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Foreign producers looking to make business connections in China are taking a more local approach, and learning, at the school of hard knocks, the ways that work best.

“I’ve seen more failures than successes — in terms of film projects, companies and partnerships,” says producer Jessica Kam, who has made four independent features in China, including arthouse hit “Piano in a Factory.”

Some issues bizzers might expect to encounter: Chinese companies that fail to honor contracts, and a high degree of government scrutiny when big U.S. firms are involved in a deal. U.S. players do best in the territory when they focus on opportunities rather than on obstacles. Censorship, import quotas and state involvement in the distribution sector are well known, and such regulatory issues keep some companies cautious.

But foreign shingles have developed many different approaches in China, all aimed at getting involved in, and embedded in the fabric of, the local industry.

Strategies range from that of Boneyard Entertainment, which was an equity investor in “Black Coal, Thin Ice,” the Chinese thriller that won the Golden
Bear at Berlin this year; to Relativity, which is the only foreign company to wholly own a Chinese distributor. Relativity also has a production and distribution deal with Jiangsu Broadcasting; is the international distribution partner for China Film Promotion Intl., a government agency that oversees the advertising for and commercial distribution of Chinese films overseas; and serves as adviser to financial behemoth Industrial and Commercial Bank of China.

In the past 15 months, Arclight and IM Global also have woven themselves into the local economy, opening sales and finance offices in Beijing.

“China is very challenging. The window is very small, because of the quotas. And because theatrical represents upward of 90% of revenues in the country, only films with a certain kind of DNA can get through,” says Ralpho Borgos, who handles China for London-based indie Mister Smith Entertainment.

Rob Carney, VP of international at New York-based FilmNation Entertainment, says that he has sold two or three films annually to China over the past few years, and that success leads to people looking to set up co-productions. Sales, however, can often be a one-way street. “It is very difficult to find a truly Chinese film that travels internationally,” he says.

FilmNation handled Zhang Yimou’s “The Flowers of War,” which seemed to tick all the boxes for a Chinese film that could cross over: a Hollywood star (Christian Bale), a big Chinese director (Zhang Yimou) and an epic story (the Japanese incursion into Nanking in 1937). The picture was a hit in China, but did scarcely more than $300,000 at the U.S. box office.

“So in our case, the situation has evolved into a question of, ‘Can we make Chinese movies instead?’ Well, maybe yes, as an investor or financier,” Carney says.

With that in mind, it’s seeking partners to co-develop graphic novel “The Undertaking of Lily Chen” as a Chinese movie. “We are definitely not coming at this from a sales point of view,” he says.

Others, such as Village Roadshow Entertainment Group Asia and Legendary Pictures, have quietly opened development and production offices in China, approaching the market slowly with veteran executives in place, developing scripts and grooming Chinese talent. Legendary East expects to start shooting its first Chinese-made pic in January when helmer Zhang begins filming on “The Great Wall,” a fantasy actioner.

One of Village Roadshow Asia’s projects, “Mountain Cry,” a drama by first-time Chinese filmmaker Larry Yang Zi, underscores today’s expanding range of international forays into Chinese filmmaking. The project is co-developed and co-produced with established Chinese producer Hairun Pictures, with funding from Ivanhoe Pictures, an Asian-focused film investor that recently hired its own development staff in both Beijing and Hong Kong. Story Mining & Supply, an L.A.-based indie headed by producer Jeff Sharp (“Boys Don’t Cry”) and backed by private equity maven Jim Kohlberg, will contribute financing for development and marketing.

As “Mountain Cry” demonstrates, it may take an international village to raise a Chinese film.