THIS is a time of life or death, a crucial period for Chinese cinema, its very survival is under threat as never before. The reason: Hollywood and what Chinese filmmakers fear could be the "Invasion of the Audience-Snatchers."

This sounds melodramatic, but these sentiments were expressed repeatedly by decidedly worried and gloomy Chinese directors at a forum during the Shanghai International Film Festival

Titled "Road of Redemption for Chinese-Language Film," the forum attracted nearly all well-established film directors in their 40s, the core of Chinese filmmakers. They included both internationally acclaimed art-house directors known to be at odds with mainstream Chinese taste and commercially successful directors making big budget films of more than 100 million yuan (US$15.7 million).

Tough competition

The topic was how to fight the "invader" (ruqin zhe), according to Lu Chuan, whose 2009 film "City of Life and Death" about the "Rape of Nanjing" made 180 million yuan in ticket sales.

"It is a challenge and danger for the entire Chinese film industry, not only to art-house films, but also to commercial Chinese movies," Lu explains.

The perceived "invader" is Hollywood and the increased influx of American films that Chinese industry figures fear - and with good reason - will overwhelm them, dominate the market and put them out of business.

In mid-March, China and the United States agreed, in effect, to relax the quota of foreign films screened in China each year - a sore point with the US film industry.

Chinese officials announced that 14 additional US films (3D and IMAX) would be added to the current quota of 20 foreign films released each year in China.

Foreign filmmakers can also expect to keep a bigger share of box-office takings, 25 percent instead of the current 13 to 17.5 percent.

Hollywood is expected to market heavily in China, far more than many Chinese producers.

Director Lu was very frank, saying Chinese directors are too self-indulgent and have been spoiled and over-protected.

"We are now facing this giant mature US industry. They respect the audience by giving them what they want and like, and they respect cinema by maintaining a stable industrial standard. And we have been overly protected and spoiled by our system that puts a quota on the number of imported films," he said.

Chinese directors have been too pre-occupied with their so-called "artistic vision" and what they want to deliver, rather than telling a good story or reaching the international industry standard, he says.

"And we can't fight such an industrial giant with just artistic vision."

Although the Chinese film industry has learned quickly about marketing, many films still have little, and in some cases, zero funds for promotion.

Wang Xiaoshuai, director of the widely acclaimed 2001 drama "Beijing Bicycle," winner of the Silver Bear at the 2001 Berlin International Film Festival, recently released his feature film "11 Flowers" in May. The film is set in a small village in 1975; the protagonist is an 11-year-old boy who became transformed after encountering a murderer who killed his sister's rapist.

"I had zero promotion funds," Wang told the forum. "So we tried our best by using weibo (microblogging) and flying to as many cities as possible."

He says that more than 5,000 screenings had been arranged at the same time as the Hollywood blockbuster "The Avengers" occupied most cinema screens in China. But ticket sales after a week were less than 3 million yuan, due to empty screenings.

"They were screened either at 6am or after midnight, which means nobody would see it anyway," Wang says.

He is joined by other directors, who complain that Chinese cinemas often canceled screening if their films were not well attended in the first and second days.

"Sometimes, for some movies, you need at least a week for the market to digest it," Wang says.

Marketing misery

Further details of the Hollywood "invasion" have not been disclosed, making the rest of the year crucial for Chinese films and filmmakers to plan and strategize.

"The year of 2012 is really dangerous. It may sound like an exaggeration, but I may not be able to continue my work in the film industry," says Guan Hu, director of "Design of Death" released in late April.

"People call us young directors, but to be honest, none of us is young anymore. We each have lots of problems in our work, so we have to identify these problems and improve ourselves."

Guan's worries are far from groundless. On Monday, National Film Capital, a fund initiated by the state-run China Film Fund and backed by private equity investors, revealed that it planned to invest US$200 million in 10 Sino-foreign co-productions featuring Chinese stories, Hollywood scripts and Hollywood directors - and targeting a global market.

The list includes the Chinese superhero movie "The Annihilator," which will be a China-US co-production with Stan Lee, creator of superheroes "Spider-Man," "The Hulk," "The X-Men" and "Iron-Man."

Guan's problems with "Design of Death" illustrate the problems faced by many directors.

The absurdist black comedy suspense film explores the strange situation in a small village where everyone is determined not to save a seriously ill man, Niu Jieshi. It was praised by critics but ticket sales were poor.

It was competing with "Titanic 3D" and "Battleship." The two Hollywood movies made around 1.1 billion yuan in a month ("Titanic 3D" alone more than 1 billion yuan), while "Design of Death," together with two other Chinese productions, made less than 100 million, much less than expected.

The industry response was immediate. A number of Chinese productions, completed last year and scheduled for release during this "golden" summer vacation period, have been put on hold to avoid direct competition against Hollywood blockbusters.

The reality is that most Chinese movies don't stand a chance in the Chinese market against the Hollywood industry and its fast-paced, heavily marketed blockbusters.

In 2011, the total box office in China was 13.1 billion yuan, of which 46.39 percent and 4.91 billion yuan came from 21 imported films; more than 200 domestic productions made just over half. And most of the ticket sales from domestic productions came from only a few big-budget films with star directors, such as Zhang's "The Flowers of War."