Zhang is the first one to try to change this model. In 2002, he directed a commercially successful film, Hero. Only one week after the film debuted at the end of 2002, the box office exceeded 100 million yuan and the figure reached 243 million yuan in the next three months, accounting for a quarter of the combined box office take of Chinese films that year.

The investment in Hero was 25 times that of Zhang's previous film and 55 times that of the average investment for all his works. In 2004, he made another kungfu film, House of Flying Daggers, with an investment of 290 million yuan. During the first 18 days, the total box office hit 150.3 million yuan, exceeding the combined box office of the imported films The Day After Tomorrow and Troy. Last year, Zhang's Curse of the Golden Flower, with an investment of 360 million yuan, also had high box office receipts.

These commercially successful films have brought Zhang criticism. Many people accuse him of only caring about the box office while ignoring the films' artistic level. Zhang said he frequently faces the dilemma of balancing aesthetics and market interests. "Only when we get the benefit from the market can we have the ability to make more [artistically strong] films for the audience," said Zhang, who has won numerous international awards, including at the Berlin, Venice and Cannes film festivals.

According to Jin Yuanpu, a professor at Renmin University of China who served as the Secretary General of the International Forum for the China Creative Industry, film has been the most popular art form for ordinary people since the day it was invented. "China's film industry should establish a new commercialized operating mode in order to cater to common people's demands, so as to further develop Chinese filmmaking," he said.

A bright future

In the course of establishing the new mode, the film producers' role is becoming increasingly important. They struggle to balance art and economic returns. In their eyes, filmmaking is only one link in a series of activities, which also include film distribution, promotion and projection.

"We can say that our film promotion work is unprecedented in China's filmmaking history," said Zhang Weiping, producer of all of Zhang Yimou's commercial films. He spent more than 20 million yuan to promote Hero, a figure several times higher than the cost of making most Chinese films.

Zhang Weiping previously was a businessman outside of the film industry and has been a friend of Zhang Yimou for nearly 20 years. In 1996, he invested in the latter's film Keep Cool. "It is I who reshaped Zhang Yimou," he joked.

At the moment, many investors are taking a wait-and-see attitude toward China's film industry. However, Zhang Weiping and some other film producers' huge investments in the sector reflect the fact that an increasing number of people are becoming confident in China's film market, which is also the reflection of the achievements made during the filmmaking system reform launched by China's film administration in the 1990s.

Prior to that, independent film producers such as Zhang Weiping had to go through complicated procedures and buy labels from those state film studios before they could shoot films and enter the film distribution business. However, film studios could only sell 150 to 200 such labels every year with the price of each hitting tens of thousands of yuan.

Films were made with money specially allocated by the state and were purchased and distributed only by the China Film Group Corp. (CFGC). This mode lasted for more than 40 years, until January 1, 1993, when the CFGC's monopoly on China's film market ended. From then on, China's film studios had to find their own market, going from sending their films to the CFGC to persuading several dozen provincial and municipal film corporations to buy their films.

After the monopoly was broken, state-owned film studios lost their privilege and had to compete with their private and overseas counterparts on equal footing. Starting in 2002, the film industry box office income has increased at an annual rate of more than 40 percent, much higher than China's GDP growth.

"Filmmaking is the most important and totally mature creative industry in China, and should lead the competition in a new round [of development] of the cultural creative industry," said Jin.

Some later entrants to the creative industry also have shown the strength to challenge the traditional giants. Through operating online games, Shanghai-based Shanda Entertainment, one of China's leading online game operators established in November 1999, took in 400 million yuan in 2002. In May 2004, the company successfully listed on NASDAQ. That year, Shanda's 31-year-old President Chen Tianqiao became China's richest person.

According to Zhang Gong, Deputy Director of the Beijing Municipal Commission of Development and Reform, the Beijing Municipal Government is devising 36 measures to encourage the development of the creative industry in Beijing, including simplifying examination and approval procedures and lowering the required registered capital. Other provinces and municipalities are also taking similar measures.

In August 2006, China's first creative industry conference was held in Beijing, and experts say the industry has promising future in China.