Kung Fu Panda 2 hit 125 million yuan ($19.29 million) in receipts last weekend, setting a new record for both opening and weekend box office in China. But the surge in sales has seen domestic "blockbusters" fare poorly by contrast: rom-com A Beautiful Life took only 7 million yuan ($1 million) in the same weekend, for example. With nothing in competition at Cannes, industry critics have questioned the poor performance of Chinese cinema at both the box-office and awards. Meanwhile, a deeper problem prevails: box-office fraud.

A scene from A Beautiful Life, which has had a disappointing box office compared to Hollywood competitors.

Ticket sale trickery

According to the 2011 Chinese Film Market Review, published by the China Film Distribution and Exhibition Association (CFDEA) in April, 2011 blockbuster Let The Bullets Fly made 659 million yuan ($101 million) by the end of February.

Yet its distributor had announced at the time that the film had reaped 40 million more than that.

Producer Ma Ke defended himself against allegations of fraud: "700 million yuan was evaluated data. Let The Bullets Fly was still showing after February in small cities, suburbs and the countryside. The figures for those were not completely included."

Ma is certainly not the first filmmaker to be accused of artificially inflating box-office take. Animation film Astro Boy (2009) was the subject of a media storm after figures from the CFDEA showed it had lied about its success to the tune of 23 million yuan ($3.55 million), claiming 40 million yuan ($6.17 million) in ticket sales. Distributor Enlight Pictures apologized for the deceit.

A well-known joke told by Gao Jun, manager of the New Film Association, goes that one film boss was known by the nickname "Plus One" "because if his film has a 5 million box office, he will claim a 15 million one."

"Box-office fraud is an open secret. Astro Boy is just the only one that's been officially exposed," film critic Hu Liang said. "Box office is still the biggest profit for Chinese films. The first weekend is essential, as it decides if people will buy tickets later on."

There is no official organization monitoring box-office data in China; a "national special office" announces data every Tuesday but the information is not transparent, for internal use only and only roughly 70 percent of cinemas use the tracking technology. Distributors thus mostly use their own teams to audit box office.

"There is no cost in lying about box-office; [the data] needn't be taxed or revenue-shared accordingly," said Gao."Only by taxing according to these revenues could you restrict or stop the fraud."