After Numbers - which he did partly as an assignment for his master's degree in directing at the Taipei National University of the Arts - he made Love Letters in Cyberspace for Taiwan's Public Service Television. His Hong Kong adventure, it seemed, was over.

Two years later, however, Cheng is seated in a cafe in a upmarket hotel in Pusan, again discussing his encounters with several well-known figures in the Hong Kong film industry, among them filmmaker Stanley Kwan Kam-pang, cinematographer Kwan Pun-leung, production designer William Chang Suk-ping, and Jackie Pang Yee-wah, who produced most of Wong Kar-wai's films. This time, however, Cheng is not just a starry-eyed fan recalling chance encounters with his heroes: these are people who have actually worked with - if not for - him on the production of his first feature-length film, Miao Miao.

Not that Cheng has fulfilled his dream of becoming part of Hong Kong's movie-making machine. Miao Miao is a Taiwanese film through and through, with the story set in Taipei and featuring actors from the island (including heartthrobs Fan Chih-wei, Ke Jia-yan and Sandrine Pinna). Rather, it's the Hong Kong film industry that has knocked on Cheng's door. Miao Miao is backed by Jet Tone Films, the studio founded and owned by filmmakers Wong and Jeff Lau Chun-wai. Stanley Kwan - who represents JA Media, the company which co-financed the film - and Pang are joint producers on the film, with Kwan Pun-leung serving as director of cinematography and Chang as its editor.

Taiwanese writer Tsai Yi-fen had already completed the script when Cheng came on board, and the latter admits the schoolgirl-driven story is not something he would have considered his forte. 'Yes it's not exactly a story I would have thought of myself,' he says. 'But Jet Tone came and asked me and I was really surprised. I actually asked them whether they had the wrong person.' After reading the script, which he now describes as 'stirring', Cheng finally agreed after a conversation with his mentor, Taiwanese producer Chen Kuo-fu. 'He told me that not every filmmaker is lucky enough to make something he really wants to do on the first attempt, so I should grab the opportunity while it's there.'

Cheng took the opportunity, but Miao Miao is much more than a novice filmmaker's attempt to cash in on a big break; it's proof of Jet Tone's canny foresight in penetrating an untapped market rich with human and financial resources. 'We started our office in Taiwan about three years ago,' says Pang. 'It was not very common in those days, as all eyes were looking towards the mainland. Though the Taiwan film industry was rather stagnant, we found this market full of potential and possibilities.'

Low production costs are one of the 'obvious benefits' of making films in Taiwan, Pang says.

Another plus is the financial support provided by Taipei's Government Information Office, which offers to fund up to 30 per cent of the total production costs of productions backed by companies registered in Taiwan. This was the impetus for Jet Tone to open a branch office there in 2005 and start shooting some of its films on the island.

The recent success of Cape No7 - which has broken Taiwan box office records with returns surpassing NT$100 million (HK$23.3 million) - brought the situation into sharper focus and highlighted the talent on offer and potential for profit. Pang says the new generation of Taiwanese filmmakers 'reconnects with their audience by displaying their acute sensitivities towards immediate social issues and their diversity in storytelling'. She also says directors are 'not tied down by the market or regulations'. Pang doesn't spell it out clearly, but the lack of stringent rules on what can and cannot be produced has made Taiwan much less of a logistical nightmare than the mainland, where the goalposts are moved so frequently nobody can be sure where the no-go areas are.

Jet Tone, which plans to produce two or three more films in Taiwan, is not alone in capitalising on its potential. Mei Ah and Media Asia have also begun operations there, with the former having already produced Button Man, Chien Jen-hao's film about the individuals who clean up the scene and dispose of corpses after contract killers do their jobs. Set in a sleazy underworld where the cleaners trade the organs they remove from the bodies, it is not a film that could have been made on the mainland.

Meanwhile, Cheng is already thinking of new projects. He studied journalism while in university and says he's interested in making a film that focuses on the profession along the lines of Samson Chiu Leung-chun's News Attack from 1988 and Gordon Chan Ka-seung's 2005 outing, A-1 Headline.

A story about the objective reporting of zealous journalists? Not exactly something that will please mainland censors, but material that Hong Kong producers can fund in Taiwan.

Miao Miao is screening now