Day and Night, an online crime drama, set an impressive rating record of 9.1 out of 10 on Douban, a major Chinese film and TV rating platform, and proved that quality content is what audiences yearn for, not simply good-looking TV stars. (Photo: CHINA DAILY)

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As Chinese President Xi Jinping said in his report at the 19th CPC National Congress: “Socialist literature and art are for the people. Writers and artists should take a people-centered approach and draw inspiration from everyday life and the experiences of the people to produce works that do justice to our times.”

However, in recent year, some TV dramas have drawn widespread criticism among viewers over ludicrous plots, bizarre scenarios and ridiculous dialogue.

The nation urgently needs thought-provoking programs with high artistic standards that reflect real life and extol our country, our people and our heroes.

As the primary players of the TV industry, listed enterprises are expected to set a good example by producing quality TV programming.

 

Listed firms
In recent years, the Chinese government has implemented a series of incentive policies to encourage film and television enterprises to go public, setting off a listing frenzy in the industry. As a result, the number of film and television enterprises listed in the A-share market has increased steadily while the amount of OTC market-listed film and television enterprises has also exploded.

Film and television firms capable of producing high-quality content are highly valued and account for a large volume of transactions on the Chinese stock market, attracting the same kind of Chinese concept shares to abandon US capital markets and return home.

According to the China Securities Regulatory Commission (CSRC), as of the end of March 2017, the number of listed enterprises whose main business is broadcasting, television, film and video production had reached 20, whereas there were only eight in 2012.

In addition, since 2012, with the establishment of the New Third Board and regional stock markets, qualified small and medium-sized film and television enterprises have also gained opportunities to raise funds in the capital market, signifying explosive growth in the past two years.

In the multi-level capital market system, film and television production enterprises have more channels to solve financing difficulties.

Since 2009, when the first private enterprise successfully went public in the A-share market, private film and TV production firms have become more and more active in the industry. Under the domestic stock issuance approval system, the supervising departments have been very strict in auditing the entry qualifications of enterprises, which means firms that have successfully listed in the A-share market are indeed leaders of the industry.

At present, there are around 12,000 firms of various kinds that have television production qualifications nationwide. Among them, the production and operation capacity of listed enterprises are the highest, but more importantly, their corporate values often produce a wide and profound effect on the sense of social responsibility within the entire industry.

 

Low-quality production
On the whole, China’s TV production industry is thriving, but there are some pressing issues that urgently need to be solved. It has to be said that some private listed companies have set a bad example in the industry, in particular, in the following two aspects.

For one, some enterprises are keen on riding on the celebrity effect to create capital bubbles, severely damaging the social prestige of the TV industry. Cashing in on the celebrity effect is undoubtedly a shrewd financial strategy to ensure viewership and box-office revenue, reduce cost pressure and transfer investment risk. In fact, it has somewhat become the norm in the capital operation of listed production companies in recent years.

Also, some enterprises overexploit the “fan economy” and show little respect for the audience. Certain listed enterprises not only fail to positively guide the public’s aesthetic tastes but also lose basic respect and awe, thus blindly catering to the economic interests. The “fan economy” is a typical example of insulting the intelligence of the audience. In essence, it is intended to exploit consumers’ loyalty and emotional attachment to products or celebrities to create addictive consumption.

For example, some listed enterprise is known for launching platforms for stars and fans to interact, creating a “fan economic circle” targeted at young people born in the 80s, 90s, and the 21st century. It creates “stars” on the one hand while encouraging “followers” on the other, pushing the market price of stars and plunging the entire industry into a vicious circle of structural imbalances.

Consequently, a lot of TV dramas with low production value that feature absurd plots and bad acting are aired, undermining the role of TV dramas in upholding correct values and social responsibility. What’s more, the “fan economy” tends to induce a series of socio-psychological problems by encouraging irrational consumption among young people, such as giving gifts to celebrities through crowdfunding.

 

Innovative reform path
If the TV industry loses its commitment to realism, it will not stand the test of time and history regardless of its economic success. However, this is not a condemnation of the marriage of culture and capital. The key is to understand the special features of culture and establish an institutional environment for cultural enterprises to simultaneously achieve social and economic benefits. Based on previous domestic and international experience, we suggest that the following reforms be carried out.

First, social responsibility standards for listed film and television firms must be established. Given that the film and television companies have not been on the capital market for long, relative regulatory policies have yet to catch up.

At present, the supervising departments are more focused on the review and approval of enterprises before listing, whereas the post-listing supervision departments, such as CSRC and the exchange house, lack coordination. The former mainly oversees enterprises’ financial disclosures to protect the interests of investors.

In contrast, the assessment of corporate social and cultural responsibility has not received enough attention, due to lack of quantitative standards and assessment tools.

Therefore, it is urgent to refer to the social responsibility evaluation system of SA8000 and AA1000 to develop a system suitable for protecting people’s spiritual and cultural interests, while cultivating third-party inspectors and linking the evaluation results with tax deductions, government purchase services, special subsidies and other awards.

Second, it is advisable to carry out pilot projects to transform film and television enterprises into social enterprises. Market players are characterized by the pursuit of maximum profit, so it is difficult to fundamentally change the status quo simply through external constraints.

That said, only when the survival and development of film and television enterprises are built on its social and cultural mission, can they better resolve the inner conflict of profit-making and sociality, which requires the introduction of new organizational form.

Social enterprise is nowadays the most innovative organizational form in the international sphere because its core value is to realize the social mission by commercial means. In this aspect, cultural social enterprises in the United States, Britain, Korea and other countries have plenty successful cases.

The introduction of social enterprises into the field of film and television industry has far-reaching significance in deepening the supply-side structural reform in the cultural sector. In the early stage, rebuilding the listed enterprises would generally enhance the demonstration effect.

Third, a social enterprise stock exchange must be established. Due to the internal difference in terms of dynamic mechanism and core mission, stock and bond trading of social enterprises should be distinguished from general enterprises.

In recent years, cultural assets and equity exchanges across the nation went through ups and downs. Hence, we propose the establishment of social assets and equity exchanges that are based on the classification of value purpose rather than industry. The practice is by no means a new invention. It has already proven successful in other countries.

Compared to the general stock exchange, the social assets and equity exchange emphasizes transparency and standardization. It not only requires enterprises to disclose financial information but also social income information. Accordingly, the exchange house will provide enterprises with a unique social audit and rating as well as an enterprises’ social impact index ranking.

It can be said that the model provides a financing solution for the film and television enterprises after transforming into social enterprises. Not to mention that social income disclosure, auditing, impact index and other innovative tools are conducive to improving the external regulation for listed film and television enterprises.

 

Pan Na is from the Institute of Contemporary China Studies at the Chinese Academy of Social Sciences.