DAs the glitterati arrived in Beijing for the film festival last week, a lot of the discussion was on how Chinese films are supposed to compete with hyper-sophisticated fare from Hollywood and other parts of the world.

Films are big business now in China. Ever since Avatar took over €168 million at the box office in China, Hollywood has been keen to exploit the potential in the market, which has displaced Japan as the world's second largest movie market. Box office was a hefty €2.5 billion last year.

Last year, overseas movies took 52 per cent of sales, despite a quota system restricting the number of foreign films to 20. This was expanded last year permitting 14 premium format films such as Imax or 3D on top of the original 20.

So figures from the first quarter of the year gave many in the local industry a boost, as they showed that local films took 69 per cent of the box office. Chinese films took 3.6 billion yuan (€450 million), with six films passing the 100-million-yuan (€12.4 million) mark.

The best performing picture in the early part of the year was Stephen Chow's Journey to the West: Conquering the Demons ," which took 1.25 billion yuan (€150 million).

As in other industries, second and third, and indeed fourth, tier cities are performing strongly, and the government data showed growing contributions from cinemas in smaller Chinese cities, where local residents "might not be as interested in Hollywood blockbusters as their metropolitan counterparts are," Zhang Hongsen, head of the Film Bureau, told the official Xinhua news agency.