China Literature Limited (China Lit) has signed supplemental agreements with Tencent Computer to raise the spending and revenue ceilings for two existing related-party frameworks—its 2026 Promotion Cooperation Agreement and 2026 Advertisement Cooperation Agreement—covering the three financial years ending 31 December 2028.
Promotion cooperation caps lifted • 2026 cap raised to RMB 230.00 million from RMB 100.00 million. • 2027 cap lifted to RMB 340.00 million from RMB 100.00 million. • 2028 cap increased to RMB 350.00 million from RMB 110.00 million.
Historic utilisation underscores the need for higher limits: promotion-service fees paid to Tencent reached RMB 83.11 million in the first nine months of 2026, already 83% of the original RMB 100 million full-year cap. Management attributes the step-up to anticipated promotion of 500–1,000 online books annually (RMB 40,000–60,000 per title) and expanded marketing of short dramas, AI-animated dramas, comics and merchandise via Weixin Mini Programmes. Expected annual promotion fees for drama content alone are projected at RMB 80–180 million from 2026 to 2028.
Advertisement cooperation caps more than doubled • 2026 cap raised to RMB 1.10 billion from RMB 850.00 million. • 2027 cap lifted to RMB 1.90 billion from RMB 1.01 billion. • 2028 cap increased to RMB 2.20 billion from RMB 1.08 billion.
Commissions from Tencent totalled RMB 566.26 million in the first nine months of 2026, surpassing the RMB 381.27 million booked in all of 2025. China Lit cites rapid uptake of advertisement-based free reading models, the rollout of new ad formats via Weixin Mini Programmes in 2025, and their extension to short drama and AI-animated drama content in 2026 as key growth drivers. The company forecasts continued annual commission growth of approximately 10%–20% in 2027–2028, supported by larger content offerings and user-traffic initiatives.
Regulatory status • Promotion Supplemental Agreement: highest percentage ratio exceeds 0.1% but is below 5%; subject to reporting, announcement and annual review requirements only—no independent shareholder vote required. • Advertisement Supplemental Agreement: highest percentage ratio exceeds 5%; therefore subject to reporting, announcement, annual review and independent shareholder approval. Somerley Capital has been appointed as Independent Financial Adviser; a circular detailing the proposal will be dispatched by 19 November 2026.
Governance and board views China Lit’s board—including its independent non-executive directors—considers the revised promotion caps fair, reasonable and in the ordinary course of business. For the advertisement caps, non-interested directors concur, while independent directors will issue their formal recommendation in the forthcoming circular. Directors affiliated with Tencent have abstained from voting.
Internal controls The company reiterated existing safeguards: benchmarking against at least two independent third-party quotes where feasible; multi-departmental reviews by business, finance and legal teams; monthly cap-utilisation tracking; quarterly reporting to independent directors; and annual scrutiny by external auditors.
Strategic rationale By leveraging Tencent’s extensive internet ecosystem, China Lit aims to broaden content reach, capture the surging demand for short-form and AI-driven entertainment, and monetise its intellectual property via advertising-supported free-content models. The enlarged caps are designed to provide operational flexibility and sustain growth momentum through 2028.