‘Cinemark XD Extreme Digital Cinema (XD),’ which offered

extended screens from the floor to the ceiling and high-quality sound system. There were 81

‘XD’ auditoriums in operation in 2015 (Ulama, 2016).

Carmike Cinemas. As of 2015, Carmike Cinemas held 5.4 percent of the U.S. market

operating 275 theaters with 2,938 screens (Ulama, 2016). Carmike’s primary focus was on mid-
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sized communities and referred to themselves as ‘America’s Hometown Theatre Chain.’

Carmike Cinemas offered 55 premium large format auditoriums with state-of-the-art technology

and 21 IMAX auditoriums (Carmike Cinemas, 2016). AMC acquired Carmike Cinemas in 2016.

Wanda’s Global Expansions

After achieving immense growth in China, Wanda Group had ventured to expand its business

empire internationally. Wanda’s first major step in the global arena was its acquisition of AMC

in 2012. It introduced Wanda Group to the U.S. market and instantly made Wanda one of the top

cinema chain operators in the U.S. The acquisition was by far the largest one by a Chinese firm

in the U.S. at that time, costing $2.6 billion.

In July 2016, AMC acquired Europe’s leading cinema chain operator, Odeon & UCI

Cinema Group, at the price of $1.21 billion. As of 2015, Odeon & UCI Cinema Group was the

largest cinema chain in the U.K. and Ireland, holding 24.4 percent market share (Grater, 2016).

Odeon & UCI Cinema Group became a subsidiary of AMC in London. Europe’s market had

been considered similar to the U.S. market in terms of maturity.

In December 2016, Wanda Group completed another major acquisition of Carmike

Cinemas, the fourth largest cinema operator in the U.S., at the price of $1.1 billion. This

acquisition made AMC, and in turn Wanda Group, the industry leader for the entire world. Yet,

since recent acquisitions were proceeded by AMC, rather than directly by Wanda, at least on

paper, AMC’s financial resources became very limited. In early 2017, Wanda Group operated

1,352 cinemas with 14,347 screens globally (661 cinemas with more than 8,200 screens in the

U.S., 244 cinemas with 2,200 screens in Europe, and 447 cinemas with 3,947 screens in China)

accounting for 12 percent of global box office sales.

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Wanda Group’s expansion was not just limited to movie theaters, but involved other

sectors of the movie industry. In 2016, the company acquired Legendary Entertainment, a major

Hollywood studio, for $3.5 billion. Legendary Entertainment was the producer of major

blockbuster hits like ‘Jurassic World,’ ‘The Dark Knight,’ and ‘The Hangover.’ This acquisition

made Wanda the first Chinese company to own a major Hollywood film studio. Wanda’s CEO,

Wang Jianlin, stated that he planned to make an initial public offering for the combined

operations between Legendary and Wanda. In 2016, Wanda Group also agreed to invest in Sony

Pictures movies. Similarly, other Chinese firms started injecting capital in Hollywood, including

Fosun International in Studio 8, and Shanghai Film Group and Huahua Media in Paramount

Pictures. Many movie industry experts considered such acquisitions and investments to be very

valuable for Chinese producers, offering exposure and experience in global storytelling and

giving access to the distribution and marketing capabilities of U.S. producers.

Wanda’s CEO, Wang Jianlin, aimed to grow Wanda’s market share in the global cinema

industry, to 20 percent by 2020. Wanda Group hoped to boost synergies among its movie-related

affiliates, such as featuring Legendary Film’s content exclusively in Wanda’s cinemas. It

intended to join the ranks of top global film production and distribution firms, such as Walt

Disney. Wang Jianlin boldly stated in 2017:

“Some people don’t believe that Chinese cultural enterprises can compete with

American ones, and this is kind of xenophilia, based on the unexamined blind

belief that the Americans can and the Chinese cannot. Wanda determines to

prove with action that we not only can do it but can catch up and overtake

(Wanda Group, 2017).”

There were opposing views; however, on Wanda’s expansion. On the one hand, some
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believe that the firm was attempting to flee China because lagged-behind and unbalanced

developments in the Chinese business environment and government involvement might interfere

with Wanda’s ambitious growth goals. Yet, being a Chinese based firm, Wanda faced backlash

from the Chinese government as it continued its expansion outside of China. The government

began heavily monitoring the firm’s financials and looking to discourage further foreign

investments from the group.

Looking Ahead

Wanda Group seemed to show no signs of slowing down its buying spree in 2017. Yet, Wanda’s

ambitious plans heightened concerns among Westerners (including U.S. lawmakers). One of the

concerns was that a company with close ties to the Chinese government was becoming too

involved in the global movie industry. Some US politicians suggested that Wanda’s acquisitions

in the movie industry should be viewed from a national security perspective, since the Chinese

firm had the potential to use its operations for propaganda purposes. In addition, the Chinese

government also started to pay close attention to Chinese firms’ outbound deals. Many Chinese

investors and state run banks became more hesitant to continue to fund the firm’s acquisitions

due to Wanda’s massive debt and potential hazards to the overall Chinese financial system

(Bradsher & Wee, 2017).

Considering the many issues covered in the case, what should be the next step for Wanda

to achieve its goal to catch up and eventually overtake global movie players? First, was it a wise

move for Wanda to enter the movie industry in China? Was it the best decision to quickly

acquire major cinema companies and a movie production studio in the Western world as it has

been doing since 2012? Since Wanda had done little to integrate its newly acquired companies in

the U.S. and Europe, was it time for Wanda senior managers to switch gears toward the
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integration of acquired companies rather than further acquisitions? During the integration period,

senior managers often have to spend a significant amount of management time on acquisition-

related issues. Wanda’s acquired company seemed to operate autonomously, and often times

Wanda Group directed public attention to the acquired companies rather than Wanda. What else

should Wanda be concerned about?

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available at http://www.npr.org (accessed 14 August 2016).

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costs,” available at http://www.hollywoodreporter.com (accessed 11 November 2016).

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http://financials.morningstar.com/income-statement/is.html?t=002739&region=chn

(accessed 27 December 2016).

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November 2016).

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(accessed 10 April 2017).

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dollars),” available at https://www-statista-com (accessed 16 November 2016).

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billion U.S. dollars),” available at https://www.statista.com (accessed 18 October 2017).

 21

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 22

Exhibit 1. Nanjing Jiangning Wanda Plaza

Source: Wanda Plazas, 2013

 23

Exhibit 2. Commercial Real Estate Industry in China

6.6
6.5

6.3
Percentage Change

6.0

5.7
5.6

2017 2018 2019 2020 2021 2022

Source: IBISWorld, 2016b

 24

Exhibit 3. Wanda Cinema’s Revenue Growth

 25

Wanda Cinema's Revenue Growth

$28.00

$27.30 $27.20
$27.00

$26.00
$26.00
RMB Millions

$25.00
$25.00

$23.90
$24.00

$23.00

$22.00
2012 2013 2014 2015 2016

Axis Title

Source: Morningstar, 2016

 26

Exhibit 4. Wanda City in Nanchang

Source: Wanda Group, 2017

 27

Exhibit 5. Financial Summary of Dalian Wanda Commercial Properties

Source: Wanda Group, 2016a

* RMB Million=$154,000 at the end of 2015

 28

Exhibit 6. Box Office Revenue in the Global Movie Industry (US$ Billions)

Global Box Office Revenue

45

40

35

30
U.S.$ Billions

25 27.3 27.2
23.9 25 26 Sum of International
Sum of U.S./Canada
20

15

10

10.8 10.9 10.4 11.1 11.4

5

0
2012 2013 2014 2015 2016

Axis Title

Source: MPAA, 2017

 29

* RMB Million=$154,000 at the end of 2015

 30

Exhibit 7. Box Office by Region, Outside the U.S. and Canada (US$ Billions)

Box Office Revenue By Region (Outside of U.S./Canada)

$16.00
$14.90
$14.20
$14.00

$12.40
$12.00
$10.70 $10.90 $11.10
$10.40 $10.60
$10.00 $9.70 $9.50
U.S.$ Billions

$8.00

$6.00

$4.00 $3.40
$2.80 $3.00 $3.00 $2.80

$2.00

$-
2012 2013 2014 2015 2016

Axis Title

EMEA Asia Pacific Latin America

 31

Source: MPAA, 2017

* EMEA: Europe, Middle East & Africa

 32

Exhibit 8. Leading Film Markets Worldwide in 2016

12
Gross Box Office Revenue (in Bilions U.S. Dollars)

10

Source: Statista, 2017