Snow White and the Seven Kung Fu Monks: Disney Sets Sights on China

The Wicked Queen will not know what hit her. Snow White is about to be transformed into a martial arts epic with Shaolin monks replacing the seven dwarves of the original Grimm Brothers fairytale.

In a sign of the times, Walt Disney is behind the kung fu retelling of its 1937 animated classic, which is part of an intensifying strategy to make inroads into the Chinese cinema market ahead of Hollywood rivals.

Yuen Woo-ping, the fight choreographer for the Matrix trilogy, Kill Bill and Crouching Tiger, Hidden Dragon, has been recruited to direct the film, which will be shot in China later this year.

Tentatively titled Snow and the Seven, the story - scripted by Pulitzer prize-winning author Michael Chabon - will be set in a British concession of colonial China in the 1880s.

The remake is part of an attempt by Hollywood studios to capitalise on the relaxation of controls on film-making and screen building in a potential market of 1.3 billion people.

China has one of the world's most protected and least-developed film industries. With less than 2,000 mostly old cinemas, its ratio of screens to people is 70 times lower than in the US.

Box-office revenues are tiny, but they grew last year by 50%. According to the investment bank China eCapital, sales of tickets and merchandising will more than double by 2007.

To protect domestic filmmakers, the state allows only 20 foreign titles to be distributed each year. Release is often delayed for several months, long after pirated DVD versions are available for less than a fifth of the price of a cinema ticket.

Hollywood's biggest studios, such as Sony's Columbia Pictures and Warner Brothers, are trying to get around this problem by co-producing films with domestic companies, which has the added advantage of tapping into the global popularity of martial arts films such as Zhang Yimou's Hero and House of Flying Daggers.

Another benefit is the low production costs. Even a big budget Chinese epic can usually be filmed for less than $5m (£2.84m) - a fraction of the $100m plus that Hollywood regularly blows. Animation costs in Shanghai are said to be 80% lower than in Los Angeles.

Disney has gone further than most to try to build a presence in China. It is opening a theme park in Hong Kong in September and is in talks to build another in Shanghai. Last year, it tied up with the Communist youth league to arrange a series of education sessions ostensibly aimed at raising creativity.

The company's president, Robert Iger, has declared himself fixated with China, which he visited four times last year. In an interview with Forbes, he noted that there are 290 million Chinese children under 14, more than the entire population of the US. This is not just a growth opportunity, he said, "it's a needle mover".