Chinese children love "Pleasant Goat and Big Big Wolf" dolls and do not care whether it's officially-authorized or pirated, but the country's film industry cares.

While a smash hit in China where both cartoon and film industries are still in their fledging stage, the domestic cartoon film "Pleasant Goat and Big Big Wolf" saw minimum revenues in the sale of stuffed toys -- "Goat and Wolf," as well as souvenirs, video games, film-based audio-visual products, books and toys, among other film related products.

Its producer, Liu Manyi, general manager of Creative Power Entertaining, a southern Guangzhou-based animation and film production house, said 90 percent of derivative products from "Pleasant Goat and Big Big Wolf" were pirated.

"The revenue gained by the film's legal products is only one-quarter of that earned by pirated ones," Liu said.

Insiders say the development of China's film industry has been severely affected by piracy, as the most profitable film derivative product market in the country was flooded with fake products.

Further, they estimate that 80 percent of film products in China were pirated and churned out from shabby manual workshops and wholesale markets.

In China, earnings from box office and product placement make up more than 90 percent of a film's total revenues, whereas that part took only 27 percent in Hollywood film productions.

For instance, "Star Wars," the American trilogy blockbuster that debuted in 1977, earned 1.8 billion U.S. dollars in box office, but that's not the end as its derivatives took in another 4.5 billion U.S. dollars.

Also, Disney's 2003 animation movie "Lion King" harvested 780 million U.S. dollars at the box office, and its derivatives, featuring the lion image, collected 2 billion yuan.

But the story is different in China. "CJ7," a 2008 Chinese hit directed and acted by Hong Kong star Stephen Chow, made its protagonist, "qizai" who was a little green alien dog with a wire on its head, extremely popular with children.

The authorized dog doll, for 58 yuan (8.53 U.S. dollars) each, sold very well at the beginning, but the market was soon overwhelmed by fake "qizai," which were sold at a very low price.

Foreign film producers also find great demand in China's hot film derivative market. Last year, "Transformers" fans queued from morning to midnight for the limited version of "Optimus Prime" models when the film made its debut. Sale revenues from the model eventually reached nearly 100 million yuan.

Cai Ling, a research fellow of the cultural sector at the China Investment Consultant (CIC), said the film derivative industry is "a new and fast-growing one" that not only benefits the film industry but the entire cultural industry as well.

"The flow of pirated derivatives will be avoided in a large way if the government should intensify anti-piracy efforts and establish standardized purchasing systems for film derivatives," he said.

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