As China’s first-quarter movie box office receipts trumped North America, many believe the Asian country is on track to become the largest film market in the world.

On the second day of the 21st Shanghai International Film Festival, leading Chinese production and distribution companies gathered to discuss both the achievements of China’s film industry and the challenges facing it.

All speakers agreed that the growth of China’s film market has been truly remarkable. 

“Before 2003, China’s annual box office receipts were less than 900 million yuan. But now during the Spring Festival, a day’s receipt could reach 1.26 billion yuan,” said Yu Dong, founder and CEO of Bona Film Group Company, which produced this year’s box office hit “Operation Red Sea.”

Jiang Ping, general manager of state-owned China Film Co. Ltd, which used to be in control of the whole nation’s film distribution 30 years ago and still is one of the industry leaders, said the company had lost its absolute advantage amid fierce competition but had since diversified its business to include production, distribution, movie projection and studio service.

But behind the box office growth looms a potential crisis, warned Wang Changtian, CEO of Enlight Media, adding that China’s film companies, large or small, still rely heavily on the government’s preferential tax policies to survive and recent adjustments of the policies were a blow to the business. In addition, there has also been a drastic reduction in the amount of capital inflow possibly due to rising production costs and low investment return.

According to Xinhua News Agency, China’s movie box office revenue surged in 2017 to 55.91 billion yuan (8.59 billion US dollars), an increase of 13.45 percent from the year before.