In the 1920s and 30s Shanghai served as a magnet for Chinese artists, many of whom had been educated in Japan, Europe or the US. A number of Chinese filmmakers returned from the US and opened several film studious in Shanghai. The movies mostly drew on American models, but frequently also contained distinctly Chinese elements.

In the years 1927-30 a new genre was created in Shanghai in the form of a number of wuxia/martial arts movies containing elements that would once again become fashionable in the 1970s with actors like Bruce Lee, Jackie Chan and others. The development was halted thanks to the Chinese dictator post-1927, Chiang Kai-shek's, personal opposition to this style of movie. Only scattered fragments of early martial arts films survive, all silent movies. The first Chinese sound movie was the 1931 Shanghai film Tian ya ge nü (The Songstress).

The film series Romance of the Western Chamber from 1927 contains a number of martial arts battles. It was made in ten parts as a lead-up to the ”real” full-length feature. Only five of the ten installments have survived until the present day.

Youlian Studios Shanghai's Red Heroine hit theaters in 1929. A restored 94 minute version can still be seen today. It centers on a young girl who is trained and granted magical powers by the mysterious monk White Monkey following the destruction of her village by bandits. In order to avenge the death of her grandmother, she fights the entire gang with a combination of swords and  flying kicks before saving its bikini clad slave girls.