HONG KONG — After the handover of Hong Kong to the Chinese July 1, the pic biz here is hoping this former British Crown colony will again become a thriving film colony.Despite a dramatic downturn in production and a shrinking box office over the last few years, Hong Kong filmmakers are banking the handover will eventually bring new money, new talent and new infrastructure to their worn-out and inward-looking biz. Signs are already pointing to a future in which the Chinese leaders of Hong Kong focus on cinema as a potential revenue-generator and cultural banner to wave worldwide. China may quickly find that it’s a boon to provide storylines, locations, talent and audiences to the local Hong Kong industry. Hollywood prepared Key Hollywood companies — not wanting to be left out of the action in this crucial part of the world — are already setting up production outposts in Hong Kong or joint ventures with local partners there. Francis Ford Coppola’s American Zoetrope and helmer Wayne Wang have already made the connection by setting up a production company in Hong Kong. Shanghai-born Mike Medavoy, chairman and CEO of Phoenix Pictures, has been nurturing relationships in China and Hong Kong for the past three years. Most recently his company provided script and casting assistance on the epic drama “Red River Valley,” a Shanghai Studio production which has been a success in China. In return, Phoenix will take all rights outside China on the international version of the pic. Hong Kong expansion The most graphic example of change afoot, however, is the ambitious plan to relocate and expand facilities for the Hong Kong film industry. A government body, the Hong Kong Tourist Assn., is undertaking a feasibility study to convert the islands of Ma Wan and Tsing Yi, mostly undeveloped but accessible by bridges, into a “Film City,” complete with soundstages, a film archive, a theme park, a residential development and hotel and convention areas. The study should be completed in August, says Peter Randall, spokesman for the HKTA. Golden Harvest Films, one of the most prolific studios in Hong Kong and the producer of the Jackie Chan films, has been asked to coordinate the “Film City” side of the project on Ma Wan. “This is very important to the film and tourist industries,” says Russell Cawthorne, public relations director of Golden Harvest. Big tourism draw According to the HKTA, Hong Kong is the most popular destination in Asia, and tourism brings in almost $11 billion a year. The Ma Wan project will include 10 acres of film studios and post-production facilities, including six soundstages, digital sound film editing facilities, a special effects shop and computer animation facilities. “It is much smaller than normal for the U.S., but we can build vertical,” says Golden Harvest producer Lloyd Chao, who is based in Venice, Calif. He believes it will take three years to complete the film facility after construction begins. Golden Harvest has signed a Memo of Understanding (MOU) with property developer Sun Hung Kai to design a film theme park, featuring Chan-inspired attractions such as a live stunt show based on his movies.An international partner, possibly a Hollywood major, is being sought by Sung Hung to play a part in the theme park. Hong Kong talent Meanwhile, an influx of Hong Kong-born talent with Hollywood know-how is looking eastward again, throwing a new element into the future mix. So far, almost $5 million has been paid out or promised to the Hong Kong film industry by Hollywood. Producer Dennis Law says his independently produced, MGM-distributed martial arts kid pic “Warriors of Virtues” contributed almost 10% of his $36 million budget to Hong Kong’s industry. “Warriors” used a Hong Kong cinematographer, costume designer and choreographer, plus Hong Kong stuntmen and equipment rental. Director Wang’s Hong Kong-based production company Chrome Dragon is a joint venture between Wang, his longtime producer, Jean Louis Piel, and American Zoetrope’s Tom Luddy. With a production office and management staff based in Hong Kong, and the possibility of using a Hong Kong director as well as technical equipment from Hong Kong, Chrome Dragon will spend more than $1 million there on one film — 10 times as much as a typical Hong Kong film budget. Plans are to produce six pics, combining U.S. and Asian talent, over two years. One will be shot in Hong Kong and the rest throughout Asia. Although no money has been earmarked for development yet, Terence Chang, director John Woo’s longtime producer, is eager to start capitalizing on his home territory, despite his departure seven years ago for the U.S. “Hopefully, I’ll become a bridge between two worlds,” says Chang. New film-funding method Finally, a new method of funding films is being tried out to counteract the hit-and-run approach of so many recent investors in the erratic Hong Kong filmbiz. The so-called film fund works like a mutual fund, offering a more calculated risk to investors. Institutional and individual subscribers join an investment fund run by film production companies and studios. That money is then invested in film production. The latest such fund, called GH Pictures (China), is from Golden Harvest, with institutional investors such as Citibank and the Singapore pubcaster STC in the mix. The fund has $30 million at its disposal and will be used to make films in China for that market. More of these newfangled funding arrangements are likely to turn up in the near future as ties between the former British colony and the Chinese mainland are strengthened.