What does it take to reduce a Chinese multimillionaire to tears?
For Li Ruigang, chief executive officer of China Media Capital and the man courted by U.S. movie makers to crack China’s exploding entertainment market, all it took was a 2011 Broadway production of “Les Miserables.”
“I was so moved,” said Li, who proceeded to bring the musical to China, along with local language versions of “Mamma Mia,” and “Cats.” Now he’s aiming to raise as much as $1.2 billion in private equity to nearly triple the size of CMC’s entertainment investment funds.
His knack for delighting local audiences, while keeping censors happy, helped Li become one of the most powerful media and entertainment players in China and a partner of choice for investors and foreign companies. Shanghai-based CMC, which he founded in 2009, has separate movie-making ventures with IMAX Corp. and Warner Brothers Entertainment Inc., is building a Legoland theme park in Shanghai, and has partnered with Jeffrey Katzenberg’s Dreamworks Animation Skg Inc. to make Kung Fu Panda 3, which opened in China on Jan. 18 and hits U.S. theaters on Jan. 29.
Li is competing with Wang Jianlin, China’s richest man, and Jack Ma, founder of Alibaba, to grab a share of one of the fastest growing industries in China. Box office receipts in the country grew nearly 50 percent last year to 44 billion yuan ($6.7 billion) and could overtake the U.S. next year to become the world’s largest. China’s sports business is projected to grow to 7 trillion yuan by 2025. Billions more in ticket sales at amusement parks and events for the country’s new middle class are up for grabs.
Li’s ascent to become one of the linchpins of the industry reflects a man with the key attributes to succeed in show business: a sense of what audiences want; a persuasive ability to attract partners and investment; and above all, powerful connections.
The 46-year-old, with glasses and graying short-cropped hair, ran state-owned Shanghai Media Group, China’s second- largest media company, for more than a decade. Li, who traveled with President Xi Jinping on a visit to the U.K. in October, also served as chief of staff of the Shanghai municipal government.
“I come from the system,” said Li in a Dec. 14 interview in Hong Kong, speaking English in a soft, measured manner.
According to Tom Doctoroff, chief executive officer of JWT Asia Pacific, Li “has a reputation as an extremely savvy operator who has been making powerful connections at the right place and the right time.” Doctoroff, based in Shanghai since 1998, has written two books about Chinese consumers and is a brother of former Bloomberg LP chief executive officer Dan Doctoroff.
Li’s ambitions have made him a high-profile businessman in China at a time when many of China’s billionaires are under increasing scrutiny from President Xi’s anti-corruption drive. Guo Guangchang, chairman of Fosun International Ltd., which owns part of Beijing-based Bona Film Group Ltd. and Hollywood film startup Studio 8, was called in for questioning in December as part of an investigation of former Shanghai Vice Mayor Ai Baojun.
The further you rise in China, the more vulnerable you become, especially with equally powerful competitors, said Ding Xueli, professor of social sciences at Hong Kong University of Science and Technology. “Managing your connections is the most important condition for managing your business.”
Still, Li’s businesses fit well with Xi’s own objectives of boosting service industries and domestic consumption, and expanding Chinese soft power by building the country’s film and media industries for audiences at home and abroad.
“The government is putting a lot of effort and energy into it,” Li said. “However, I think business is the biggest consideration.”
Li has wooed and won powerful associations both within and outside China. Among those he counts as “very good friends” are media mogul Rupert Murdoch, basketball star Yao Ming, Yahoo! Founder Jerry Yang and National Basketball League commissioner Adam Silver, along with many others he mentioned during the hour-long interview.
Allan Zeman, who is building a $2.8 billion entertainment complex with CMC in Shanghai says Li is “like part of my family,” while Warner Bros’ executive vice president of international, Richard Fox, describes him as “really engaging, very sophisticated and a great listener.”
Li got his start in media after graduating with a degree in journalism from Shanghai Fudan University, landing a job with Shanghai TV station as a lifestyle reporter. A stint making documentaries followed, and by the age of 32 he had risen to become president of its parent company, SMG.
“He doesn’t switch off,” said Martin Sorrell, chief executive officer of WPP Plc. on whose board Li sits. “Very well-connected, hardworking, serious. No flim-flam.”
Li took his first holiday in years last summer at Lake Como in Switzerland, and his spare time is given to reading scripts or exercising. He swims 4 kilometers in the pool, and biked 120 kilometers in China’s mountainous Yunnan province.
Li set up CMC with backing from his then employer SMG and China Development Bank, creating a 2 billion yuan fund. One of his first deals was the purchase of a 53 percent stake in Murdoch’s money-losing Star TV China channels, which he bought out completely three years later. He revamped programming, adding “Voice of China,” a local talent show modeled after “American Idol.” Last year the company made a profit of 100 million yuan on sales of 2 billion, Li said.
“He has definitely created a lot of value for that business,” said Vivek Couto, founder of Media Partners Asia consultancy. “It is about programming, production and localization.”
The rise of China’s urban middle class presents Li with opportunities across the entertainment spectrum, from amusement parks to sports events to theater, and he’s going for all of them.
In October, CMC paid 8 billion yuan for the five-year broadcast rights to the China Super League, the country’s premier soccer tournament. Two months later, after Li toured Manchester City’s football academy with President Xi, a CMC led- consortium paid $400 million for 13 percent of City Football Group, the team’s Abu Dhabi-based owner.
“China is looking for experience in running a high-end or well-operated league,” Li said. “We are interested in many sports assets globally,” including a possible stake in the Formula 1 motor-racing franchise.
“There’s a whole ecosystem that takes time to develop,” said Li Sheng, chief executive officer of SECA, a sports management company China Media has invested in. SECA’s activities include staging boxing matches, managing Olympic hurdles gold medalist Liu Xiang, and running a squash and fencing academy for kids.
CMC’s competitors are some of the biggest in China. Dalian Wanda Group’s Wang spent $49 million for a 20 percent stake in Spanish soccer team Atletico Madrid last year. On Jan. 12, the company announced announced it will pay as much as $3.5 billion for Burbank, California-based Legendary Entertainment, the producer of the “Dark Knight” Batman trilogy and “Godzilla.”
Alibaba’s Ma has teamed up with his rival Pony Ma, founder of Tencent Holdings Ltd., and Huayi Brothers Media Corp. to make films. Alibaba Pictures also signed with Paramount Pictures to produce “Mission: Impossible – Rogue Nation,” the latest installment in the Tom Cruise franchise, while Tencent’s record third-quarter profit owed much to the popularity of its online games and streaming HBO shows.
Li’s competitors are also partners. CMC has an investing platform with Tencent and Alibaba called CMC Holdings that has set up a smart-TV maker Whaley Technology Co. Li says he plans to launch a Netflix-style service soon.
Like a good Hollywood producer, Li has made his ability to gain partners and finance the cornerstone of his empire. In 2014, CMC raised $350 million from overseas investors including Time Warner Inc. and Pavilion Capital Pte Ltd., a private equity arm of Singapore’s state-owned investment firm Temasek Holdings Pte. Its investments include stakes in the Broadway production of Kevin McCollom’s “Hand to God,” Hong Kong-listed IMAX China, online game company Ourgame International Holdings Ltd, and Jaunt, a Palo Alto-based virtual reality film-maker.
Li is now looking to add $600 million more to the international fund and 4 billion yuan to his original China fund.
“There are a lot of moving parts around the picture of media and entertainment in China,” said Nick Varney, chief executive officer of Merlin Investments Plc., the Dorset, United Kingdom-based owner of Legoland. “Ruigang has done pretty well to put himself in the middle of it.”
Li says he knows his limitations. “I’m not that savvy and not that aggressive in tapping into the global market,” he said. “In the past the Japanese have failed. People with big money from the Middle East and Russia, they failed. Can the Chinese succeed in the short term? No way.”
And can this adept impresario still be moved to tears? Li says he’s seen another 14 performances of “Les Miserables.” “I have cried many times.”