China’s leading entertainment corporation Huayi Brothers has disclosed in a notice that it was trying to get through a challenging period and that employees were being let go.
The Chinese film studio issued a notice on October 28, but it was not until November 16 that it caught mainland media’s attention.
As Beijing Business Daily reported, Huayi Brothers admitted in the notice that it had suffered slow growth or even negative growth for several consecutive fiscal years. As a result, the group has tried to cut back unimportant spending, but significant operational hurdles remain. As a result, it had no choice but to further cut back on hiring.
The company was candid that its financial losses are due to the pandemic and the country’s economic slowdown.
According to the outlet, Huayi’s operating income was $51.3 million (366 million yuan) in the first three quarters of 2022, down almost 62% year over year.
Its crisis appears to have begun in 2018, and up to 2021, Fast Technology believes it accumulated losses of around $883 million. Last year, Caixin.com reported that Wang Zhonglei, one of its co-founders, was selling 43% of his stake in the firm. This August, internet giant Tencent slashed its holding to 5% from 8%.
China’s film industry is among the casualties caused by the Chinese Communist Party’s hardline “zero-COVID” policies. With constant lockdowns and social distancing, cinemas and the scheduling of new films have been significantly hampered.
According to Beijing Business Daily, China’s annual box office nosedived from more than $8.41 billion in 2019 to $2.8 billion in 2020. Although the figure reached over $6.5 billion, it still hasn’t fully recovered from its initial state of development. The national movie box office has not yet surpassed $4.2 billion this year.