In recent years， the Chinese film industry saw increasing revenues from its box office. Since 2002， when China implemented film industrialization reform， the country’s box office has witnessed substantial growth for nine successive years. Annual box office revenue passed 10 billion yuan in 2010， and exceeded 13 billion yuan in 2011， making the country the world’s third largest film market， only trailing the United States and Japan. Experts estimated that the figure would reach 18 billion yuan in 2012.
　　Fast Pace of Internationalization
　　By the end of November 2012， the biggest domestic box office hit of that year was Painted Skin： The Resurrection， which hit Chinese theaters last summer. A bigbudget Chinese fantasy flick， the film alternates between a romance and the struggles between a man and a demon. A sequel to the first Painted Skin， and benefiting from its positive reception， the film was also aided by a successful advertising campaign and two of China’s hottest actresses： Zhou Xun and Zhao Wei. The film swept the na- tion， setting a historic record by raking in over 700 million yuan.
　　Many other Chinese movies have earned more than 100 million yuan at box office. For instance， Caught in the Web， directed by Chen Kaige， tackled issues related to internet violence and current conditions of the media， ultimately earning 180 million yuan at the box office. For this movie， Chen abandoned the style he was known for， “artistic and literary expression from a historical perspective，” in favor of straight realism. White Deer Plain， directedAMC Entertainment Holdings， the second largest U.S. theater chain， in a US $2.6 billion deal. The merger made Wanda the world’s largest cinema owner. Later， in August， U.S. director James Cameron announced that he was establishing a China branch of his Cameron Pace Group （CPG）. This move is expected to accelerate the internationalization and technological evolution of Chinese film.


　　 Racing Hollywood Rivals
　　With the evolution of the Chinese film market， China has developed an increasingly close relationship with Hollywood. In February 2012， when Chinese Vice President Xi Jinping visited the United States， the governments of the two countries reached an agreement， according to which China would increase the annual import quota from 20 to 34. Also， the American studios’ share of the Chinese box office would increase to 25 percent from only 13-16 percent. 　　Consequently， Chinese filmmakers took a series of countermeasures to hedge against the greater threat from their Hollywood rivals. In addition to investing in technological upgrades to catch up with Hollywood， some Chinese directors are exploring indigenous subjects and immersing themselves in individuality and innovation. During the 2012 May Day holiday， facing challenges from Hollywood blockbusters such as Titanic 3D， Battleship， and The Avengers， seasoned Chinese directors fought back with domestic productions such as Ning Hao’s Guns N’ Roses， Yang Shupeng’s An Inaccurate Memoir， Guan Hu’s Design of Death， and Zhang Yang’s Full Circle. Each of these Chinese films features a distinctive style and profound artistic aesthetics. However， the marketing strategy of releasing them at the same time as so many big Hollywood films proved less successful than expected.
　　Now， many promising Chinese films purposely avoid releases of Hollywood blockbusters. As a result， many domestic films hit big screens when fewer Hollywood rivals are in theaters， but they still compete fiercely with each other. During China’s 2012 National Day holiday， domestic films met gloomy box office reports， except for Double Xposure， which performed well due to successful integrated marketing.
　　As the 2013 Spring Festival holiday draws near， Chinese films face fierce competition from both domestic rivals and scheduled Hollywood blockbusters such as Life of Pi and 2012 3D. Whether domestic films will find new hope in the market remains to be seen.
　　 The Biggest Enemy
　　In fact， the seemingly-prosperous Chinese film market is suffering from many difficulties. Compared to the threat of Hollywood， the deterioration of Chinese film production is even more worrisome. In 2012， the few big-budget domestic films failed to achieve either critical or financial success， and the rest of Chinese movies didn’t do much better. In 2011， the Chinese film Love Is Not Blind beat three Hollywood blockbusters playing during the same period， and earned more than 300 million yuan at box office. However， few domestic films could match its success in 2012.
　　Statistics show that China’s film market realized a box office of 13.2 billion yuan from January through October of 2012， increasing by 40 percent over the same period in 2011. However， the ratio of earnings from domestic films dropped to 41.4 percent. Despite healthy investments， the film industry remains a high-risk industry. Of 791 films produced in China in 2011， only 260 made it to the big screen. The rest were broadcast on television or the internet， and only a handful turned profits. Of all films released in the first half of 2012， only 10 yielded profits， eight broke even， and the rest， a daunting 82.5 percent， lost money. In the third quarter of 2012， 17 films， including Caught in the Web， earned profits – 41 percent of all domestic films screened during the period. Despite the improvements in turning profits， domestic films’ market share still didn’t increase much. 　　Although screens in China now exceed 10，000， numbers of moviegoers haven’t increased accordingly. One of the major reasons is blind investments and redundant cinema construction. Most movie theaters are found in bustling commercial zones. The increase of screens didn’t expand the market pie， but rather caused a decline in the attendance rate of each cinema and average per screen performance.
　　Moreover， rampant piracy is another problem haunting the Chinese film market， which weakens domestic films’ opportunity to find earnings through a variety of alternate channels other than the big screen.
　　Of course， neither piracy， nor Hollywood rivals， nor irrational infrastructure allocation can fully be blamed for the troubles of Chinese films. Perhaps William Kong， a famous Hong Kong film and stage producer， said it best when he joked， “The biggest enemy of Chinese filmmakers isn’t their Hollywood counterparts， but crappy Chinese movies.”