Domestic and foreign investors from the film and animation industries, attending an industry fair this week in Guangdong province, are eying investments in facilities in southern China, where they can design and produce their highly lucrative ranges of film products, such as animation figure models and T-shirts.

Walt Disney is expected to announce an agreement in Dongguan, Guangdong province soon for those kinds of "derivative" film products, taking advantage of the skills available in the city, said Zhou Deming, vice-president of Walt Disney Co (Shanghai).

A total of 382 companies have been attending the fourth session of the China International Animation Copyright Fair in Dongguan, 107 more than the previous event, said officials.

Participants include 54 companies from other countries and regions, such as Walt Disney, BBC and New Zealand film props and special effects company Weta Workshop.

Walt Disney was showcasing animation models and T-shirts, based on its productions like Spider-Man, The Avengers, The Hulk and Capitan America, at the fair.

"We have come with the hope of connecting with the manufacturing industry," Zhou said, adding the management of Marvel Entertainment LLC has put great emphasis on selling toys associated with the films.

Marvel, which produced the above-mentioned films, is a wholly owned subsidiary of Walt Disney.

It is expected that the Hong Kong-based joint venture founded by Hong Kong's Stanley Tong Workshop and Weta Workshop, and Tianshan Studio, a manufacturing company in Dongguan, would establish a venture in the city.

The first-phase investment would be around 10 million yuan ($1.59 million), said Wang Weimin of Tianshan.

The venture would be engaged in the design and production of film derivative products and targeting Asia-Pacific, but China will definitively take up the largest share, he said.

The derivative product industry in China remains underdeveloped, but presents huge potential, Wang said, estimating at least 50 percent annual sales growth in the coming three to five years.

"More and more people are buying derivative products, far more than just five years ago," he said.

Wu Dun, public relations director of the Guangzhou-based Creative Power Entertaining, said the future of the market is positive, as it is directly linked to the development of the country's thriving cultural and creative industries.

"When the industry increases, the demand of derivative products go up as well," said Wu, whose company produces the popular Pleasant Goat and Big Big Wolf series.

Strong in industrial design and manufacture, Dongguan hopes to further link up to the creative industry, said Ye Zeju, deputy publicity chief of Dongguan.

US film productions reap two-thirds of their revenues from derivative product sales, but the income from them still remains insignificant in China, Wang said.

La Peikang, deputy chief of the State Film Bureau of China, said domestic filmmakers still relied heavily on box office earnings.

The authorities will work this year to help push forward the development and authorization of film derivative products to maximize the value of film copyrights, La said.

Tianshan Studio is also contacting domestic filmmakers for cooperation.

Taiwan-invested Dongguan Lekit Stationery Co expects sales of Disney-themed products to grow by 10 to 17 percent every year, said its general manager York Lau.

The company signed a five-year deal with Walt Disney last year to make and sell Disney-themed products, including calendars and notebooks, for the domestic market.

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