Occasional awards cannot hide the difficulties of the country's film industry. According to sources from the 13th China Golden Rooster & Hundred Flowers Film Festival, held this September, since 2003 the nation produced a total of 320 movies, of which some 200 were not released at all, leading to losses of at least 400 million yuan (around US$50 million).

Just a decade ago, the annual gross box office takings of Chinese movies were more than 2 billion yuan (about US$250 million), but now they hover around 1 billion yuan, said an anonymous film expert. Each year around 100 films are made, but half don't appear on the market, and few of those that do are profitable.

A survey shows that in 1998 there were more than 10,000 cinemas nationwide, but the number fell to 3,000 in 2001 and to around 900 now. Annual cinema admissions per capita stand at 0.2, compared to 5.7 in the United States and 2.27 in South Korea.

Many potential cinemagoers have been put off by ticket prices, since charges of 30 to over 100 yuan are far beyond most ordinary viewers' price range.

According to a market survey by the China Film Association conducted in Beijing, Shanghai, Wuhan, Hangzhou and Guangzhou, people with low incomes show relatively strong intention to go to the movies. But for most of them 10 yuan is an acceptable charge, and if the fee is too high, they purchase pirated video discs instead.

What's more, the impact of imported Hollywood big-budget movies that have flooded the market during recent years means that many domestic films, with much smaller budgets, turn out looking rough and slipshod in comparison. In fact, Chinese films are falling into a vicious circle: lack of investment resulting in poor quality and loss of audience, which in turn attracts less funding.

This decline affected the Hundred Flowers Award, the country's most popular award conferred on the basis of votes from fans. The annual award was initiated by the late Premier Zhou Enlai and sponsored by the film magazine Popular Movies. In 1962 when the award came out for the first time, as many as 120,000 people voted. However, for recent years only several ten thousand ballots were received.

The Beijing Student Film Festival, with a history of 11 years, whilst not as authoritative as the Golden Rooster & Hundred Flowers Film Festival, has drawn the attention of directors because of participation by college students. This year's festival was held in April and May and attracted several hundred thousand students from over 50 universities and colleges. Wang Guoping, a graduate student from Beijing Normal University and a member of the organizing committee, came to the conclusion that "Chinese movies are losing student viewers."

For their "Favorite Films" 41 percent of students voted for Hollywood movies, 33.6 percent for Hong Kong and Taiwan movies, 19.1 percent for European movies, and only 10.8 percent for films from the Chinese mainland. Around 42 percent of student interviewees said they viewed just one to three domestic movies each year.

Breaking away from reality is the common defect of Chinese films, Wang said. Interestingly, award-winning films like Crouching Tiger Hidden Dragon and Not One Less, as well as Hero that found a box-office success in North America, were all voted "Worst Films" in the student film festival. These "sham and insincere" movies were regarded as the narcissistic work of major directors.

At the 7th Shanghai International Film Festival in June, scholars from home and abroad offered advice and suggestions for the development of Chinese film industry, which is struggling to get out of the doldrums.

Many countries' movie production has experienced a decline under globalization, pointed out David Bordwell, professor of communication arts from the University of Wisconsin-Madison. China doesn't have to take the path of Hollywood; instead, the most important and practical measure is to develop the domestic market with a population of 1.3 billion.

While drawing on Western film aesthetics, filmmakers should gear themselves to the cultural demands of local viewers, and produce more works depicting real-life experiences that people love to see, said Prof. Zhou Bin of Fudan University.