Company Town : Hong Kong Movie Company’s IPO Draws Investor Gold Rush : Film: Mogul Raymond Chow raises $29 million in the offering for Golden Harvest Entertainment.


Raymond Chow is too modest a man to say so himself, but he has lots to boast about these days.

The man who introduced kung fu star Bruce Lee to America and transformed Jackie Chan from an actresses’ stunt double to a millionaire martial arts performer has another hit.

The initial public offering of stock in Chow’s Golden Harvest Entertainment Ltd. was a smash last week, with many eager investors shut out as the offering was 52 times oversubscribed.

Chow raised $29 million in the offering. Investors are expected to quickly bid up the stock’s 25 cents-per-share offering price when trading begins on the Hong Kong Stock Exchange next week.

The stock is popular because Golden Harvest is well positioned to sate Asia’s hunger for entertainment. In this fast-developing region, a movie ticket is something most people can afford, and despite the growth of cable and satellite TV, the theater provides an escape from crowded households and steamy weather.


Hong Kongers see almost as many movies as Americans--at least six a year--and cinemas in Golden Harvest’s key markets of Singapore and Malaysia are in the world’s Top 10 moneymakers per screen.

“If you believe that the leisure sector is going to take off in Asia, this is the sort of company you want to bet on,” says Nikhil Srinivasan, a vice president at Baring Securities in Hong Kong.

Analysts give the company good ratings for its regional network, established reputation and exclusive distribution agreements with several of Hollywood’s major studios.

Movie moguls in Hong Kong only half-jokingly refer to the territory as “Hollywood East.” Hong Kong holds second place in the world for movie exports, and it cranked out 276 films for domestic distribution last year. Golden Harvest controls more than a quarter of the market.

The company boasts the kind of vertical integration that American studios grudgingly gave up in the 1920s and 1930s because of antitrust regulations. Different arms of the company produce films, then distribute them to company-owned theaters. Golden Harvest also handles distribution in Hong Kong and Vietnam for Universal Studios, MGM and Paramount, whose movies make up a third of Hong Kong’s foreign film market.

“There just isn’t any other large-scale, well-organized film distribution company with a regional network,” Chow says. The closest competitor is Shaw Bros., which Chow worked for until he broke loose in 1970 to found the tiny family-owned company that has become a regional powerhouse.

Chow, the 67-year-old chairman of Golden Harvest, learned from Bruce Lee how to break boards with his feet. It takes that kind of finesse and tenacity to establish a pan-Asian network--and to deal with its pitfalls, from piracy to government monopolies and censorship.

Golden Harvest plans to use most of the money raised in the initial offering to build more multiscreen theaters in Thailand, Malaysia, Singapore, Vietnam and someday China. China’s 1.2 billion people may represent the biggest potential audience, but the nation also represents the biggest challenge because of government control. It is also among the most risky for piracy.

Theaters in Chinese cities will split a cinema in half, show a government-sanctioned film on one side and a pirated laser disc on the other. “It’s multiplex in its crudest form,” says Steve Stine, an analyst for Kagan World Media.

Golden Harvest and Time Warner are the only foreign companies allowed in China. The terms are strict, and profits are “nothing to brag about,” Chow says.

Though Chow doesn’t shy away from any particular pictures, he says his people know how to pick what will be popular and how to anticipate problems. “I don’t believe in slipping politics into films,” says Chow, noting that the American government’s hands-off policy has resulted in some of the world’s best movies.

Golden Harvest distributes some American record setters such as Steven Spielberg’s “Jurassic Park,” but overall, Chinese-language movies are the most popular. Action comedies with titles such as “Drunken Master” “Justice, My Foot” and “Fight Back to School” beat out American hits like “Terminator II” and “Basic Instinct.”

For now, Golden Harvest is keeping the volatile film production arm and its coveted Chinese movie library private.