Recently, industry insiders revealed that almost all cinemas in China were in a deficit state last year. According to incomplete statistics, after the Chinese New Year box office season this year, more than ten cinemas in China have publicly announced their closure.
Reported by the “Xinjingbao”, the Beijing UME Cinemas official WeChat account recently issued a closure notice, announcing the closure of UME Cinemas (Beijing Huaxing Store) (referred to as “UME Cinemas Huaxing Store”) on March 1st due to the expiration of the lease contract.
In July 2002, “Star Wars Episode II: Attack of the Clones” was the first film shown here. In June 2006, Beijing’s first IMAX screen landed at UME Cinemas Huaxing Store. In December 2010, UME Cinemas Huaxing Store’s annual box office exceeded 97 million, setting the highest record in the Chinese film market that year.
Furthermore, staff at Lumiere Shanghai Grand Gateway Store recently revealed that the cinema decided to close due to poor management. “Nine years in operation, although ‘Ne Zha’ brought a wave of revenue, overall, the foot traffic in the mall was not good, and the rent was too high, and there has been no improvement in recent years.”
According to incomplete statistics from the “Daily Economic News”, after the Chinese New Year box office season this year, more than ten cinemas, including Beijing Huan Ying Cinemas Fengtai Chunfengli Store, Zhongguang International Cinemas Jiaozuo Store, Xi’an Oscar Chang’an International Cinema (Central Plaza Store), China Film International Cinemas Nanhai Vanke Store, CGV Cinemas Zhongshan Xiaolan Store, have publicly announced their closure.
Although “expiration of lease” is a reason for many cinemas to terminate contracts, several cinema managers disclosed that rent accounts for a significant proportion of operating costs, sometimes exceeding 50%. However, on the other hand, the film market has not maintained a year-on-year growth trend.
“During the pandemic, rents are still increasing, as written in the original contracts,” stated a cinema manager. Rent has not decreased due to the poor market condition, at most, “a reduction of one or two months.”
Faced with high rent and weak market demand, many cinemas choose to close after their lease expires to avoid continuous losses.
Chen Lin, in an interview, was about to discuss rent reduction with the landlord. He said, “The key to whether a cinema can continue to operate lies in the rent.”
“Summers in the south are hot, many people complain on social media that cinemas don’t turn on the air conditioning, really just to cut costs. Last summer, the daily income of over ten cinemas was only around 1,000 yuan, and at its peak, the electricity bill for one of my cinemas was as high as 120,000 yuan. In the current situation, how can we afford to keep the air conditioning on?”
Chen Lin revealed that almost all cinemas were in a deficit state last year. Most cinemas, due to limited financing channels and high financing costs, were unable to sustain continued losses, choosing to close after the Chinese New Year box office period to earn one last box office revenue.