The animation industry in Asia has expanded significantly in recent years and has a key role to play in boosting the entertainment sector in coming years. Mainland China in particular, where animation has been given a major lift by the success of “Ne Zha 2”, which has taken over $2 billion and become the highest-grossing animated film in history, and the fifth-highest-grossing film ever.

“’Ne Zha’ is going to be the best performing animation in the world – in the future we will see a bigger role for Chinese animation and big box office is awaiting us,” Catherine Ying, president of Pearl Studios, told a panel on the animation industry at Hong Kong FilMart.

“Ne Zha 2” is based on  “Journey to the West,” one of China’s four great classical novels, and toon houses in China are likely to mine ancient texts for further content. Pearl is expecting to release “Eight Immortals” in 2026, which is based on the Chinese myth about eight immortals with special powers. The story features in the 16th-century Chinese novel “Journey to the East” by Wu Yuantai.

Ying told the panel that the key was to make sure that the ancient texts were backed by contemporary production values and story-telling.

“From our frontline experience we find it’s not an easy job to launch abroad. Overseas, the key is to strike the balance between modern ideas Chinese cultural traditions. Successful Chinese productions are steeped in Chinese culture,” said Ying.

Pearl was formerly known as Oriental DreamWorks, the joint venture DreamWorks Animation founder Jeffrey Katzenberg launched in 2012 with China Media Capital and Shanghai Media Group.

Chinese animators are improving their storytelling technique, she said, and Chinese technical effects in animation were as good as Hollywood.

“Animation is separate from ideological and political conflicts so it’s easier for animation. As long as we have a good story to tell… animation should be the easy to sell overseas,” said Ying.

The animation industry in Japan, which is the regional leader, generated a revenue of about JPY1.72 trillion ($11.5 billion) via overseas sales in 2023.

Francesco Prandoni, global licensing team leader at Production I.G in Tokyo, said one of the reasons why the sector was doing so well was that it was well established among young people.

“Japanese animation is a genre on its own with its own audience. Japan never adopted CGI (computer-generated imagery) – we are the Galapagos Islands of animation, with paper and pencils,” Prandoni said.

Mia Angelia Santosa, chief of staff of Visinema Group, presented the Indonesian animation “Jumbo” which is coming to cinemas in two weeks after five years in the making. She said a lot of hopes in the industry were banking on the toon, which is helmed by Ryan Adriandhy and features the voice of Prince Poetiray as Don, a boy who attempts to stage a play in a local talent show.

Animation content demand in Southeast Asia has risen strongly in the past few years, chiefly down to streaming services. Indonesia and other Southeast Asian studios are particularly benefitting from this rising demand since they can offer high-quality products with much lower labor costs than places like Japan and South Korea.

She said the industry produced high quality work but still trailed other regional players like Japan and China.

“Change in Indonesia is slow but consistent. Most of the content we have is exported, so this is the first animation that will celebrate Indonesian values and Asian values,” Santosa said.