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In an exclusive interview, Storm founder Eric Zho tells IQ the Chinese market is about to explode – but that foreign firms that want in had better do their homework first
By Jon Chapple on 26 Oct 2017
China’s concert industry is on the verge of an era of “explosive growth”, according to one of its most successful homegrown music execs, with a booming middle class and ever-growing appetite for dance music laying the groundwork for the country to become a true live music colossus.
Speaking by phone from the company’s HQ in Shanghai, A2Live founder Eric Zho – whose vast EDM empire includes promotion, booking, artist management and record label divisions, as well as the property for which he is best known, the five-city Storm festival, which welcomed 250,000 attendees last year – tells IQ he is “trying to build a 360° music ecosystem” in a country home to 1.4 billion people – almost 19% of the world’s population.
Zho started Storm in 2013, and has since then been a key player in the development of the local electronic dance music (EDM) scene into what he describes as “hippest thing” among China’s young middle-class consumers. While Western pop superstars such as Taylor Swift and Justin Bieber are always “definitely going to sell out” when they visit China, he says, a burgeoning nightclub culture has led to EDM being Chinese millennials’ music genre of choice.
“Something like 50% of our nightlife used to be KTV [karaoke] clubs,” Zho explains. But if I’m young and wealthy – and there’s a lot of money in China, right up to self-made millionaires and billionaires, and those with second-generation wealth – am I going to to go to a KTB club? No!
“So the nightclub industry is booming, and that’s resulted in a lot more interest in dance music – something we’re also helping grow with our festivals.”
Echoing PwC’s description of China as a “sleeping giant” music economy, Zho says the market for live music is still a nascent one, but is maturing by the day as Chinese consumers before “more refined” in their musical tastes. “We’re on the cusp of explosive growth,” he continues. “The middle class is already a market of hundreds of millions of people, and it’s going to keep growing…
“China is a unique market, and unless you figure out how to localise you’re never going to win”
Zho predicts a timeframe of two to three years for that explosion – long enough, he says, for those involved in the Chinese music business to catch up to their counterparts in the West. “Ninety per cent of people working in this business [in China] still don’t understand it,” he says.
What about the US multinationals? Do they have a part to play in China, IQ wonders – and does A2Live feel threatened at all by the likes of Live Nation and AEG?
“What you have to understand is that Live Nation, for example, is a tiny company by Chinese standards,” says Zho. “Especially compared to the big conglomerates that we see as potential partners, such as Alibaba and Tencent.
“When foreign companies come here they don’t know what to do – China is a unique market, and unless you figure out how to localise, to work with local partners, you’re never going to win. Those big American companies are already here, but they haven’t been able to grow for that reason.”
Perhaps cognisant of the difficulties facing grassroots venues and musicians in other, more mature markets, Zho says ensuring the sustainability of China’s music-industry growth is central to A2Live’s ethos.
“Most people,” he continues, “don’t think about the building blocks, of small, underground shows, of building the culture – which is the most important thing we need to do to sustain that long-term growth.
“You’ve got lots of big festivals and promoters who are seeing our success and thinking, ‘Why aren’t we in China?’. But they don’t look under the [bonnet]. The biggest problem is that there are lots of people – not just those big international players, but also rich kids who want to throw a big party – who don’t understand the music or the operational side behind it all.
“The nightclub industry is booming, and that’s resulted in a lot more interest in dance music”
“There’s a risk the industry could become very top-heavy if we don’t support the foundations.”
Perhaps of greater concern to the aforementioned international players is the ever-present danger that China’s communist government could step in to regulate the activities of foreign promoters, as has happened with the film industry, where number of Hollywood imports is currently capped at 34 per year.
“Look at the movie industry,” says Zho. “There are only a certain number of foreign films allowed in China per year, and they can’t be screened during certain periods, such as the CPC [Communist Party of China] meeting. (It was “difficult or impossible” to gain permission to stage events in the run-up to the latest such meeting, October’s 19th National Congress of the Communist Party of China, Zho explains.)
“If there’s going to be a flood of foreign companies and brands coming in, you’re probably going to see the ministry of culture making new regulations. [The music business] is like the Wild West at the moment – but it could happen.”
A2Live recently announced the launch of Storm events in Australia and Taiwan, its first outside China, but Zho says the company’s focus is still on building the business in China, with Australia largely serving as an “operations centre” for touring its Chinese acts in south-east Asia.
“Sitting here in China, you can see the future is definitely here,” he concludes. “I was in Amsterdam for ADE last week and I could see the interest: everyone’s talking about China.”
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