Did Huayi Brothers ultimately fall due to real estate?

Ask AI · How does real estate expansion drag down entertainment giants?

In April 2026, a piece of news hits the entire entertainment and capital circle: Huayi Brothers filed for bankruptcy reorganization at the request of creditors

The court has initiated pre-reorganization procedures

Who would have thought that this company, once holding top-tier resources like Feng Xiaogang, Ge You, Fan Bingbing, and others,

The first Chinese film and television stock with a market value once approaching 8B yuan,

Would ultimately fall due to a debt of only 8B yuan upon maturity?

When I saw this news, I felt quite emotional,

Trying to recall various clues from my memory.

Suddenly I remembered the story of this company vigorously developing** real estate before.**

Around 2012,

01

Huayi’s shift to real estate began in this year.

Making this decision at the time seemed reasonable.

The film industry’s pain points were clear:

Unpredictable content, unstable returns, low profit margins, and valuation fluctuations of overall productions.

Meanwhile, real estate was in a period of land dividends, leverage dividends, and urbanization dividends overlapping.

Capital scale, return certainty, and asset appreciation potential—

Created a crushing attraction for the content industry.

And more importantly,

At that time, real estate could quietly solve many problems,

Especially money.

Heavy asset industries had large and stable capital turnover; when short of funds, jumping into real estate meant continuous inflow of money.

This was definitely a very good combination for Huayi Brothers at that time,

One hand in film, one in real estate, maximizing risk avoidance and corporate capitalization mechanisms.

Meanwhile, in 2011, Shanghai Disneyland broke ground,

Completely igniting the ambitions of the Wang brothers.

Film IP + theme parks + cultural tourism land acquisition were seen as a replicable “Chinese Disneyland.”

This was almost a perfect business model.

Of course, this wasn’t an original idea of one person.

Almost all developers thought the same back then.

Sunac, Wanda, Evergrande… each project of cultural tourism city is still vivid in memory.

Of course, we’ll put aside the stories behind these for now and look at Huayi Brothers’ expansion pace.

In 2012,

Huayi signed and settled the Haikou Greenland Huayi Feng Xiaogang Film Commune.

Becoming Huayi’s first benchmark in scenic entertainment.

And also the starting point of subsequent developments.

02

As Huayi’s first project,

The Haikou Greenland Feng Xiaogang Film Commune had a total investment of 5.5 billion yuan, with debt of 8B yuan.

The project centered around film scenes from “Fanghua,” “1942,” and others.

If the Haikou project was a test, the Suzhou Film World was a suicidal heavy asset investment.

Land acquisition in 2012, with a total investment of 977B yuan,

And in 2011, Huayi Brothers’ total assets were 8B yuan, with an investment amount 1.42 times their total assets.

This shows Huayi’s ambition clearly.

A lightweight asset film company risking everything on a heavy asset cultural tourism project.

The trend that followed grew more intense.

Behind it was a leverage to real estate: Ping An.

Huayi reached a strategic cooperation with Ping An, whose core strategy was to:

Help them finance and evaluate land.

The reasoning was simple: at that time, the film market was booming, making financing easy.

As for land evaluation, it was straightforward.

Ping An invested in real estate companies like Greenland, Country Garden, and CIFI.

With Huayi’s film concept entering, finding developers to execute was almost a matter of hand-to-hand combat.

Moreover, Ping An made a huge promise to Huayi: a loan of 30 billion yuan to Huayi Brothers.

In mid-2015, Huayi partnered with Jianye to create Zhengzhou Film Town, a typical example.

In 2014, Shenzhen Pingshan International Film and Culture City was another.

At the end of 2014, the company’s executive president Wang Zhonglei outlined his blueprint: to land in 20 cities in 4-5 years, contributing 18 billion USD annually to Huayi.

I did a quick calculation:

That’s about 6 billion yuan in revenue per project per year on average.

And the ultimate interpretation of this model was: Huayi Brothers’ cooperation with Evergrande.

This partnership was a perfect fit at the time.

Both sides planned to develop 100 small towns.

Huayi would earn 100 million yuan in brand fees plus 10% equity for each town project.

Doesn’t this business sound very Evergrande and Huayi Brothers?

In 2017, Huayi’s brand licensing and scenic entertainment revenue grew 204.60% year-on-year to 198 million yuan,

Accounting for 14.93% of total revenue, up from 5.51% the previous year.

Of course, Evergrande also benefited.

Using this hype, they acquired land at extremely low prices across various regions.

Because at that time,

Small towns were a hot trend, land needed a concept, and as long as there was a concept, land could be sold cheaply.

Huayi’s scenic entertainment projects had a total investment exceeding 50 billion yuan,

With land reserves of nearly 14,000 acres nationwide.

This number, among real estate companies, unquestionably places Huayi among the top 100 developers.

I checked Huayi’s projects across the country,

And they were undoubtedly of this type: large, seemingly beautiful tourist resorts and towns.

Later, Huayi Brothers acquired all shares and debts of Huayuan Jiali under Huayuan Real Estate.

With this shell, they could independently acquire land in the market.

At this point, Huayi Brothers had both lightweight and heavyweight assets.

03

Of course, the subsequent stories are probably predictable.

Things didn’t turn out as ideal as imagined.

Money didn’t fall from the sky as expected.

Huayi’s nationwide projects almost all ended similarly: grand signing ceremonies, but landings in chaos.

Inescapable Feng Xiaogang Commune.

Scenes were built, but visitors were sparse.

Operating proved to be more difficult than expected.

In the first half of 2017, Feng Xiaogang Commune’s revenue was only 87.64 million yuan,

With an operating loss of 12.76 million yuan and a net loss of 11.89 million yuan.

The core and fatal problem: reliance on single visits, very low repeat visitation.

Film scenes were static displays, with no ongoing content updates, so visitors “came once and never returned.”

This already foreshadowed the ending: Huayi would only do “scenes,” not “operations.”

Suzhou Film World was delayed multiple times,

Finally opening in July 2018, but from 2018 to 2020, it accumulated losses of nearly 8B yuan.

The project’s debt was 8B yuan, becoming a burden for the listed company.

Other case details will not be elaborated here.

The result was almost always the same:

Huayi’s IP value was overestimated, unable to provide continuous content, attract visitors, establish operational systems, or form a business closed loop.

The so-called “film IP + real estate” was essentially using the name of culture and tourism to acquire land.

Once the real estate cycle declined and land acquisition logic failed, the model collapsed immediately.

04

Why talk about this company today? Besides the fact that such an event has occurred,

Huayi Brothers is indeed a very good example.

This example reflects the attitude of almost all companies in the previous cycle: faith in real estate.

Not just developers,

But all companies.

They say when men have money, they turn bad; when a company suddenly makes a lot of money or needs to spend heavily,

Almost all mainstream opinions judge that you should go into real estate.

Because this sector can carry large amounts of capital,

And is risk-free.

This attribute attracted countless hot money.

We see aggressive developers like Evergrande and Country Garden,

And also see capital players like Ping An Group quietly making profits internally.

Of course, there are also companies like Huayi Brothers, long coveting a share of the pie.

This was the norm at that time.

Looking back now, it’s clear there were risk signs.

A very typical standard was: we look at whether an action is aligned with money or with the project itself.

Why did so many developers fail in cultural tourism or small-town projects?

Actually, most had been doing residential development without major issues.

Very few companies doing pure residential development faced such existential crises.

Back then, many developers flocked to cultural tourism or small towns, thinking about the benefits:

The projects were large enough to keep land costs low,

And the more they appreciated, the more they gained.

But they rarely seriously considered that the real challenge was in operation; only successful operation could keep the project alive.

That’s why many developers needed the so-called IP concept—to “pretend” they had operational ability.

This absurdity led to many projects being rushed and short-lived.

In fact, it proved that a concept alone cannot sustain for long, which is a key reason for defaults.

Let me tell a darkly humorous story:

In 2021, Huayi Brothers, facing a cash crunch, sold 14.29% of Suzhou Huayi Cinema’s shares to a company under Shiji Jin Yuan for 225 million yuan.

But Shiji Jin Yuan later sold it to MBK Partners’ Heyi Anwen Cultural Tourism, a Korean private equity giant,

Now known as Suzhou Yangcheng Peninsula Amusement Park.

After the new operator took over, the project suddenly revived.

In just one summer, nearly 400,000 visitors, revenue increased by 70%.

In other words,

Many cultural tourism projects may not have issues with site selection or products,

But operation becomes the critical factor.

Over the years, many companies claimed to aim for Disney-level success, only to prove that it was just a market concept or hype.

Truly successful projects don’t start with such benchmarks.

05

At this point, I suddenly recalled that in 2011,

While Huayi Brothers was frantically expanding into real estate,

Two other giants also did something.

Jack Ma and Jet Li also established a company to promote Tai Chi culture.

At that time, Jack Ma told Jet Li his expectations for this company.

One iron rule: No involvement in real estate.

Looking back now, this was a stroke of genius.

Such a judgment at that time must have been based on insight,

Or sensing some irrational phenomena.

In essence, many people had strict bottom lines for their companies:

Do you remember Wang Shi’s advice to Vanke?

In 2001, Wang Shi told Yu Liang: If you do commercial real estate, I will crawl out of my coffin and grab your hand to stop you.

In 2011, Wang Shi at APEC was even more straightforward: Anyone who diversifies, even if I die, I will come out to oppose.

Think about it:

If these twenty years, Vanke had only done residential,

What would it look like today?

Times change, and so do circumstances.

Time is merciless.

In essence, the temptations and cruelties of the business world are the same.

And individuals within it find it hard to see whether it’s an opportunity or a risk.

The coin always has two sides.

Entrepreneurs become entrepreneurs because of their courage, sensitivity, and ability to solve problems.

Failure can also come from recklessness, sensitivity, and thinking they are solving problems.

Many times, these labels are the same—no one truly knows what is what.

That’s why, after the passage of time, Wang Zhonglei said: “During the capital frenzy, we made some wrong choices.”

Only after losing do you realize how precious it was.

Perhaps that is the eternal truth.**

Author’s note: Personal opinions only, for reference.