Of late, big Hollywood studios have been trying to reach out to Chinese audiences by adding Chinese elements to their productions. But even then such Hollywood films are far from real co-productions because the Chinese elements are simply "decorations" aimed at boosting their appeal in the lucrative Chinese market.

For Hollywood studios, the Chinese market has become increasingly important. China is the world's second-largest film market and has the potential to be the largest. And US producers are adjusting to this fact by trying to "please" Chinese audiences by including popular Chinese actors and adding familiar Chinese elements to their films.

Thirty-eight Hollywood movies were screened in China last year, among which actress Xu Qing played a role in Looper, and Jet Li and actress Yu Nan were part of The Expendables 2 cast. This year has seen actress Zhou Xun playing a role in Cloud Atlas, for which Dreams of the Dragon Pictures was one of the investors and distributor for the Chinese region. And in Iron Man 3, extra scenes featuring actress Fan Bingbing and actor Wang Xueqi, and several Chinese brands were added for the Chinese version.

According to the State Administration of Radio, Film and Television, a film is considered a co-production if the Chinese partner provides more than one-third of the total investment, a Chinese actor or actress plays one of the main characters and most of the shooting takes place in China. If a Hollywood film meets these criteria, it will be considered a "domestic film" and will not be included in China's import quota for foreign films. And like domestic films, it can take 43 percent of the box office, a significant increase on the 25 percent share of imported films.

But even when Chinese companies are involved in the production or account for part of the budget, they hold only part of the production process and their returns come from the domestic market, not the global market. Therefore, they are not true co-productions. Even China Film Group, one of the companies that produced the new The Karate Kid (starring Jackie Chan and Jaden Smith) - a movie about an American boy learning kung fu in China and mostly filmed in China - restricted itself to the domestic market by not participating in its global distribution.

Hollywood studios have drawn a fine line between having enough Chinese elements to appeal to Chinese audiences and too many to alienate audiences in other markets, especially the US, which is still their biggest market.

"Hollywood studios cannot give up the rest of the market just to win over Chinese audiences," says Peng Kan, research and development director of Beijing-based consulting company Legend Media. "Using too many Chinese stars and other Chinese elements may make a film unacceptable for viewers in other countries, which Hollywood doesn't want."

Even though US companies play the dominant role in movies produced with Chinese enterprises, the latter are still keen to cooperate, hoping to learn the slicker tricks of trade. Association with Hollywood is good for the brand image of Chinese companies, for it helps boost their competitiveness in the domestic market. For example, Dynamic Marketing Group, a rising Chinese film company that invested in Looper and Iron Man 3, has made a name for itself as an international production collaborator.

Dan Mintz, CEO of DMG, says that despite the cultural differences, Chinese films have to learn from Hollywood movies if they want to be successful overseas.

But the Chinese government is still wondering whether cooperation with Hollywood is a good way of promoting Chinese culture overseas and whether the investment of domestic capital in foreign films will benefit China's cultural industry. The result: lack of government support for private film companies.

However, the change from simple cooperation to co-production needs to be expedited because the Chinese film industry has to be thrown fully open to global competition in 2015 according to China's commitment to the World Trade Organization. "Despite the difficulties ahead, the Chinese film industry should be prepared for the coming competition," says Zhang Zhao, CEO of LeTV, a Chinese media company that invested in The Expendables 2. "Instead of acting like a spoiled child and being protected by the government, we should make our first move now ... we have to step out and cooperate with Hollywood."

In fact, Chinese companies should be bolder and seek appropriate opportunities to make a real co-production with Hollywood. And at this early stage, the focus should be on a combined market, not either the US market or the Chinese market. Otherwise, the difference in tastes between the two nations can never be balanced. Just like Zhang Zhao says, the roles of Jet Li and Yu Nan in The Expendables 2 were the results of negotiations among all the investors, who thought about the global market as a whole. As a result, the film's box office return on the Chinese mainland was 300 million yuan ($48.9 million).

Other issues, too, have to be taken into consideration. The Chinese film industry lacks a strong copyright and guarantee regime. To quote Peng Kan, as most co-productions are big-budget films with budgets of more than $100 million, a guarantee company, which is the norm for big-budget films in the US, would be able to control potential risks with careful assessments and ensure that the production is completed on time.

Moreover, Chinese companies have to act more boldly instead of simply investing in a movie for a share of the domestic box office. They have to risk more to get a greater share of the returns from the global box office. After all, the aim of co-productions is to use more capital and resources to increase a film's market penetration. And China's filmmakers will not create a global impact if they do not participate in global distribution.

The author is a reporter with China Daily.