Blockbusters such as Avatar have helped boost audiences. Hui Zi / CFP

The boom in theaters is also attracting foreign capital.

China allows foreign investors to set up theaters in the country only through joint ventures with local companies. Before 2004, foreign investors were allowed a 49 percent stake in the joint venture. In 2004 the government eased the rules to allow as much as a 75 percent stake in selected cities. But in 2005 it reimposed the upper limit of 49 percent, and that stands to this day.

Warner Brothers, which planned to set up 30 cinemas in China, quit the country's theater business the very next year the government resumed the 49 percent limit, but some have chosen to stay.

According to the Financial Times, IMAX has raised the number of cinemas planned in China by 15 to 96, and Lotte Cinemas of South Korea is planning to build 30 theaters in the country in 2011. South Korea's Orion Group, which owns two cinemas in Beijing, will build one more theater in Shenyang in Northeast China in 2011.

"The Chinese film industry experienced a slow season around 2003, but people always need access to entertainment," says Han Chunhui, a senior executive of Orion's theater business in China. "Watching films has proven popular around the world. And we have seen a strong rebound here."

Some remain unmoved, however.

Wang Changtian, president of film and TV studio/distributor Enlight Media, is one of those who has kept his distance from the theater business.

"Competitors are many, while the rent is surging," he was quoted as saying in a recent interview. "It is becoming more difficult to choose the right locations. And bigger construction costs mean a longer time to break even."

Huang Qunfei of New Film Association agrees.

"The biggest risk lies in the rent," he says. "In good locations in Beijing the rent can account for 25 percent of a cinema's cost. Food and products sales contribute only a small part of the revenues."

The competition is fierce, with almost all theaters screening the same films.

Han's Megabox theaters are trying to stand out with better service. The two Megabox theaters in Beijing offer to refund viewers' money if they decide not to watch a film at least half an hour before its screening. The theaters also allow viewers to bring their own snacks and soft drinks.

"We hope our hospitality will attract more people," Han says.

Hong Kong Edko Films has taken a different tack, setting up an art house in Beijing. Regular screenings of auteur directors' works have made it a frequent destination of art film lovers.

Bona Films' theaters, backed by the mother company, a successful film producer and distributor, often host film premieres attended by A-listers to attract more viewers.

"Competition is good," says New Film Association's Huang. "Only by intense competition will the quality stand out. This is something the Chinese theater business, which has just started to thrive, has to experience."