(Photo Source: sd.news.cn)
People who deposit 100 yuan (16 U.S. dollars) to 1,000 yuan (161 dollars) in an online investment fund will be able to pick a movie, TV drama or social-networking game to invest in, Alibaba said as it launched its Yu Le Bao fund on Wednesday.
The investors should expect an annual return of 7 percent from the fund, whose name means “entertainment treasure”, the Chinese e-commerce giant said in its announcement.
This new investment product Yu Le Bao, or Entertainment Treasure, is marketed as a way for ordinary Chinese to play mini roles as film producers.
Alibaba said investors could suggest what films should be made and who should direct and star in them.
It said an initial batch of four projects -- three films and one social networking game -- together are aiming for total financing of 73 million yuan. These include the third and fourth sequels to the 2013 Chinese blockbuster “Tiny Times.”
Yu Le Bao is the latest example of how Alibaba's novel online investment offerings are encroaching on the state-owned banking system.
By offering returns of up to 7 percent, about twice the maximum interest rate traditional banks are permitted to pay on a benchmark savings deposit, Alibaba is amassing a share of China's trillions of dollars in household savings.
However, traditional players in the sector seem to be fighting back. Industrial and Commercial Bank of China, Bank of China, Agricultural Bank of China, and China Construction Bank have recently imposed limits on the amount of money customers can transfer to Alibaba’s online-payment service Alipay, noting the financial risks involved.
By setting its sights on China's movie industry, Alibaba is focusing on the world's fastest-growing major cinema market.
Box-office sales in China grew 27 percent last year to 3.6 billion dollars, a total second only to the U.S.A., according to figures released by the Motion Picture Association of America.
But investments in Yu Le Bao will not go directly to financing movies.
Alibaba said, ''in the initial phase'' it would be channeled into insurance and so-called wealth-management products being offered by Guohua Life Insurance, which is based in Shanghai. It would later be invested in the cultural industry, it said.
