China's box office figure for the Spring Festival holiday was nothing but stellar. Despite the COVID-related capacity restrictions, by the end of February 17, collection for the holiday period topped 7.8 billion yuan ($1.2 billion), surpassing the all-time high figure of 2019.

Detective Chinatown 3, which topped holiday rankings, took in more than 3.7 billion yuan as of February 19, according to data from Chinese ticketing platform Maoyan. Hi, Mom, and A Writer's Odyssey, which came in second and third place, each grossed around 3.2 billion and 600 million yuan.

It is the first time that all of the top 10 grossing films for the holiday were made by Chinese studios. Hollywood blockbusters, which usually had their foothold in China's Spring Festival box office, had many of their theatrical releases delayed or canceled.

Right now Hollywood is facing a series of challenges vis-à-vis China, said Michael Berry, director of the Center for Chinese Studies at the University of California, Los Angeles. While there is a downturn in direct Chinese investment into Hollywood, there is also a lack of "products" to sell to China especially given a decimated U.S. film production amid the COVID-19 pandemic. 

After the pandemic shut down theaters across the U.S., major Hollywood studios announced that they would shift their tentpole releases to digital streaming platforms or delay their theatrical releases indefinitely. No Time to Die, Godzilla vs. Kong, and Avatar 2 are among the big-budget franchise films that are expected to make a splash in China but are delayed screening so far because of the pandemic.

But Chinese homegrown films started to overtake foreign releases in Chinese box office even before the pandemic. Last year, Tenet, the sci-fi epic by legendary director Christopher Nolan, brought in $66 million in China's box office, in comparison to homemade war film The Eight Hundred which took in $472 million and became the highest-grossing movie of 2020 worldwide.

In 2019, among the top 10 grossing films in China, two were from Hollywood studios. In 2020, there was only one.  

"China has been able to produce films that achieve not only comparable box office success, but they can do so on a fraction of the budget, and by solely relying upon the Chinese market," Berry told CGTN.

China is the second biggest source of revenue for Hollywood and is regarded as holding the key to generating profits for Hollywood films. Hollywood blockbusters like Fast & Furious, Transformers: the Last Knight, which, though, did not do well in the U.S., raked in millions of dollars in Chinese box office.

Though recent years saw Hollywood filmmakers trying to incorporate more Chinese elements into films to cater to Chinese audience, some experienced major setbacks. The Hollywood remake of Mulan brought in around $42 million in China, far below the home run that many expected for the film set in China and featured a number of Chinese film stars.

The Chinese film market is really competitive, said David U. Lee, a Hollywood film producer and CEO of Leeding Media, an international entertainment company. The cut-throat competition in the Chinese film industry, on top of the growing size of the market, has helped breed a younger generation of Chinese filmmakers able to tell stories that are more poignant, relevant and compelling to local audience.

"The development and growth of local filmmakers in China are phenomenal," Lee noted. "If Hollywood wants to compete, they have to keep upping their games."

Li Boyang, a Chinese independent filmmaker based in Los Angeles, said that Chinese filmmakers should nonetheless still be aware of how much catch-up they should play in comparison to Hollywood directors. "There is only one The Wandering Earth, one The Eight Hundred. For the vast majority of the films, their production quality is still incomparable to Hollywood."

He said that he hopes to see greater engagement between Hollywood and China to spark innovation so that higher quality of work can be produced on both sides.  

Big-budget Hollywood franchises, that are most likely to become hits in the Chinese market, such as Marvel's Black Widow, Fast & Furious 9, have now lined up to be screened for the first half of 2021. Their box office performance will show if China is ready to move beyond Hollywood.