A worker with the institute's animation industry zone displays the interactive technology between human and TV screen.

A scene from the film The Frog Kingdom, an animation film by the institute and its in-house animation company Vixo, which is currently in theaters.

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However, as of Jan 20, ticket takings are less than 30 million yuan, according to Zhao Bin, deputy general manager of the production company Vixo.

"In terms of technology and visual art, we have to go a little distance more, compared to our Western counterparts. What we lack is the knowledge of how to tell a good story," Zhao says.

The Frog Kingdom is still "testing the waters" of the 3-D animation market, Zhao says, as the company and the institute make efforts to establish their own brand in China.

Although they have invited directors and scriptwriters from the West to participate in the production process, it is still a Chinese company making the film, Zhao says. Many plots are drawn from Chinese classics, such as The Art of War, an ancient military treatise attributed to Sun Tzu (544-496 BC).

But while more and more directors from the West are turning to China to find inspiration, especially after the success of Mulan and Kung Fu Panda, the Chinese, says Zhao, are very cautious.

"We want to produce good animation on our own. We're already working in the right direction," Zhao says.

Even as The Frog Kingdom is still on screen, production on the sequel has already started and related games and merchandise have been released.

Zhao is confident about the future of made-in-China animation, especially when he has the support network of a major animation institute, with more than 10,000 students working in studios of their own.