Credit: CFP

TMTPOST -- The summer hit historical drama Lychees of Chang'an has taken China by storm, driving a surge in tourism to Xi'an and setting off a nationwide "lychee economy." Yet behind the fanfare, the drama's co-producer Qujiang Cultural Tourism (Qujiang Wenlv) continues to report mounting losses, underscoring the monetization challenges facing even the most popular IP-driven tourism businesses.

Since its June 2025 premiere, Lychees of Chang'an has become a cultural phenomenon. Directed by Cao Dun and starring Lei Jiayin, the series adapts Ma Boyong's novel and reunites the core team behind The Longest Day in Chang'an. Its tale of a low-ranking official racing to deliver fresh lychees to a Tang Dynasty consort has captivated audiences and sparked a nationwide Tang Dynasty craze.

The show racked up over 1 billion views on Tencent Video in just seven days and has since exceeded 5.8 billion views overall, with a Douban rating of 8.9. It has even eclipsed other top-tier dramas in popularity.

The series' success triggered a tangible consumption boom. Meituan reported a 143% spike in searches for "Guangdong lychees" in June, and the show's themed food items topped its bestsellers list. JD.com saw Guangdong lychee sales surge over 560% year-on-year, while brick-and-mortar supermarket sales jumped 128%.

Qujiang Wenlv, through parent company Xi'an Qujiang Film and TV Investment Group, co-produced the drama. Its shares hit the daily limit for three consecutive days in mid-June, with its market cap temporarily surpassing 3 billion yuan. Xi'an Tourism Co. also saw a 3% bump. Analysts cautioned the rally lacked earnings support, but the brand value of hit IPs is clear.

Qujiang Wenlv leveraged the drama to revitalize key Xi'an sites. It mapped the fictional lychee delivery route onto real attractions like the Xi'an City Wall, Huaqing Palace, and the Tang Paradise, creating immersive tourist experiences. The Tang Paradise saw a 600% jump in foot traffic, with daily visitors topping 50,000. Xi'an tourism searches soared 320%.

In the first three days post-premiere, Qujiang Wenlv rolled out three monetization strategies:

1. Upscale Tang Banquets: Dishes like lychee sorbet and fresh sashimi from Lingnan boosted per-customer spend by 30%.

2. Digital Licensing: VR scenes and in-game content from the show generated over 8 million yuan in first-week licensing deals.

3. Themed Stays: Hotels like the Tanghua Huayi launched “Imperial Consort”-themed rooms, driving a 45% occupancy spike.

Elsewhere, local governments and platforms rode the wave. Guangdong launched a PR stunt replicating the 12-hour lychee delivery, Maoming debuted a lychee-themed district and helicopter tours, and TikTok Life Services introduced immersive tour routes mimicking the show's journey from Lingnan to Chang'an.

Despite its viral IPs and traffic-driving ability, Qujiang Wenlv has posted three consecutive years of losses: 249 million yuan in 2022, 195 million in 2023, and 131 million in 2024. Its Q1 2025 loss hit 44 million yuan. Why can't a company with top-tier cultural products turn a profit?

The problem starts with its business model. Qujiang Wenlv operates on a light-asset basis. While it manages high-traffic sites like the Xi'an City Wall and Tang Paradise, it does not own them. Ownership lies with local state-backed heavy-asset platforms like Qujiang Wen'tou and Qujiang Lvtou. Qujiang Wenlv only collects management fees, not gate revenue or appreciation benefits.

Government payments account for most of its income. However, this revenue stream is weakening: scenic area operations made up 52% of 2024 revenue, down from over 70% in previous years.

Compounding the issue is weak internal cash generation. Of its ten subsidiaries, five were loss-making in 2024. Its core scenic area management firm lost 48.7 million yuan; its food and hospitality unit lost 12.3 million yuan; and its pedestrian street operator lost 13.6 million yuan.

Attempts to diversify into landscaping, retail, e-commerce, and sports haven’t helped much. Hotel and dining revenue—its second-largest segment—accounts for 22%, but profit margins are slipping. The company's overall gross margin fell to 17.15% in 2024.

Zero-cost tourism further limits revenue potential. The free-entry Tang Paradise hosts nightly performances without admission charges, while high maintenance and promotional costs eat into margins. In H1 2024, Tang Paradise made just 23,530 yuan in net profit on 39.4 million yuan revenue—about 1,292 yuan/day.

Adding to its woes are unpaid receivables. By end-2024, Qujiang Wenlv’s accounts receivable totaled 1.177 billion yuan, with bad debt provisions exceeding 364 million yuan—31% of the total. Its largest debtor? A local government asset management unit.

Budget tightening under “frugal governance” guidelines led to a 40% cut in Qujiang Wenlv's management fees for major parks in 2024. Meanwhile, its parent Qujiang Lvtou has seen multiple court-ordered share freezes and auctions due to debt disputes.

While Xi'an’s three listed tourism companies—Qujiang Wenlv, Xi'an Tourism, and Xi'an Catering—lost a combined 519 million yuan in 2024, unlisted peer Shaanxi Tourism posted 1.245 billion yuan in revenue and 503 million in net profit.

With backing from the Shaanxi SASAC, Shaanxi Tourism controls high-yield assets like Huashan and Huaqing Palace and focuses on high-margin business lines like large-scale performances and cableways. Its The Song of Everlasting Sorrow show and Huashan West Peak cableway alone made up over 90% of revenue in 2024.

Unlike Qujiang Wenlv, it maintains gross margins above 60% and is preparing a second IPO attempt after a failed 2020 listing.

Lychees of Chang'an proves once again the power of top-tier cultural IP to drive nationwide interest. But Qujiang Wenlv’s losses highlight a painful truth: IP traffic doesn't equal sustainable profit. Without a clear path to monetize fan engagement, IP remains a flashy but fragile asset.

As local governments tighten budgets and economic tailwinds fade, companies like Qujiang Wenlv must develop high-margin, repeatable business models—or risk being left behind, despite commanding center stage in China’s cultural renaissance.