If you can’t beat ‘em, join ‘em, goes the old saying. While the studios continue trying to crack the nut of getting Hollywood films into China, many of the majors also have a wider global strategy that’s proving lucrative both there and elsewhere: Local-language production. Hollywood’s involvement in the area is not new. But, increasingly, movies that are co-produced or distributed by the majors in such places as China, India, Germany, Italy, Spain, Korea and Latin America are finding themselves reaping strong returns.

The markets “are huge,” especially where local box office rivals that of Hollywood pictures. Homegrown films in China, for example, generally snag about 50% of the annual market share and are currently widely outperforming Hollywood films – this week’s Iron Man 3 notwithstanding. In India, the indigenous share of a $2B market can be as much as 90%. There’s an argument to be made that Chinese or Indian films don’t cross cultural borders, but with those kinds of numbers, “Why would the film need to travel?” posits an exec.

Richard Fox, EVP International for Warner Bros., says the studio is looking to develop relationships to make Chinese-language films. “There are a lot of moving pieces in assessing which countries to focus on,” but, “if it doesn’t recoup in the country of origin, we don’t get involved,” he says. Warner recently bet well in Mexico where its comedy Nosotros Los Nobles smashed records with the second biggest opening ever for a non-animated local film.

Another studio exec says local language production “is all relatively opportunistic.” It can be a distraction to try and stay abreast of local material, but “paying attention to local markets, filmmakers and stories around the world gets you more educated in terms of worldwide taste and emerging filmmakers.” Plus, “the minute you have a hit, it’s ‘How much money are we making? Why don’t we up this business?’” Here’s a look at how the studios are speaking in various tongues:

ASIA
There is a relatively low barrier to entry for many local language productions whose budgets are small by Hollywood standards. In China, the current number one local film of all time, Lost In Thailand – which did not have studio involvement – was made for $3.1M and has gone on to take over $200M locally. Then there’s the Village Roadshow Pictures Asia co-produced Journey To The West, which was made for under $20M and has paralleled Lost In Thailand’s success. Fox International Productions distributed Journey in Taiwan, Vietnam and Malaysia where it is one of the highest-grossing films of all time. Fox International has made three films in China including Tony Chan’s 2010 Hot Summer Days and the director’s 2011 Love In Space which cost $4M and grossed $12M locally. The studio is eyeing more.

In Japan, the average cost of a film is $5M and many gross over $50M. Last year, the market share for local pics was about 35% 65%, but Warner Bros. Entertainment Japan president Bill Ireton tells me, “The pie is a moving target if you have big U.S. product” coming out. Warner Bros. is most active of the studios in Japan where the production model involves a consortium often made up of a local TV network, a distributor, an agency and a digital promotion partner like Yahoo. There may also be a comic book publisher in the mix. The local production initiative for Warner, says Ireton, is driven by the in-country P&L; “Whatever gets picked up overseas is all ancillary.”

Warner’s recent films in Japan include Takeshi Kitano sequel Outrage Beyond which it released there for a small piece of the equity. It also developed last year’s hit action drama Rurouni Kenshin and worked with the Amuse talent agency which reps star Takeru Sato. Amuse has a video distribution company, so it took sell-thru and Warner kept rental. “The profit flows back into the consortium pari passu,” Ireton says. On the upcoming Japanese slate are Takashi Miike’s Cannes competition title Shield Of Straw, and Sang-il Lee’s remake of Clint Eastwood’s Unforgiven, which is eyeing a September release.

Fox International, whose second local Korean film, Running Man, has grossed about $10M since its early April release, is also active in Japan. It backed Dragonball Z: Battle Of Gods which is still on release and has taken about $28M so far to make it the second biggest homegrown film of 2013.

In India, Fox is now making eight local films per year. India is such an upside-down territory from a U.S. perspective that Avatar grossed $20M, but a local Fox movie, Bol Bachlan, made $30M. In a bit of synergy, the studio recently released Hindi film Murder 3, a remake of its own local-language Spanish film La Cara Oculta. (Fox also works across Latin America and last week it boarded the upcoming Amapola, a reimagining of A Midsummer Night’s Dream from Oscar-winning art director Eugenio Zanetti.)

Disney has been involved with local productions in China inlcuding High School Musical China and Trail Of The Panda and in India with Do Dooni Chaar, Once Upon A Warrior and Zokkomon. It also has a strategic stake in Indian producer UTV which made last year’s hit Barfi!. The Hollywood studio does some local pick-ups and is open to other local language production opportunities, but is largely focused on its branded tentpoles. Similarly, Paramount has put a big emphasis on the global event performance of its Hollywood titles since moving its focus away from co-productions in the past few years. But Viacom 18 Motion Pictures, a joint venture between Paramount owner Viacom and India’s Network 18, is active in India where it recently co-produced Bollywood 100th anniversary movie Bombay Talkies.

GERMANY
Germany is proving to be a highly worthwhile territory. Fox released Matthias Schweighöfer’s $5M comedy Schlussmacher (The Break-Up Man) in January, and it’s now the third highest grosser of the year with about $25M in takings. A U.S remake is in development.

Warner Bros. Germany has a multi-picture deal with Til Schweiger, the hitmaker behind the Kokowaah and Rabbit Without Ears movies. The studio is also in bed with Schweighöfer’s Pantaleon Films via a four-picture deal. Warner Germany head Willi Geike says the studio and its partners are making money. There’s a share in the copyright, although the local production company will have the majority of the equity on about 6-to-10 co-productions per year with budgets of 6M-9M euros ($7.9M-$11.8M). Comedy is the biggest focus. “It’s tough to compete with big budget action genre or horror” from the U.S., says Geike. Warner aims to grow in Germany by 10% per year, but Geike allows that there have been some movies that didn’t work, notably last year’s Zettl from director Helmut Dietl. “Expectations were high and weren’t met,” he says.

Sony is also in development on projects in Germany – along with Russia and China. The studio last year collaborated on Die Vampirschwestern (Vampire Sisters) and Yoko, both of which performed well. In Russia, it opened Vysotsky, Thank God I’m Alive in December 2011 which became a top 10 title.

SPAIN
In Spain, local market share usually hovers around only 12%. “The market is small, but if you can capture a good chunk of that you’re doing well,” contends Warner Spain managing director Pablo Nogueroles. The studio is investing in and distributing about 4-7 local titles a year, plus what it gets from Burbank. With the Spanish economy in dire straits and a hike on value added tax on movie tickets, Warner Bros.’ strong position has made it a preferred partner for local producers. Its upcoming local pics include comedies La Gran Familia Espanola; Tres Bodas De Mas and thriller Tres-60.

Notably, last year Warner Bros. had a huge Spanish hit with awards season contender The Impossible. Juan Antonio Bayona made that movie in English, but it was still considered a local picture and became the country’s highest-grossing homegrown film ever at about $55M.

Also in English-language local films, Universal’s international division backed recent horror hit Mama as a Spanish/Canadian co-production and took distribution in the U.S. and most overseas territories. It often makes a small investment in P&A and takes some recoupment in home entertainment, plus a little equity in the rest of the world. It’s active in such territories as Spain, France, Germany, Argentina, Brazil, Mexico and China where it was a co-financier on Journey To The West, taking distribution outside greater China, Singapore and Australia/New Zealand.

ITALY & FRANCE
In Italy, where Italian pics take about about 35% of the market, Warner Bros. recently co-produced Giuseppe Tornatore’s English-lingo hit The Best Offer. Warner Italy chief Barbara Salabe says being in English helps a film break out, but she contends that the first consideration is Italian box office. There is a lot of competition in Italy where the leading Italian producers are Medusa and Rai who have access to TV money and strong distribution arms. But a renaissance of commercial Italian cinema throughout the 2000s, gave Warner a “good opportunity to get into the business,” says Salabe. She comes in at script stage or to develop a project and is “very seldom” just the distributor. “We are co-producers.” Upcoming, the studio is co-producing Ages Of Love director Giovanni Veronesi’s L’Ultima Ruota Del Carro and Welcome To The South helmer Luca Miniero’s Un Boss In Salotto.

France, which has one of the strongest local industries in Europe, is not the easiest of countries in which to work locally. Warner Bros. found this out the hard way when it structured Jean-Pierre Jeunet’s 2003 Amélie follow-up A Very Long Engagement as a French movie via local production company 2003 Productions. Despite all the elements of the film being French, France’s state film body balked at allowing it to access local subsidies because it considered 2003 Productions to be backed by Burbank. The system in France, which some would say is generous to a fault, allows for inflated budgets – a sore point in the local industry of late. A U.S. producer says, “I could make a French movie tomorrow, but I never would spend what French producers would because they’re spending government money. I’d spend $8M and they would spend $22M… Protection in France has changed the entry point.”

Warner’s Richard Fox says the studio may not be as aggressive in France as it is elsewhere because of the restrictions, but he still wants to be able to dip into the 40% share that local films enjoy. That’s “a lot of admissions and revenue.” Warner Bros. released The Artist locally in 2011. It has a long-standing relationship with Artist producer Thomas Langmann and also a development deal with director Lisa Azuelos. Iris Knobloch, president of Warner France, says the studio has about 4-to-6 slots to fill with local product per year and generally comes in once a project is finished, paying an MG and collaborating with producers on theatrical, video and digital. A 100% co-production “is not something we’re doing,” she says. But, “that doesn’t prevent us from accompanying projects before and providing input and knowhow.”