Chengdu’s path to prosperity: making cultural financing accessible

The Purpose

To make the financing of cultural enterprises more accessible, affordable and efficient.

The Challenge

Supporting its growing cultural and creative industries is a key priority for Chengdu, and in recent years, the city’s investment potential has been well-documented. However, small to medium-sized creative enterprises in Chengdu often face barriers when trying to raise funds. They are often seen as too risky by potential investors, therefore inhibiting the sector’s growth.  

Chengdu City Government created a 100 million RMB ‘Cultural and Creative Enterprise Financing Risk Capital Fund’, encouraging banks to invest in creative companies.

The Solution

Innovative Cultural Financing has been identified as a key action by The Chengdu Municipal Party Committee and the Government’s five-year Action Plan. 

The approach makes use of partnerships between the government, public and private sectors, and manages the perceived risks to investors. It hopes to achieve this by setting up investment banks to cater directly to cultural and creative enterprises, offering risk compensation to potential investors.  

The Chengdu ‘Culture and Creative Industries Government Guide Fund’, a 10 billion RMB fund, was set up to incentivise venture capital into the cultural and creative sector, including start-ups, listed cultural corporations, and other mid to large-sized projects. Proposals for financing innovative products, particularly those making use of new technologies such as big data and cloud computing, are viewed favourably. Insurance companies are also being encouraged to offer new products and services tailored to the culture sector. 

The Impact

Chengdu City Government created a 100 million RMB ‘Cultural and Creative Enterprise Financing Risk Capital Fund’, encouraging banks to invest in creative companies. The government and the banks share the financial risks of the investment and give out loan subsidies instead of direct subsidies. The first stage of the ‘Culture and Creative Industries Investment Fund’ released 1.37 billion RMB to provide financing options like debt and equity investments. This fund comprises investments from different government levels, state-owned cultural enterprises, and other funds. 

It is hoped that developing a healthy investment environment for the creative industries will improve the financial sustainability and capability of Chengdu’s cultural enterprises, and develop new opportunities for Chengdu’s thriving financial and cultural economies.

Source: World Cities Culture Report 2018

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