Hi, this is Evelyn, writing to you from Beijing. Welcome to the latest edition of The China Connection — a succinct snapshot of what I’m seeing and hearing from local businesses.
Today, I dive into Alibaba’s latest effort to take on the global animation market, just as Hollywood tries harder to capture Chinese moviegoers. What does a Chinese executive producer see as the path to success?
Enjoy!
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The big story
How does a Chinese animation studio run by Alibaba decide what stories to tell?
The answer starts with internet user data.
Rather than focusing on “what we like, it’s more about, what do they like?” said Huiyu Xu, a producer for Alibaba’s video platform Youku, referring to the app’s roughly 170 million users.
Said out loud, that’s quite different from the desire to explore a concept that directors in Hollywood might often start with.
I spoke to Xu, executive producer of Youku’s popular “Cang Yuan Tu” animated series, at Alibaba’s vast new Beijing offices, complete with restaurants, coffee shops and a movie theater.
The team behind Youku’s “Cang Yuan Tu” animated series kick off the third season in Beijing on March 12, 2026.
CNBC | Evelyn Cheng
“Cang Yuan Tu” is a fantasy martial arts story that has its roots in a 2019 online novel that received 5 million reader recommendations in just over a year — the kind of data that also drew rival platform Tencent Video’s interest in adapting an earlier novel by the same author. Since season one of “Cang Yuan Tu” aired in 2023, Youku’s animated series now has more than 9.9 million followers in China.
That makes it by far the most popular show on Alibaba’s Netflix-like video platform, which offers a mix of domestic and foreign movies along with TV shows for 25 yuan ($3.62) a month. A movie version of “Cang Yuan Tu” is planned for summer 2027.
To keep up with ever-increasing viewer demands, Xu said Youku has had to keep raising the series’ production quality, from the level of detail in its animations to hiring better artists to paint the watercolor stills that appear in the show.
“Compared to Disney animated films, there isn’t much difference versus three years ago,” Xu said in Mandarin Chinese translated by CNBC, when I met him earlier this month. “But for us, it’s like night and day.”
Hollywood still has its eyes on China, despite censorship and restrictions on how many U.S. films can hit theaters each year. Disney’s 2025 “Zootopia 2” animated film can thank China for about a third of its $1.87 billion global box office – it became the top-grossing Hollywood film of all time in the country.
Meanwhile, New York-based film production and distribution company A24 is also bringing its highest-grossing movie to date, “Marty Supreme,” to China this month.
Actor Timothee Chalamet, right and American filmmaker Joshua Safdie attend the premiere of film “Marty Supreme” on March 10, 2026 in Beijing, China.
Visual China Group | Getty Images
To promote the story of a fictional table tennis star, lead actor Timothee Chalamet came to China for the premiere in Beijing. He even played ping-pong with locals and served traditional street food out of a cart — all documented with his new celebrity account on social media platform Xiaohongshu. Writer-director Josh Safdie also appeared with Chalamet in Beijing.
However, opening weekend box office takings for the R-rated film were just over 3 million yuan ($440,000), according to Chinese online ticketing site Maoyan.
Moves outside China
On the flip side, Youku joins other Chinese animation and entertainment companies with ambitions outside China.
“Cang Yuan Tu” is gaining traction in Thailand and Vietnam, according to Youku. The company operates an international streaming platform, in addition to a YouTube channel with 1.27 million subscribers for animation alone. Anyone who wants to watch full episodes with subtitles must pay $3.99 a month.
In English, “Cang Yuan Tu” is officially translated as “The Demon Hunter,” but it has no affiliation with the popular Netflix show “KPop Demon Hunters.”
Youku is planning other animated content this year with urban and futuristic settings that have less apparent traditional Chinese elements, Xu said. But the company isn’t immune to the artificial intelligence impact, something Xu expects in the next year or two that will likely hit special effects teams more than smaller teams handling creative direction.
In the U.S., A24 has reportedly launched an AI lab with money tied to OpenAI. The film company, which departed from traditional Hollywood marketing tactics to work more in tandem with directors, also quietly opened its first movie merchandise store in mainland China — inside Alibaba’s new Beijing offices.
A24 did not respond to a request for comment.
The question of what resonates with China’s hundreds of millions of consumers extends beyond cultural and technological borders. When I asked Xu about why the third season of “Cang Yuan Tu” seemed to center on a mythological phoenix, he hinted at what the team wanted to convey.
“Just because there is war, it doesn’t mean we should stop living. No matter what happens outside, a person’s heart should remain bright,” he said.
Need to know
U.S.-China. Both sides reached “new consensus” in Paris, according to China’s Commerce Ministry. That’s despite Trump delaying a trip to Beijing that was originally planned for late March.
Alibaba cuts jobs. The company disclosed a 34% drop in headcount last year amid a shift to focus on AI. Tencent earnings showed a modest increase in its workforce last year.
Nvidia intrigue. U.S. prosecutors have charged Super Micro Computer employees with smuggling Nvidia chips to China.
Coming up
March 24 – 27: China’s Bo’ao Forum for Asia
March 25: PDD Holdings to release earnings
March 25 – 29: China’s Zhongguancun state-organized tech forum in Beijing
March 27: China industrial profits for January and February