A sharp rise in China's box office revenues has Hollywood hunting for local partners to help them crack the booming Asian market. And while China has a fast-growing audience, there are also challenges facing the country's film industry. Cathy Yang explains.

The buzz over China's film market lies in the billions of dollars foreign films rake in each year. Box office sales in China reached 1-point-3 billion dollars in the first half of 20-12 - reports the State Administration of Radio, Film and Television. That's a 42 percent rise on the same period in 20-11.

Dan Mintz, Ceo, Dmg entertainment group: "China is an amazing market, an amazing growth market. "Our real focus at this point is making international films, international wide-release, star-driven (films) with Chinese elements in them. It's a very specific criteria as we look for the right kind of story that will resonate around the world and in China."

Several major Hollywood directors are getting in on the act. James Cameron in April announced at the Beijing International Film Festival that he is looking for co-production opportunities in China for sequels to his smash hit, "Avatar".

John Foley, China Editor, Reuters breakingviews: "Co-productions are really popular at the moment, we're seeing Iron Man 3 with DMG. We saw the Karate Kid a couple of years ago. Now one of the big reasons for this is the market is still quite closed. We have this quota of 34 films per year. If you're a co-production, you don't need to worry about that quota because you're treated as a Chinese film.

Cathy Yang, Hong Kong: "And then there is the problem with piracy. Hollywood blockbusters "The Dark Knight Rises" and "The Amazing Spider-Man" are both scheduled for China release. That's a big lag from other markets, where there were weeks between their premieres. Unlike in Hollywood - Chinese film scheduling is set not by studios - but by state-run China Film Group. "

So with annual quotas for foreign films likely to stay in place for sometime - expect more foreign filmmakers to pursue co-productions with Chinese film outfits - to gain maximum exposure in a promising but tricky market.