Huayu 05, our science fiction movie universe

Chapter 691 The balance of offense and defense shifts
Movies, animations, games, TV series, novels...

In 2021, the works of Xinghe Group can be said to have blossomed in all aspects, occupying a leading position in the national and even East Asian markets.

This, of course, relies on the film industrialization system that Wang Hao strictly required the group company to establish from the very beginning.

A scientific, rigorous, and rational creative approach, coupled with solid technical support, is the fundamental reason why Galaxy Group's works are so successful in the market.

Many colleagues in the domestic film and television industry and the gaming sector are unaware of this, or even if they are, they are unable to make the decision to increase investment in this area, and there's nothing that can be done about that.

In 2021, Galaxy Group's works continued to hold a leading position in China.

In early May, the movie "Rampage" officially ended its theatrical run, having grossed 21.4 billion RMB in China and $620 million worldwide when combined with overseas box office revenue.

If this were a typical Hollywood movie, this box office performance might not even cover the costs.

However, thanks to China's powerful and comprehensive industrial system, Xinghe Pictures still managed to make a huge profit from the $6.2 million box office of "Rampage".

Yes, the success of "Rampage" is not only the result of the film industrialization system established by Galaxy Pictures, but also the result of the entire industrialization system of China.

Perhaps no one could have imagined that the balance of power would shift so dramatically in just twenty years.

Twenty years ago, when Chinese filmmakers watched Titanic, Transformers, and Avatar, it was just like when Chinese people went abroad and saw America's skyscrapers, or when military commanders watched other countries' fighter jets from an aircraft carrier.

At that time, Chinese people, Chinese directors, and Chinese soldiers could only look on with envy.

They didn't even dare to dream of a specific day when they could catch up with others; they only dared to comfort themselves with the thought that:
"It will happen, it will all happen."

However, in just twenty years, we now have aircraft carriers, electromagnetic catapults, and even sixth-generation fighters like the J-50, leaving the United States far behind.

So much so that high-ranking U.S. military officials complained that our army relies on high-tech weapons, while they have the strong will to fight back, completely reversing the script.

This only shows that China has changed so much and so fast that many people cannot even feel the enormous changes. Everything has happened quietly and naturally, and now others are starting to envy us.

As for how much I envy him?

"Hello everyone! I'm sure you all know me."

The lecture hall at the new campus of Beijing Film Academy was packed with students on Saturday.

Wang Hao stood before them and gave a brief self-introduction.

"Of course, it doesn't matter if we don't know each other. I'm not that petty. When you graduate and apply for a job at Xinghe Group, you can still use my name."

A burst of cheerful laughter erupted in the lecture hall.

After Wang Hao and the others stopped laughing, he continued:
"Over the past few years, the principal has always given me the opportunity to come to the school and give open classes whenever possible."

He said that you film and television companies are the pioneers at the forefront of the industry. You should share your good experiences with your juniors at the school.

This is a real headache for me too. When it comes to the cutting edge of the industry, you guys probably know more gossip than I do.

After all, I'm busy with film production and company management on weekdays, so I haven't been browsing Douban, Weibo, or Douyin much.

At least in terms of how quickly I catch up on gossip, I'm no different from the professors and teachers at the university.

Upon hearing this, the principal, who was sitting in the front row, shook his head with a wry smile, while behind him, sporadic laughter rang out again.

There have certainly been a lot of celebrity gossip and scandals this year, with several earth-shattering revelations occurring in the first half of the year alone.

"However, when I visited a film crew at the neighboring Galaxy Cinema the day before yesterday, I saw a small item that actually made me think of something worth talking about."

As Wang Hao spoke, he casually pulled a small metal ring from his pocket, pinched it between his fingers, and held it high so that the students in the back of the classroom could also see it.

However, because the metal ring was too small, the students in the back row could only vaguely see a glint of silver light flashing between Wang Hao's fingers.

Fortunately, the student acting as the teaching assistant quickly projected the image of the metal ring onto the large multi-functional screen behind Wang Hao.

"There are quite a few students attending the class today, from various departments."

This is something that photography students are probably familiar with, right?

Can anyone tell the other students what this is?

A burly, third-year photography student immediately raised his hand and stood up.

"These are irregularly shaped shims for cameras, mainly used for adjusting the camera's axis of rotation, increasing the fastening area, and distributing pressure."

"Very good, correct answer!"

Wang Hao clapped his hands, then continued to ask, "Do you know its price?"

The photography students who had stood up were now in a dilemma, and shook their heads somewhat embarrassedly.

"do not know."

"There's nothing to be embarrassed about, it's normal."

Wang Hao gestured for the student to sit down and said with a smile:

“In large companies, photographers don’t need to worry about these things; there are people who manage logistics and equipment to take care of them.”

The teachers and students present thought Wang Hao was going to talk about the procurement and production costs of a film crew.

After all, controlling costs is indeed a very important thing for commercial films today.

Especially with the entry of internet capital into the entertainment industry, cost control is no longer as easily fooled by industry insiders as it was when coal bosses were in charge. Internet thinking has indeed played a progressive role in film and television project production.

However, to everyone's surprise, Wang Hao changed his tone when he picked up the gasket.

"Don't underestimate it, everyone. Although it is just a small, irregularly shaped camera pad, it is this inconspicuous industrial component that, like the capillaries of manufacturing, holds the key to a major transformation in the global film system."

More importantly, behind it stands the hard power of China's modern industrial system, which can turn the "impossible" into the "cheapest."

"I just asked that student if he knew the purchase price of this gasket, so now I will report the data to everyone."

In Hollywood, this gasket costs $48 each, which is approximately 340 RMB at the current exchange rate. But how much does it cost in China?

Everyone can take out their phones, open the Taobao app, and search for it.

Upon hearing Wang Hao's words, the students in the classroom immediately took out their phones and started searching on Taobao, and the results surprised them greatly.

"Yes, as you can see, such a camera pad costs only 3 RMB, and if you buy more than 10,000 pieces, the price can be as low as 1 RMB, and even includes shipping."

Compared to Hollywood, it's a hundred times worse!
Some people might ask, how can the cost be reduced to such a low level? Can the quality be guaranteed?
All I can tell you is that this thing is made of high-strength alloy steel and uses a variety of processes such as etching, laser, stamping, and coating.

In terms of materials and manufacturing process, this is not a high-tech product. There is no difference between domestic gaskets and Hollywood gaskets.

However, the special alloys used by Hollywood are imported from Japan, costing about 210 yuan per kilogram, while the alloy steel we use from Ansteel costs 42 yuan per kilogram.

In recent years, the country has invested in mines overseas, and the entire process from iron ore mining to finished steel products is in its own hands.

The processing stage is where the intricacies of the process become even more apparent.

In the mold industry cluster in Cixi, Zhejiang, 500 small and medium-sized enterprises of all sizes have formed a "1-hour supply chain".

Upstream there are forging and molding plants specializing in metal materials, midstream there are processing plants that master precision stamping technology, and downstream there are coating plants and service companies responsible for quality certification. Everyone works together seamlessly, with each person making the mold and the other doing the stamping.

This ecological reconstruction directly rewrote the cost logic. Through shared molds and collaborative production, the Cixi cluster reduced mold changeover time from 30 minutes to 5 minutes and increased material utilization from 60% to 92%.

Perhaps you've stayed in school and haven't participated in industrial production, so you don't know that the waste material removed from the middle of a gasket like this can actually be used to process other materials, such as smaller gaskets.

However, Western processing enterprises have not formed an industrial cluster effect, and the remaining materials after processing can only be treated as waste, otherwise the transportation cost would be higher than the material cost.

However, the mold industry cluster in Cixi does not have this problem. Demand from all over China allows them to make the best use of materials, and batch processing has reduced labor costs to 0.3 yuan per minute.

It must be made clear here that mass production is not without cost, but the cluster's sharing mechanism allows 20 companies to share the cost, reducing the amortization period from one year to three months, ultimately achieving full cost control.

In contrast, American companies that make similar parts have to import base materials from China for further processing, which adds a lot of costs just from the intermediate links. Naturally, our purchase price can be as low as one-third of that of imported products.

Looking at the advantages of logistics and full-chain control, from the Cixi factory to [Xinghe Cinema], it is a 24-hour direct route with a logistics cost of 0.8 yuan per kilogram.

The Hollywood film studios in Los Angeles and Atlanta require transcontinental land transport, which takes 5 days and costs 8.2 yuan per kilogram, given the local transportation infrastructure in the United States.

More importantly, their local processing costs are too high, and 60% of the basic component production capacity has long been transferred to Mexico, with the intermediate links increasing the purchase price by 40%.

We have built an independent supply chain from overseas iron ore to machine tools in Shaanxi and molds in Zhejiang, with the localization rate of core components reaching 75%.

Behind this lies the nation's comprehensive industrial chain layout, encompassing 41 major industrial categories, 191 medium categories, and 525 minor categories, a result of the resonance between national strategic will and market mechanisms.

Therefore, the cost of using the same gasket in the [Galaxy Cinema] is a hundred times different from the cost of using it in Hollywood in China. This is by no means a cost-saving measure in a single link, but a dimensional reduction attack on the entire industry chain ecosystem.

And that's without even considering the "ultimate weapon" for cost control.

It is worth noting that the Cixi Industrial Processing Cluster Park, through long-term photovoltaic power contracts and energy storage systems, can reduce the electricity cost of a single gasket to 0.2 yuan, saving 60% compared to the traditional power grid.

What do all these advantages ultimately lead to?
It is a "cost haven" in the global film industry, and it is also the core competitiveness that allows our [Galaxy Cinema] to maintain its prosperity despite the global film market downturn!
As everyone knows, the worse the economic environment, the more cost reduction and efficiency improvement become the top priorities for large companies.

Over the years, the studios at [Galaxy Cinema] have not been idle due to the unfavorable economic environment; on the contrary, film crews have been moving in every single day of the year.

To give a simple example, take the recently released "Rampage 2".

This film is a Sino-US co-production, a collaboration between our Galaxy Pictures and Hollywood's Legendary Pictures.

At the beginning of the project, they made a budget in Hollywood, and we made a budget here. When the two companies met together and presented their respective cost budgets, the CEO of Legendary Pictures took one look and said directly, "Listen to us, we'll shoot in China, right here at Galaxy Cinema."

why?
This is a very simple cost issue.

According to their calculations, the production cost of such a monster blockbuster in Hollywood would be at least $1.8 million, which is approximately 13 billion yuan.

Don't think it's a lot; the film company has a professional production team that has calculated it.

The actors' and directors' salaries account for 30% of the cost, and then the special effects cost accounts for 50%.

Of these special effects costs, post-production processing is the biggest expense, and the manpower costs differ between the two sides.

Take the creation of those monster models in the movies, for example. These are not simple plastic models. They come in various sizes, and many need to be remotely movable.

You can search for Hollywood sci-fi movie models from 20 years ago after class; the mechanisms inside are extremely complex.

However, Hollywood today lacks local precision mechanical model manufacturing plants and has to order parts from Switzerland, with a single model costing over $800 million.

We specifically inquired with domestic manufacturers about the same model, and their quotes were only one percent of this price.

Yes, a monster model that costs $8 million in Hollywood would only cost $800 in China.

This is still the price of a single company's package solution.

In fact, if the process is broken down, with the props department of the production crew designing the materials and then ordering raw materials from Cixi, Yiwu, Huaqiangbei, and other places, and then shipping them over for assembly, the cost can be further reduced, making it easy to convert US dollars to RMB.

As for the venue and manpower, there's no need to elaborate; those who know, know.

So the budget we gave them was unbelievable; the total cost was only $0.58 billion, less than a third of Hollywood's.

why?
Because our industrial system can reduce costs at every stage!
Because we were able to reduce costs, Galaxy Entertainment Group was able to not only recoup the costs of "Rampage 2" but also have profits to invest in the production of the next film.

Furthermore, thanks to China's comprehensive industrial system and the film industrialization system built within the Galaxy Group, "Rampage 2" can not only reuse the props, equipment, and special effects materials from the original "Rampage 1" filming, further reducing costs, but also keep the costs of subsequent film merchandise development to an extremely low level.

When it comes to making toys, who can compare with Qiaoxia in Zhejiang, Chenghai in Guangdong, and Gaomi in Shandong?
Therefore, it's not just our Galaxy Pictures' co-production projects that have settled in China; many major Hollywood studios have also come to China to inspect and have chosen Galaxy Movie City as the filming base for their movie projects.

This isn't because we have particularly good negotiation skills, but because China's industrial system has given the Chinese film production industry the most fundamental 'pricing power'.

This 'pricing power,' especially the pricing power for special effects blockbusters, was originally in the hands of Hollywood companies.

It can only be said that in just twenty years, the balance of power in the film production industries of China and the United States has shifted dramatically.

(End of this chapter)