But things went downhill when movie fans and industry insiders began noticing that online ticketing services showed that unusually large numbers of “Ip Man 3” screenings were sold out and that ticket prices had gone as high as US$31.
Beijing Max Screen, the film’s distributor, later admitted to buying 56 million yuan’s worth of the tickets itself and fabricating more than 7,600 screenings of the film according to the film bureau under the State Administration of Press, Publication, Radio, Film, and Television.
The bureau said it had ordered Max Screen to suspend distribution for a month while it “rectifies all malpractices” and that it had given serious warnings to three electronic ticket-selling groups involved in the fraud. Seventy-three cinemas were also given serious warnings. The fake box office figures will not count towards the film’s gross earnings.
Shanghai Kuailu Investment Group, run by business tycoon Shi Jianxiang, is the controlling shareholder of Hong Kong-listed Shifang Holding Ltd. Shifang owns the rights to box office earnings from “Ip Man 3.” Shi stepped down from his position as CEO and chairman of the company on April 1, citing “health issues.”
But the scandal has effects beyond just the movie industry. Kuailu is a large private enterprise that was formed out of four old state-run enterprises in the 1990s. Shi, 52, who ranks No. 746 on the Hurun Report’s 2015 China Rich List, with an estimated fortune of US$780 million, has expanded the company’s business into “innovative” film financing and distribution in recent years.
Shi had invested in a series of peer-to-peer lenders, and Kuailu’s innovative approach to “Ip Man 3” was to make financial products in order to securitize its box office assets and raise funds from its peer-to-peer and crowdfunding platforms, based on box office expectations.
To make a greater financial gain from the movie, industry-watchers say the backers of “Ip Man 3” may have sought to inflate box office results to boost their companies’ stock price. As the “ghost screening” box office scandal broke out, Shifang Holding Ltd’s stock price dropped by more than 50 percent. Shenkai and other companies and platforms involved also suffered significant losses.
Hundreds of investors gathered at Jinlu Financial Advisors’ headquarters on March 30 to ask about delayed payments. Jinlu said they would suspend payments on some wealth management products jointly created with its partner Kuailu because of a 300 million yuan (US$46.41 million) cash shortage.
To resolve the issue, Kuailu said on April 6 at a press conference in Shanghai that it will merge and refinance Jinlu and Dangtian Wealth, another related wealth management company, and offer a payment plan to investors soon. Kuailu has committed 5 billion yuan in assets as collateral for the delayed payment. Xu Qi, the new chairman and CEO of Kuailu, said they would fully resolve the payment problem of wealth management products before March 31, 2018, the National Business Daily reported.