Blockbuster movies for Lunar New Year audiences are a tradition in China, but the box office success of this season's home-made hits over foreign imports is a sign that the country's struggling film industry may finally be ready for take-off in its centenary year.

Two festive big-budget comedies -- Steven Chow's Kung Fu Hustle and Feng Xiaogang's crime caper A World Without Thieves -- have already raked in estimated takings of more than 100 million yuan (US$12 million) each.

Following on from the success of Zhang Yimou's epic House of Flying Daggers, last year's top revenue earner which grossed 153 million yuan (US$18.5 million), analysts see a cinema boom in China.

"We are happy to see the success of Kung Fu Hustle and A World Without Thieves," said Woody Tsung, chief executive of Hong Kong's Motion Pictures Industry Association.

"The Lunar New Year movie tradition started in Hong Kong but the mainland is fast catching up. There's no doubt China is a huge market and this is only the tip of the iceberg," Tsung said.

Chinese cinema takings rose to a total of 1.5 billion yuan in 2004 from 1.1 billion the previous year, according to the State Administration of Radio, Film and Television (SARFT).

But analysts stress the numbers are still small for a country with a population of 1.3 billion and warn the perennial problem of rampant piracy remains an impediment to the industry's growth.

"With barely 7 million people, Hong Kong's takings were roughly the same," said Zheng Dongtian, professor at the Institute of Cinema in Beijing and member of the national censorship body.

Significantly Chinese film receipts exceeded those from foreign films for the first time since 1994, according to SARFT, while a record 212 movies were produced in China last year, a huge jump on the 140 made in 2003.

This was despite a doubling of the number of foreign movies allowed to be shown in China, from 10 to 20, with takings split between the foreign distributor and the Chinese cinema.

Thirty other overseas films annually are permitted to be bought by Clouded Film Import Export Corporation, which monopolises imports and pays a lump sum but no box office percentage to the distributor.

Yet only a select few domestic productions, in particular those made by heavyweights like Zhang, Feng and Hong Kong's king of comedy Chow, draw large numbers of punters.

"Whether home-made movies will dominate in China it is still too early to say," said Tsung.

China now has 1,188 cinemas with 2,396 screens, although that works out at about one screen for every 650,000 people. This compares with the more than 30,000 cinemas in the United States.

Yet many seats remain empty.

The high price of tickets, which cost as much as 60 yuan (US$7.2) in major cities like Beijing or Shanghai, and rampant piracy, are blamed for the poor attendances.

In China, DVD versions of the latest films can often be found on the streets for as little as six yuan.

In the mid-80s, before television, video and DVDs became widely available and popular, annual takings at cinemas were as much as two billion yuan, according to Zheng Yang.

With the market ripe for exploitation, many new cinemas are being built in big cities to take advantage of growing affluence as China's economy expands at a blistering pace.

Most recently, Warner Brothers this week signed an agreement with a Chinese company to open five new cinemas in Shenzhen, Nanchang, Changsha, Zhengzhou and Chongqing, with the first one to open in May.

The American movie giant will hold a controlling 51 percent stake in the cinemas while the state-owned Shenzhen International Trust Investment Corp will hold the rest.

Rules under which China joined the World Trade Organization now allow foreign investors to hold up to 75 percent in cinemas.

In rural areas, where incomes are lower, the rush to build cinemas is not yet on. Many picture houses here still belong to the state and are forced to show a small number of propaganda films as well as blockbusters,

This is not popular, with few profits to be made from propaganda.

"Distributors and cinema owners do not want to make efforts to promote films that are more difficult to sell," said Zheng Dongtian.

"Distributors are focusing on coastal cities where people have higher earnings," said the industry association's Tsung. "Only when the economic benefit can be broadened to inland cities and provinces will we see China's full potential."

(China Daily February 9, 2005)