The arrival of US and European financiers and the frenzy ripping through Asia has allayed fears that the Hong Kong film industry is on its way out.

With rampant video piracy and declining box-office receipts during the late 1990s, industry analysts predicted a doom and gloom scenario. But the production tide has turned and Asian film-makers are experiencing a renaissance. Even if Hong Kong audiences are not yet flocking back to local pictures, investors certainly are.

The biggest buzz in the region has been generated by the growing influence of Columbia Pictures Film Production Asia. It has invested in four films since it set up shop in Hong Kong four years ago, including Tsui Hark's Time And Tide, a thriller about the odd relationship between a Triad bodyguard and a former mercenary. Headed by Barbara Robinson, the company has also bought world rights to Zhang Yimou's The Road Home and Not One Less, and co-financed director Ang Lee's film Crouching Tiger Hidden Dragon. "There was a low ebb a couple of years ago, but that's picking up now," Robinson said.

Meanwhile it's rumoured that 20th Century Fox, Miramax and Warner Bros - all of which have opened offices in Hong Kong - are also scouting local projects.

Hollywood's moves on Hong Kong are having a domino effect on the rest of the industry. China Star Entertainment has signed Tsui Hark to three new pictures, following a strategy of signing major talent before it's snapped up by companies from outside the region.

Thomas Chung, managing director of Hong Kong's Media Asia Group, has instead learned to mimic the US style of production and marketing to attract audiences at home, and then sealing foreign sales to the US and Europe. With a glossy campaign and high production values, Media Asia's Gen-X Cops raked in international sales of $3m. Directed by Benny Chan the film also did good business in its home territory, garnering an impressive $3m at the Hong Kong box office. Now Chung says he has five US "suitors" looking to invest up front in his latest picture, The Touch.

Despite the boom, producers are waving a flag of caution. There are fears that above-the-line costs will rocket again and greedy producers will overextend themselves.

Star East Holdings is also pumping more money into its film and television production arm, Bob & Partners Co. The company has just signed up StormRiders director Andrew Lau to direct three unspecified projects. The company recently sold $25.2m worth of stock and bought a multimedia studio from Paul Y ITV Construction in March in order to convert its product into Internet or broadband versions.

Golden Harvest is producing Jackie Chan's latest vehicle, The Accidental Spy. The company is going through tremendous upheaval following Village Roadshow's recent sale of its shares in Golden Harvest Holdings and is banking on the film's one asset: Chan's buns of steel.