The penny first dropped a decade ago with Mulan. Finding this Chinese folk tale an odd choice for a Disney film, I asked a senior Disney exec whether their corporate ambitions in China had any influence over the subject matter. He looked at me as if I was the global village idiot. “Of course,” he said. Seven years later, Disney opened a $3.6 billion theme park.

And now Warner Bros has bankrolled its first Bollywood co-production, Chandni Chowk Goes to China, starring Akshay Kumar as an Indian chef who learns martial arts. It is also the first Indian film to have been shot in China. My initial reaction is not, as the Executive Vice-President of Warners International Richard Fox elegantly puts it, “a fusion of two rich cultures”, but “ker-ching!” These are the two nations Hollywood is most excited about, together in one film.

Tinseltown, you see, has finally discovered that the map of the world doesn’t end at California. A typical blockbuster can now double its revenues abroad (Mamma Mia! has made three times as much abroad as in the US). Thanks to the growth in multiplexes, the UK alone can contribute £20-£50 million to a film’s revenues.

Why do you think so many action movies have a Brit as the villain? Not just because global domination sounds sexy in Shakespearean tones, but because it’s an easy way to whip up interest in UK audiences. Why did Mamma Mia! cast a Swede, Stellan Skarsgård? To keep the Scandinavian Abba fans happy. Why did The Dark Knight stop the plot to go flitting off to Hong Kong? To sell toys in the Far East. And so on.

But some nations still refuse to abandon their own cinema entirely to giggle at Jim Carrey and gawp at Tom Cruise. In India, especially, US films account for only 5 per cent of revenues. So Hollywood has decided that if it can’t beat ’em, it’ll join ’em. Warners has been co-producing local films in a variety of countries for a decade — Fox was even made a Chevalier de l’Ordre des Arts for his contribution to French film production — and India was the next logical step. Sony has also recently made its first Hindi film, Saawariya; Disney has several projects in the pipeline; and a few months ago Fox announced that it too was setting up an Asian unit specialising in local production.

As for China, the potential rewards are even greater. It hasn’t the same film-going tradition as India, and despite investment in hundreds of new cinemas by American studios there is still only one screen for every 400,000 people. Yet it’s the third largest producer of films, after India and America, and audiences are expected to double in the next few years. Add to that a strict quota system that permits a mere 20 foreign films to be screened each year, and it’s no wonder Hollywood studios are desperate to invest in local co-productions.

“These are more than emerging markets,” Fox says, “they are the powerhouses of the future. And each country presents its own opportunities and challenges. India is wide open, but how do you get the audience to connect? We have to adapt to a whole different culture, how the stories are told. Even the language is a problem.”

Last month, Warners announced a three-picture deal with People Tree films: an emotional drama with the same director and star as Chandni Chowk Goes to China; a romantic comedy; and a political thriller. Add to this a new Indian television channel to launch next year in a joint venture with Turner, and this could be very big business.

Pleasingly, the traffic is not just one-way. Bollywood is starting to be seen as “cool” in Western circles, in the same way that Japanese anime has acquired a pop-cultural cachet. And it’s already had a huge, if indirect, impact on Hollywood. Baz Luhrmann, the director of Moulin Rouge!, freely admits that its lush visuals, pop music soundtrack and characters’ propensity to break into song at any minute were influenced by Bollywood. The success of Moulin Rouge! paved the way for Chicago and a host of others, at a time when Hollywood was about to write off the musical.

But the real shocker was the $500 million deal, announced this autumn, for India’s Reliance ADA to take over half of Steven Spielberg’s studio, Dreamworks. Together with the Indian company UTV, in which Disney last month raised its stake to 60 per cent and which is building a cross-platform media business, this could truly herald a new dawn for India: the age of the Film Mogul Empire.

Chandni Chowk Goes to China opens in the UK on Jan 16

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