400 million increase in stake in the parent company of "Ling Cage"; China Literature strengthens IP operations
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Author | Huang Yu
On June 2, China Literature Group (0772.HK) announced that it would make a strategic investment of about 400 million yuan to acquire a 28.22% equity stake in Yi Hua Kai Tian. After the transaction is completed, China Literature’s shareholding in Yi Hua Kai Tian will increase from 31.48% to 59.70%, achieving control of the company.
Why is China Literature increasing its investment in Yi Hua Kai Tian?
For China Literature, which is advancing its “Big IP Strategy,” this means a further extension downstream in the content industry chain; while for Yi Hua Kai Tian, which joined the top ranks of Chinese animation studios with “Ling Cage,” it means access to more stable IP supply and support with commercialization resources.
As a giant online literature platform, China Literature is not short of IP.
By 2025, the China Literature platform had added 400,000 new writers and over 800,000 new works, with newly created content reaching 42 billion words. In recent years, hit IPs such as “Joy of Life,” “My Heroic Husband,” “Soul Land,” and “Lord of the Mysteries” have continually been adapted into films, animations, games, and other diverse content forms.
But as the industry has entered a phase of high-quality development, merely possessing IP is no longer enough to form a competitive barrier.
In recent years, leading domestic content companies have strengthened their control over IP development capabilities. The reason is that the key to unlocking IP value has shifted from “obtaining rights” to “how to turn rights into blockbuster content.”
Animation is one of the most important links here.
Data shows that by 2025, China’s animation industry has surpassed 250 billion yuan in scale. Meanwhile, animation content is becoming a key genre for long-form video platforms to compete for user time. Top animations such as “A Record of a Mortal’s Journey to Immortality,” “Soul Land,” and “Ling Cage” have continually validated the commercial value of high-quality Chinese animation.
For China Literature, a large number of online literature IPs are naturally suited for animation development, and Yi Hua Kai Tian will further strengthen China Literature’s capability in animation production.
Founded in 2015, Yi Hua Kai Tian is known in the industry for its sci-fi animation “Ling Cage.”
Since the launch of the first season of “Ling Cage” in 2019, the total play count on all platforms has exceeded 10 billion, making it one of the most important original sci-fi animations in China. Its performance in world-building, character development, and industrial-level production has also made Yi Hua Kai Tian one of the few domestic teams capable of producing long-form, high-spec animation.
However, according to China Literature’s announcement, Yi Hua Kai Tian is still operating at a loss, recording net losses of about 220 million yuan and 250 million yuan in 2024 and 2025, respectively.
To some extent, this deal reflects a shift in the domestic content industry from “single-point blockbuster competition” to “full industry chain capability competition.”
If viewed in the context of China Literature’s development in recent years, this acquisition is actually an important step in building a complete IP ecosystem.
In recent years, China Literature has been pushing to transform from an online literature platform into a comprehensive IP operation group.
Currently, its business already covers online literature, comics, animation, film and television, games, derivatives, short dramas, and AI-generated comics.
By 2025, China Literature achieved operating income of 7.37 billion yuan and a non-IFRS net profit attributable to the parent company of 860 million yuan. Among them, AI comic revenue surpassed 100 million yuan, and the GMV of IP derivatives broke 1.1 billion yuan for the first time, growing over 100% year-on-year.
Behind these numbers is a trend: China Literature increasingly relies on secondary IP development and diversified monetization, rather than simply on online reading revenue.
However, to achieve this goal, merely having an IP reserve is far from enough.
The core logic of current content industry competition has changed. In the past, it was about who had more IPs; today, it is about who can turn IP into film, animation, games, or derivative consumer goods faster and with higher quality.
By acquiring a controlling stake in Yi Hua Kai Tian, China Literature can further open up the chain from “online novel creation—animation development—commercial monetization,” improve certainty in IP development, and enhance control over the supply of quality content.
Importantly, the value of this deal is not limited to the domestic market.
Globalization has now become one of China Literature’s key strategies. In May, China Literature officially launched the overseas comic-drama platform ToonScroll, planning to release over 1,000 comic-drama works within the year, betting on the global visual IP content market.
As short dramas, comics, and animation content globalize more rapidly, Chinese IP’s internationalization is entering a new stage.
In the past, Chinese cultural products going overseas relied more on web literature; today, animation and comic-dramas are becoming more efficient vehicles for dissemination.
Yi Hua Kai Tian’s high-spec animation production capabilities are expected to become important support for China Literature’s overseas strategy.
“Ling Cage” has already gained some recognition in overseas markets. In the future, if more leading China Literature IPs can be adapted into high-quality animation by Yi Hua Kai Tian and then disseminated through platforms like ToonScroll, China Literature’s internationalization story will have a more solid content foundation.
However, the content industry has always faced the challenge of balancing creativity-driven and capital-driven strategies. For animation teams that excel at original content creation, how to achieve industrial-scale expansion while maintaining creative independence remains a challenge faced in many acquisition cases.
In addition, competition in the domestic animation market is also intensifying. Platforms like Tencent Video, Bilibili, and iQIYI are all increasing investments in Chinese animation, making high-quality production teams a scarce resource. Whether China Literature can boost production capacity through the acquisition and continuously deliver new works at the level of “Ling Cage” remains to be seen.
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