At least one VIE exists in the corporate structure
We are the largest privately owned film distributor in China. We are the leading distributor of domestic films among all privately owned film distributors in China in terms of number of films distributed and total box office receipts.
We believe that our brand name and reputation in the Chinese film industry, our experience in distribution and marketing, our collaborations with other domestic and international film industry players, and our management's access to industry participants enable us to identify and secure distribution rights for promising film projects. We also selectively invest in film production projects by funding a portion of the film production budget in order to augment the supply of desirable film projects that we can distribute, while at the same time gaining title to or economic benefits associated with the copyright for those films.
We distribute films through virtually all of the theater circuits in China. We are able to gain distribution rights to a wider selection of films through joint distribution arrangements with industry participants such as the state-owned China Film Group Corporation. We have also distributed 17 Chinese films (including Hong Kong films) internationally since 2008, from which we generated nil, US$2.0 million and US$5.2 million in net revenues in 2008, 2009 and the nine months ended September 30, 2010, respectively. Although our international film distribution business has not historically made a significant contribution to our results of operations, it has accounted for an increasing proportion of our net revenues. We believe that we are well positioned to take advantage of the increasing popularity of Chinese films abroad, given our track record of international distribution and the distribution arrangements we have established with film distributors in markets including Korea, Japan and Southeast Asia. We have also expanded into non-theatrical distribution channels, including home video products, digital distribution and television. As films continue to generate an increasing proportion of our revenues from non-theatrical sources, we expect to continue to develop new and existing relationships to maximize the value of our distribution business and our film portfolio.
In addition to film distribution and production operations, we own and operate six movie theaters in commercial districts and residential areas in several major cities in China. Our movie theaters are affiliated with leading theater circuits in China and provide our audiences with modern facilities. Theater circuits are mandated by PRC laws and regulations to negotiate the terms of arrangements for the exhibition of films and provide film prints to movie theaters. Consistent with industry practice in
Last updated November 26, 2010
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