A scene from Gong Yijian's comic book, The Crystal Sky of Yesterday Photo: Courtesy of Gong Yijian

Pocket Chocolate has locked himself away for the summer ignoring the sun outside so that he can complete his latest much anticipated comic book. For the 36-year-old artist, otherwise known as Gong Yijian, the new work, If, At That Instant, will most likely be a huge success and bring in more money, acclaim and the possibility of an animated film based on the comic. But not all comic or animation artists are enjoying fame and fortune.

Gong's earlier comic book, The Crystal Sky of Yesterday, appeared in eight installments in the monthly comic magazine Touch Soul in 2011. The acclaimed story was based on the lives and loves of senior high school students about to sit the gaokao (college entrance examinations) in his hometown Lanxi, a small town in Zhejiang Province, in the 1990s. Gong said he distilled a lot of his memories for the book and went back to his hometown to capture its landmarks.

Touch Soul is one of the titles from the Bosom Friend (Zhiyin) Media Group, and is targeted at an audience aged between 16 to 28. The group publishes some of the best-selling comic magazines in China.

Gong's nostalgic themes and his original imagery quickly gained popularity with young readers, especially those in South China, and became the most read section of the magazine.

Top earners

Gong's book, The Crystal Sky of Yesterday, published in 2012, sold 200,000 copies nationwide, making him 14th on the list of the top-earning comic artists in 2012 with an annual income estimated at 1.25 million yuan ($203,391).

The list of top earners was determined primarily on the royalties each comic artist received in Chinese mainland from November 2011 to November 2012. Other artists on the list included Taiwanese artists Zhu Deyong and Liao Fubin (or Jimmy) and Tianjin artist Zhou Hongbin.

Gong, who started his career as an assistant artist, claimed he actually earned less than the list reported but he attributed his commercial success to a growing market.

"The business model for comics, or manga, is becoming clearer and clearer over the years and the Chinese market has matured a lot compared to years ago. If a comic artist has a good idea and good work, it's not too difficult for him or her to make a living. Comic book sales are cumulative and sustainable."

Gong said that he belonged to the first generation of comic artists in China whose passion for the form was inspired by Japanese manga and anime. But he said a Chinese comic artist should have a broader perspective. "If Chinese comics want to attract more readers, they shouldn't aim just at the fans of Japanese manga but must create their own styles. Only in this way can they attract a larger audience."

Gong is now working with an animation company on a short video version of The Crystal Sky of Yesterday and hopes this could bring his work to a larger audience.

But unlike Hollywood where films based on comic characters and themes regularly become blockbusters, this has not yet worked in China.

"In Chinese we use the word 'dongman' to refer to both animation and comics. But film animation and comic books are completely different art forms. I haven't seen a single Chinese comic book successfully turned into a major animated series or film so far, and the business model for the animation industry is uncertain," Gong said.

He is right. In China's animation industry, things are not going well, according to people who have worked in the industry for decades.

Zhu Xiaoyue graduated from Shanghai University in 1996, majoring in animation. "I applied for it because it was hot then," said the 38-year-old.

He learned in his studies how to draft animated characters and adapt storytelling techniques. The courses were taught by experienced artists from the Shanghai Animation Film Studio.

After graduation, Zhu worked in Shanghai as a key animator and over the next 15 years witnessed the rise and fall of the industry. Key animators draw the key images from the character designs.

"From the early 1990s to 2003, China's animation industry was mainly doing outsourcing work for countries like the US and Japan," Zhu said.

He worked on the post production animation for several foreign studios in the late 1990s, including the Walt Disney animated series Tarzan and the Japanese television show InuYasha. The latter was based on the successful comic book created by Rumiko Takahashi and boasted sales of over 45 million in Japan.

Bringing it alive

"The foreign studios provided us with character designs and scripts and the Chinese companies would work on the frames and add backgrounds, color and details, bringing the still drafts alive," Zhu said.

An industry report noted that about 70 percent of all Japanese animation work was being carried out in China around the late 1990s.

"Back then, although the animation industry in China depended heavily on outsourcing and had little original work, being an animator was a high-income job. A monthly income could be as much as 15,000 yuan, which was quite a lot at that time," Zhu said.

A major shift for the industry occurred in 2004, when The State Administration of Radio, Film and Television (SARFT) announced that one third of the country's provincial television stations should have children's channels, and domestically-produced animation should account for at least 60 percent of all the animation aired on Chinese television.

Two years later SARFT banned the screening of foreign animation on domestic channels during prime viewing time, from 5 to 8 pm.

These moves created a huge market demand from Chinese television stations looking for original, home-made animated shows. Nationally television channels suddenly needed more than 260,000 minutes of Chinese cartoons every year.

This was coupled with the rise of the value of the yuan, which reduced the competitiveness of Chinese labor in the global market and drove foreign studios to other emerging countries in Asia like the Philippines, North Korea, Vietnam and India for outsourcing.

"In China, the monthly salary of a key animator is about 15,000 yuan, but you can hire three animators for the same amount in, say, the Philippines," an industry insider said.

Many local studios thought it was the time to start their own animated television shows and films. One of the pioneers was Xu Ke, the CEO of Shanghai Hippo Animation, which he founded in 2003. "I was passionate about the animation industry, and saw a big opportunity then." Xu said.

Not a help

But the huge demand for original home-grown animation did nothing to improve the quality of the product, nor did it help enhance the industry in China. Xu would remain disappointed for the next 10 years. Although his company produced several critically acclaimed animated films, including Jungle Master which premiered in January this year, it was constantly on the verge of bankruptcy and relied heavily on fresh investments to survive.

"We don't have a business model," Xu complained. "Not in this bleak environment." His company, based in the Zhangjiang Science & Cultural Exchange Center, has more than 200 employees.

This was echoed by Zhu. "The animation industry is in a terrible state at present. It's very bad indeed."

Both men blame the problems in the industry on the television stations' monopoly. "The State-owned Shanghai Media Group (SMG), for example, controls every television channel in Shanghai, and it has an absolute say in deciding how much they pay for an animated program. Even if animation companies are not happy with the price, they have no one else to sell their programs to," Zhu said.

This was why Hippo Animation only made animated films. "We can make no money at all if we make television shows. All the risks are taken by the privately-owned companies, and their fruits are taken by the television stations," he said.

Hollywood wins out

Things are not going well in the animated film industry either.

"The general environment is against Chinese animation. The cinemas give us few slots, and leave most opportunities to Hollywood productions. Capital investment in the animation industry is way too little," Xu Ke told the Global Times.

One of the biggest successes for China's animation industry over the past decade was probably Pleasant Goat and Big Big Wolf, a popular television series, later made into five films which collected over 600 million yuan at the box office across the nation.

An important reason for its success, according to Xu, was that the State-owned SMG owned a large part of its box office in China. "They spent a lot on promotion. There's no way an animated film produced by a private company can achieve that sort of success today without the support of a television station with government backing."

To encourage the country's animation industry, both the central government and the Shanghai municipal government have handed out subsidies for animation companies.

"It was really helpful and we benefited a lot when we were starting up. But subsidies cannot build a healthy market," Xu said.

Many provinces offer subsidies of 2,000 to 3,000 yuan a minute if an animated show screens on China Central Television, and around 1,500 yuan a minute if it is shown on provincial television channels.

"Because television stations pay so little, many companies are producing animated shows simply to get the subsidies. And as the subsidy is based on the length and not the quality, many animation companies keep their budgets low to keep a profit. If the subsidy is 1,000 yuan a minute, for example, they keep their budget to 600 yuan a minute and ignore the quality of the product," Xu explained.

Shanghai is reportedly not making a big impression in the animation industry at present. The Communication University of China's Yearbook of Chinese Animation 2011 reports that none of the top 10 animation companies in China in 2011 were based in Shanghai. Shanghai was also absent from the lists of the top 10 provinces or municipalities producing the most animation.

New entrants

This may change soon with Disney and DreamWorks coming to China. Last year Disney announced a partnership with the Ministry of Culture's China Animation Group and Tencent, China's largest Internet service provider, to develop China's animation industry.

DreamWorks Animation has signed into a joint venture with SMG, to create a family entertainment company, Oriental DreamWorks, which will produce animated and live action movies and television shows for the Chinese market.

Xu is ambivalent about the arrival of Disney and DreamWorks. He is more concerned about the future of the local companies. "I sure hope they will come and help raise the standards for Shanghai's and China's animation industry, but this is not their obligation. They are coming to China primarily to make profits, and their main objective is to tap into China's market and cheap labor."

Asked about his future in the industry, Xu sounds dispirited. "We expect to move into other industries. Animation burns up money so we're going to divert at least half of our business to the aerospace industry and use the profits from there to sustain our animation work."