Jackie Chan (成龍), John Woo (吳宇森) and Michelle Yeoh (楊紫瓊) are among the many Asian stars who brought Hong Kong films to Hollywood.
But despite such international prestige, Hong Kong's film industry, just like many other sectors of the former British colony's economy, has suffered severely in the turmoil that followed the Asian financial crisis of 1997.
Now, as the city's film community prepares to reward its stars and moviemakers in Sunday's 2004 Hong Kong Film Awards, analysts say the industry is on the cusp of a recovery thanks to an improving economy and relaxed regulations in China.
One of the keys to the industry's future success, analysts believe, will be the Closer Economic Partnership Agreement (CEPA), a trade agreement between mainland China and Hong Kong that took effect on January 1.
Among its many provisions, the deal eases restrictions on the showing of Hong Kong films across the border.
Hong Kong filmmakers can shoot a co-production with a mainland company and distribute it in China as a local movie that is entitled to wide distribution through the country's theaters and video outlets.
Further, the deal removes Hong Kong from inclusion in China's release quota of 20 foreign films each year.
It enables the city's films to be distributed more freely than foreign films, including many Hollywood blockbusters, and gives Hong Kong moviemakers easy access to the fastest-growing cinema market in Asia.
"CEPA has definitely opened up the market for us. While film productions have been recovering since the second half of last year, co-productions with China are growing as the country relaxes its regulations," said Jeffrey Chan, head of distribution and sales at Media Asia, which produced all three of the widely acclaimed Infernal Affairs (無間道) police drama movies.
CEPA could not have come at a better time: Hong Kong's film industry has taken a dive in the past decade as the Asian financial crisis reduced outside investment.
Hong Kong was the world's third largest movie producer in the 1980s, after India and the US. But since the 1990s, its once-thriving international trade has steadily been eroded and last year it struggled to regain market share in Southeast Asia.
The Taiwanese market, for example, accounted for 40 percent of Hong Kong's film revenue in the early 1990s, but that had plummeted by 1995 due to problems with piracy, combined with the growing preference for Hollywood films in most Asian markets.
The negative impact was compounded last year by the SARS outbreak, which brought releases to an all-time low of 79 films in 2003, from 92 in 2002 and 126 in 2001, according to the Motion Picture Industry Association (MPIA).
This compares with 200 films a year in the early 1990s heyday.
But Hong Kong is seeing a rebound. Industry analysts estimate that up to 130 films will be produced this year, more than half of which will be co-productions with Chinese partners.
Hong Kong films are also faring better than foreign films at the local box office as Hong Kongers appear to be rediscovering their taste for domestic productions.
According to the MPIA, seven of the top 10 films last year were made by local companies, compared with four in 2002 and five the year before.
The return of Hong Kong people's confidence in domestic films had much to do with "a handful of outstanding films."
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