For Western filmmakers willing to use a lot of Sino elements, as seen in the recent Roger Spottiswoode pic "The Children of Huang Shi," which was in many ways a Chinese movie shot with relatively little foreign input, it can work out very well.

The pluses are there: China remains a cheap production venue with skilled crews.

While it still lags in post-production, and getting around the rules can be a problem, shooting here has its allure.

"The fundamental incentive for market growth will always come from the market itself. And the strong growth rate in the domestic market is the biggest incentive for investment in 'market- oriented' films," says Cindy Lin of Infotainment China.

She says contempo Chinese helmers are entering the mainstream, but this has to be matched by maturity in terms of technique and also in understanding auds while not being afraid of chasing box office.

The best structure for most features is a co-production with a foreign company to ensure overseas distribution channels and cost effectiveness.

Yuan Gadi, a producer at Fantasy Pictures in Beijing, believes the lack of theaters is still an issue when it comes to distribution.

"The first big problem is the lack of screens," Yuan says. "Also there are few genre films of good quality. Some new distribution companies have appeared, but the market still does not have enough space."

The top Chinese films in 2007 were "The Warlords" and "Assembly"; both were released in December and made $23 million to $25 million by year's end.

But although the Chinese market is potentially huge, the common wisdom is that the regulatory environment can make it a difficult market to access. When Hong Kong's Salon Films unveiled a collaboration with international partners to help grease the wheels for investment in Asian movies, distribution and production in China were two of the big elements of the deal, and one of the main partners in the pact was China's Hengdian World Studios.

Salon's chairman, Fred Wang, says the aim of the tie-up was to streamline production in China, particularly cross-border productions with Hong Kong, and to broaden the distribution base to include more of Asia.

"Cross-border productions were done in a loose way for many years. I see in the future the industry getting more organized and more smooth and cost effective," says Wang.

Beijing's Olympic Games are having a varied effect on production and distribution. On the one hand, the film biz is looking inward to provide a strong domestic showing for the Games; on the other, it means getting permission to shoot is difficult.

Foreign producers are advised to perhaps wait till the Games are over to start broaching new projects.

CHINA STATS
FILM FINANCE AT A GLANCE
Film production spend in 2007: $112 million*
Anticipated production spend for 2008: expected to rise
*estimated average of 20 million yuan per pic ($2.8 million) and around 400 pics made

INCENTIVES
China has relatively little by way of lures for foreign filmmakers in terms of rebates and other money-saving incentives, but it is cheap and there are good facilities for some bigger pictures. Local filmmakers try to get "Important Film" status for their movies from the Film Bureau, which means that if they distribute 50 prints, they get $28,637 as an incentive.

B.O. STATS
Top film: "Transformers" $39 million

B.O. 2007
Total B.O.: $460 million
Number of releases: around 400
Chinese-language: 54%
Foreign: 46%

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