The most striking fact I learned about the Chinese film industry this year is that more than 700 local films are produced each year.

Only a fraction of those break through at the box office, of course, but the ambition and output has to be admired.

No wonder Chinese producers don’t really worry about making films for international territories, because they have so much potential at home.

If Lost In Thailand can make $200m in China - admittedly surpassing any expectations - it doesn’t need to travel.

The way in

The more complicated question is how Western companies can tap into China’s giant market - the box office could hit $3.5bn this year.

The frenzied hype of the past few years is now settling down, and these companies need to figure out how to approach real business in a smart way. Outfits that have set up Chinese outposts in recent months include Wild Bunch and IM Global.

Western companies aren’t just trying to fill their coffers with any renminbi they can find, they know the most important thing is a trusted, reputable Chinese partner. For instance, Exclusive Media is working with Talent International on Skiptrace starring Jackie Chan.

“China is not Hollywood’s ATM,” Bona Film Group COO Jeffrey Chan told me during Toronto 2012’s Asia Film Summit.

That’s become even more true this year, with the government clampdown on co-production clearances and of course the continued quota on foreign films.

Chinese companies are said to be wary of being burned by US studios (DreamWorks Oriental being the exception), so high-end independents from the US and Europe might be even better positioned than the majors.

Screen International’s Asia editor Liz Shackleton spends months every year in Beijing, talking to people on the ground rather than trying to figure out this complicated market remotely. I’m biased but I think she offers some of the best insight around into China’s ever-shifting landscape, as our China territory focus in our November issue proves.

There are big opportunities in China for the international film business now and in the future, but companies should think about strategic long-term partnerships, not smash-and-grab quick money.

Wendy Mitchell is Editor of Screen International