“A Race to the Bottom”: The Economy’s Impact on Chinese Production
As economic uncertainty and fierce competition grow in China, the production market has become a “race to the bottom” states P.I.G. China’s managing partner and executive producer, Nick Dodet.
“That fear of lacking revenue means that pitches are driven primarily by costs, and creative comes a far second. If the goal becomes to be the cheapest, decisions will be made based on costs and minimising financial exposure rather than what is actually best for the project. In turn, this breeds average looking work at best, with only a few pieces standing out once in a while. The fear of losing clients leads some production companies to execute rather than produce, which often creates safe and average work.”
In this interview with LBB’s Sunna Coleman, Nick opens up about the challenges China’s production companies are increasingly facing, how it’s impacting creative output, and discusses possible solutions to push the industry in the right direction for 2025.
LBB> In China, budgets have become tighter and competition fiercer. What has led to this current climate?
Nick> It’s the combination of many concurring factors:
- Uncertainty regarding the economic outlook of the Chinese market, where most brands have experienced a decline in revenue, makes brands very conservative in how they allocate their marketing budget.
- The need for more content on different platforms dilutes the amount of money allocated to each piece of content.
- The willingness, sometimes by necessity, of some production companies to generate revenue leads them to accept projects with much tighter profit margins than would be healthy, which in turn leads to a race to the bottom between some of these companies to see who will underbid the most and get the project. This leads to brands feeling they get production for ‘cheaper’ when they are, in reality, getting less than expected while depleting over time the pool of production companies to choose from.
LBB> There are a few prod companies using a more western model – are they faring better in the current climate?
Nick> I think they do. I hope they do! They seem to be more attached to a process and more focused which leads to better work, which always benefits the brands, who are then more likely to become return clients.
If the relationship is purely based on accepting underfunded projects and terrible payment terms, this becomes the unhealthy base of the relationship and it will never get better. The few production companies who stick to a more western model of realistic budgets, schedules and payment terms produce better work and seem to fare better with their clients, as their relationship is much more horizontal and based on the quality of the work rather than solely on the financial aspect of it.
They tend to consider the creative input (including the director) as an asset rather than a commodity, which makes a big difference when it comes to the dynamics of clients/agency/prod cos relationships.
Note that not all western-owned production companies stick to a western model, and that there are few local companies adhering to a western approach. But it is a minority.
LBB> What would you say the current attitude of Chinese production companies is at the moment, do you think they are open to change? Is there a sense of dissatisfaction?
Nick> I think that most, if not all of them, would love to see drastic changes in the way business is conducted. However, some are already so entwined in relationships with clients which are not healthy to their business that it is hard for them to change the terms of these relationships or to forego their existing client pool!
LBB> How is P.I.G. structured and will you be updating anything in line with new marketplace challenges and trends?
Nick> We have restructured ourselves from two angles:
- We have refocused part of our resources into doing more production service for foreign companies or brands who need to shoot in China or the APAC region.
- We do more and more hybrid projects, involving creative, short-term strategy, online and offline content in addition to traditional video film production for local brands. This enables us to be flexible to the needs of our clients and forge long-term relationships based on mutual trust.
LBB> How do you see the production landscape in China changing across the board over 2025?
Nick> That’s the million-dollar question! There are so many ponderables, both at the local and international levels, that it is very hard to predict what 2025 will bring. But we personally do see a trend for more and more turn-key type hybrid work, involving creative, short-term strategy, production and postproduction across different media and means of communication. Which is probably more intuitive when it comes to marketing and allows for a more integrated message while being more streamlined financially speaking. This is probably going to become more pronounced as time goes by.
LBB> What key message would you like to share with other Chinese production companies?
Nick> Innovate, be flexible, try things out. The core of our industry is to come up with solutions to communications challenges, it is imperative to have a broad vision and a range of options in that regard.
LBB> And with Chinese directors?
Nick> This is a different conversation! Most Chinese production companies do not have a roster, since they generate board flow based on the producers’ relationship with agencies and clients. Directors are therefore pretty much freelancers in China (and there are many very talented ones), and local prod cos contact them based on the briefs they receive.
However, the notion of ‘developing’ an in-roster director and curating his/her work and style is foreign to the market. Therefore many directors, especially those getting lots of work, will shoot back to back to back films with little prep (and often with conflicting schedules!). Prod cos and directors are not as closely linked as they are in the west.
Although the western model has its own limitations, it does foster relationships between prod cos, directors, agencies and brands which are more based on creative production than mere execution.
