Taiwan can stake its claim as the gay movie capital of Asia in 2007. Internationally, its position was crowned in February when lesbian drama Spider Lilies won the Teddy Award for best feature at the Berlin International Film Festival. At home, the three local releases of the year to date have all had a gay theme with Lilies becoming that rare thing, a Taiwanese box-office success.

Opening on March 30, Zero Chou's Spider Lilies scored $71,000 (t$2.4m) on its opening weekend at four theatres in Taipei, double the opening box office of groundbreaking gay fantasy Formula 17 in April 2004. After 12 days on release Lilies has grossed $173,700 (t$5.7m), overtaking the second highest-grossing local film at the box office in 2006, gay coming-of-age drama Eternal Summer.

Part of Spider Lilies' box-office success can be explained by a rapid release after its Berlin win. Tsai Ming-liang's more conventional The Wayward Cloud grossed more than $300,000 (t$9.9m) - $500,000 (t$16.6m) nationwide - when it opened a month after winning a Silver Bear at Berlin in 2005. His latest, I Don't Want To Sleep Alone, is struggling to make $30,000 (t$993,000) in Taipei after a gap of six months since its Venice premiere.

While gay films in Taiwan have traditionally made stars out of new faces, the box office for Spider Lilies was boosted by the casting of popular idols, Taiwan's Rainie Yang and Hong Kong's Isabella Leong. In her first leading role, Yang's fanbase helped Lilies take 10,000 advance ticket sales in a promotion with a local convenience store.

Just as the boom in mini-theatres in Tokyo in the early 1990s made independent (gay and straight) Japanese cinema more commercially viable, recent Taiwan cinema has benefited from the support of the Galaxy Cinema in western Taipei under booker Monica Hsu. The theatre alone accounted for 60% of the box office of Formula 17, 48% of the box office of Spider Lilies and 35% of the box office of Eternal Summer.

Unusually, gay films in Taiwan are not necessarily directed by gay film-makers, and tend to overturn traditional stereotypes. One explanation is that directors in Taiwan are among the youngest in the region: Formula 17 was the debut of 23-year-old DJ Chen while Eternal Summer was the second feature by 25-year-old Leste Chen. Young Taiwanese - both film-makers and audiences - are as accepting of different sexualities as their European contemporaries.

Taiwan films also benefit from a classification system as progressive as its filmmakers. Despite a daring sex scene, Eternal Summer was passed uncut for anyone over the age of 12. Elsewhere in Asia, governments are more restrictive. In Hong Kong, Summer was restricted to over-18s only on its release in January; it has received a 21 rating for its Singapore release later this month.

Taiwan has created a fertile ground for gay cinema in the region through a unique formula: open-minded audiences who want to see young people empowered on screen; a progressive censorship system; a bounty of fresh-faced stars; young film directors; access to a key movie theatre; and a steady export market. It is a combination that means the territory may be holding onto its crown for a few more years to come.