CHINESE film producers are showing a strong ambition at the ongoing 17th Shanghai International Film Festival to dominate the domestic film market, as well as to attract an international audience.

China is the world’s second-largest film market, with box office receipts last year hitting 21.8 billion yuan ($US3.6 billion). Industry insiders anticipate that in four or five years it will replace the United States as the largest film market in the world.

Domestic films became the dominant share of the Chinese market in 2013, accounting for 58.7 percent of mainland box-office revenues. Among the 10 highest-grossing movies, seven were homegrown and only three were Hollywood productions.

It strengthens Chinese filmmakers’ confidence to confront and compete with Hollywood with Chinese stories that are relevant to Chinese people’s lives and feelings.

“Chinese audiences are still far from satisfied with the amount of intriguing Chinese stories being put onto the big screen,” says Xu Zheng, director and producer of “Lost In Thailand,” one of the highest-grossing Chinese movies.

“These stories can be inspired both by people’s real-life experiences and folk tales.”

The festival has released numerous new Chinese film projects catering specifically to Chinese audiences. Since those born in the 1980s and 90s are a major proportion of cinema-goers in China, many film stories are inspired by popular online novels and video games.

The suspense thriller film “The Ghouls,” based on an online novel series, is one of them.

The film is about a group of people’s adventures looking for treasure in ancient tombs.

Zhao Fang, one of the film’s producers, is optimistic about the movie’s box office prospects when it is released next year.

“The original novel of the movie has developed such a large fan base on the Internet,” Zhao says. “It encouraged us to buy the novel’s movie adaptation copyright in the first instance.”

Best-selling author Han Han will present his directorial debut film, “We Won’t Meet Sooner,” next month. The road-trip comedy film is about youth and separation.

Fang Li, producer of the movie and an investor in it, says his criteria for a good story is that it must be touching and hopeful, with impressive characters who have distinctive personalities.

“I don’t consider Hollywood a nightmare or a threat to us,” Fang says. “Successful films have things in common: depicting and documenting people’s life and emotions in a creative way.”

Shanghai Film Group Corporation has announced big film projects, including a 3D fantasy film based on the online novel “Nine States: Huaxuyin” and a martial arts film set in the late Tang Dynasty (618-907 AD).

For the first time, award-winning filmmaker Jia Zhangke, known for his art-house movies, will cooperate with the Shanghai Film Group to shoot a futuristic drama later this year. The film, titled “Mountain River Acquaintance,” is about the emotional link between a mother and a son and is set in 2025.

Kevin Fan, an IT worker in his 30s, is thrilled at the coming projects. He thinks that China can compete well with down-to-earth stories because most of the imported Hollywood movies are sci-fi or fantasy blockbusters.

“Compared with Hollywood productions, Chinese filmmakers understand what Chinese audiences really need,” says Fan.

“Though we still lag behind Hollywood in film technology, marketing and production, a good story is a key factor for the revival of the Chinese film industry.”

Meanwhile, the industry is sensing greater enthusiasm for Chinese cinema outside of China. More and more filmmakers are devising strategies to attract an international audience from the very beginning of production.

Mili Pictures’ 3D animated film “Dragon Nest,” adapted from a popular online game, invited Hollywood veteran Bill Borden to be its producer.

It has also boosted its overseas presales and has made more than US$600,000 from overseas distribution so far.

Another successful case is the 3D film “The Monkey King,” which was released during Spring Festival. Producers expected 40 percent of the film’s revenue to come from overseas, and the goal has almost been met. So far the movie has earned more than US$31 million from overseas distribution in 37 countries. That success gives Wang and his team confidence to make a sequel, which will be about the Monkey King’s fighting with White Bone Demon.

“To help Western audience understand the Chinese story, we make the characters more clear and straightforward: They are simply the good and the evil,” says Wang Haifeng, the film’s producer. “The Monkey King story is a subject of great market potential in the West. It is a Chinese superhero film.”

In Wang’s eyes, the film’s overseas distribution is an important process to export Chinese culture and values. He regrets that many children in China are now growing up with the stories of Spider-Man, Superman and Ironman.

The number of film productions where Chinese are cooperating with foreign filmmakers are on the rise. In these projects, China is no longer simply a backdrop of the movie; instead the joint cooperation involves many aspects of film production, marketing and distribution.

Later this year, for example, the sequel to Ang Lee’s Oscar-winning film “Crouching Tiger, Hidden Dragon” will start shooting in New Zealand and China. The film, a US-Sino production, will be released in 2016.

One of the film’s producers, Sun Jianjun, president of Pegasus Media, says the film will retain the Oriental flavor of the first installment while employing special effects, costume and make-up professionals from “The Lord of the Rings.”

In a major example of international cooperation, Shanghai Media Group signed an agreement in March with Walt Disney Pictures to co-produce movies.

The newly founded China Film International, located in the China (Shanghai) Pilot Free Trade Zone, also will gather film professionals from home and abroad with a plan to make 10 big commercial co-productions in the next three years.

Additionally, the wider participation of Chinese video websites in filmmaking, distribution and financing is considered a new impetus for the domestic film industry. Officials from leading video websites say they can analyze data of Internet users to decide a new film’s content, cast and marketing strategies. It can be a very effective tool.

In the next few months, Tencent will invest in a series of new movies, including Jackie Chan’s new war epic, “Dragon Blade,” fantasy film “Zhongkui — Snow Girl and the Dark Crystal,” and the comedy romance “I Am Queen.”

“The focus of our work is to develop byproducts of Chinese movies such as video games, music and novels,” said Sun Zhonghuai, vice president of Tencent. “It is a very profitable field in Hollywood and Japan, taking about 70 percent of a movie’s total revenue. However, in China it seems to be an untapped field.”

Despite the rapid growth of China’s film market, experts and industry insiders say there is still a long way for Chinese cinema to go. They say Chinese filmmakers have a lot to learn from Hollywood in the basics of film — cinematography, successful storytelling formulas, production techniques and marketing.

Xu Zheng, director of “Lost In Thailand,” says that although China does not lack for good stories, it urgently needs good movie scripts because only a few sensitive stories with realistic roots can pass the country’s censors and be made into movies.

“I like to watch TV programs about lawsuits and crime in China,” he says. “They are inspiration for a good thought-provoking movie. However, few of the real-life subjects can be put onto the big screen. Only when we have courage to tell true stories about life can we really excel in this field.”

Professor Gu Xiaoming, a film critic and expert from Fudan University, suggests domestic filmmakers develop their own distinctive style of artistry and narration. “I think film is a mirror to society and life, and it also explores the complexity of humanity. Chinese directors can do much better if they add more philosophical thinking to their works,” Gu said.