The study aimed to investigate the environment and competitiveness of Taiwan’s film industry and to provide recommendations for the industry and academia. Porter’s “Industry value chain” was used as the main research method to understand the environment of four main sub-industries in film industry: production, post-production, distribution and exhibition industries. The study also analyzed Taiwan’s film industry competitiveness with Porter’s “Diamond” system. The study further discussed the opportunities and barriers in mainland China and a contrastive analysis was performed to understand the consequences of the implementation of CEPA in Hong Kong film industry, in order to clarify Taiwan film industry’s competitive strength as well as the opportunity and threat of signing ECFA. Through discoveries and conclusions made from this study, suggested strategies and implications are given to Taiwan's film industry for future development in China market.