Xinhua was founded and controlled by Shankun Zhang(张善琨), who had previously worked in the Peking opera scene.
By 1934, Zhang had made enough money to create his own movie studio named "Xinhua" or "New China.
"[1] Zhang proved to be an excellent promoter, and within three years, Xinhua had transformed from a minor newcomer to a major industry player.
As a result of Zhang's business dealings, Xinhua managed to produce twenty-four films in 1939 alone, making it the largest production company in Shanghai.
[3] By 1942, however, Xinhua was folded into the Japanese-controlled Zhongguo lianhe zhipian gufen gongsi (China United Productions Ltd. or Zhonglian for short); the result of a Japanese orchestrated merger between Xinhua and eleven other Shanghai studios under Japanese film producer Kawakita Nagamasa [ja].