"Transformers 4: Age of Extinction" is the highest grossing film in China in 2014. [Photo/Agencies]

China is not only more capable of withstanding the impact of Hollywood, but is expanding its influence overseas, said a report on Tuesday.

The report, by China's domestic film industry research firm Entgroup, said that some 29.6 billion yuan ($4.76 billion) were generated by 388 films screened China last year, 36 percent up on 2013, achieved in a sluggish market while North America registered a 6 percent drop.

The report said the quality of China's homegrown films is improving fast, with 54.5 percent of the total box office generated by domestic products. This success of domestic film comes even after the import movie quota was expanded from 20 to 34 in 2012, and regardless of the success of "Transformers 4: Age of Extinction," the highest-grossing film in China.

The biggest threat to China's film industry is not Hollywood blockbusters because, "even if the quota is lifted, what audiences will see will be second and third class products."

"What domestic filmmakers need to do is to improve their own quality, particularly making more 'high-concept' movies," the report said.

Entgroup estimates that China's film industry generated more than 50,000 jobs both directly and indirectly in 2014; an output of 68.7 billion yuan ($11.07 billion).

China is the main engine of the global box office with 75 percent of the annual increment from China. The domestic market is exerting a subtle influence globally, with all six Hollywood studios opening offices in China.

European directors are turning to China rather than of Hollywood, said the report, citing French director Jean-Jacques Annaud's "Wolf Totem," a co-production between China and France.

As of the end of 2014, ten countries have co-production agreements with China.

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