Recasting Hong Kong; Filmmakers are overhauling the way they make movies to please mainland customers--and censors.

Byline: Alexandra A. Seno

It's a familiar plot in Hong Kong films: hero down on his luck is transformed by a new sense of purpose, and amid a rain of gunfire and dazzling kung fu, finds himself in a heartbreaking romance. Only this time, the hero is Hong Kong film itself, which is reinventing itself to court the moviegoers (and appease the touchy censors) of mainland China.

Though Hong Kong has long seen itself as the gateway to China, its filmmakers tended to look everywhere but the mainland, until recently. By the late 1990s the industry's world ranking had dropped from No. 3 early in the decade, when it turned out 200 films a year, to No. 26. Customers in its core overseas markets of Taiwan, Korea, Japan, Malaysia and Singapore were defecting in droves from Hong Kong films, some famously shot in one week without a script, to higher-budget Hollywood blockbusters or local productions. But China was not yet the answer. Not only was it difficult for foreign films to make money there owing to the power of the parsimonious state-run distribution company, but Hong Kong was treated as just another outsider in competition to fill China's yearly quota of just 20 foreign films.

The door began to open in 2002, when Media Asia Group, one of the biggest Hong Kong film companies, coproduced a period drama called "Cat and Mouse" with a mainland partner. As a coproduction, the movie was exempted from the quota on foreign films, and free to keep some of its mainland box-office sales of $2.5 million. At the same time, "The Touch," an action movie starring former Bond girl Michelle Yeoh (who also coproduced with a Chinese partner), was flopping in Hong Kong, but became a mild success because of mainland sales. Media Asia executive director John Chong says, "We all realized then that China could be our new business model."

Early this year came the big break. Beijing agreed to exempt Hong Kong films from the foreign quota as of January 2004, giving them a huge advantage in the world's biggest market. Now a Hong Kong film-industry revival is underway, driven by mainland movie fans. By the end of 2004, Hong Kong is expected to produce 140 films, up from only 77 in 2003. Investments in Hong Kong-Chinese ...