More than 6,000 cinemas with 32,000 screens across China saw up to 1.26 billion visits in 2015.

Meanwhile, speaking of the shift toward merchandising, Rao Shuguang, the secretary-general of the Chinese Film Association, told the 2016 Beijing International Film Festival recently that "China's movie revenues will see a shift from reliance on the box office to more diverse sources."

Industry sources also say that the emergence of domestic film franchises will also boost Chinese merchandise production.

Several years ago, popular Chinese films rarely had sequels.

But, in the past two or three years, the producers of some of the highest-grossing domestic films, such as Monster Hunt and Monkey King: Hero Is Back, have announced that sequels are in the pipeline.

The franchises mean that the merchandise retains continuing relevance and will attract more buyers, says Hou.

To understand how merchandising is still a nascent business in China, one has only to look at the Monster Hunter example.

The producers of the film－to date the second highest-grossing film in China－did not realize there was a marketing opportunity waiting to be exploited until toys resembling the protagonist monster began to be sold online.

Now, having learned a lesson, Monster Hunter's producer Bill Kong has said that his studio has partnered with the China Film Group to develop merchandise, two years ahead of the sequel.

However, despite the opportunity that merchandising offers, piracy remains a major source of concern.

And China will not be able to fully develop its merchandise sector unless a sound system to protect copyrights is established, says Shao Zheng, founder of Lumiere Pavilions, a cinema investment company specializing in the construction and operation of high-end cinemas in China.