After it lost the Communist War in 1949, the KMT (Kuomintang, often referred to in English as the Nationalist Party or Chinese Nationalist Party) government failed to attract film studios when it retreated to Taiwan, while Hong Kong, then a British colony, served as a haven for many filmmakers from Mainland China.
In the late 50s, KMT started to work with the Mandarin-speaking studios of Hong Kong while many filmmakers and actors in Hong Kong, most of whom were originally from Mainland China, adopted Taiwan as their motherland in order to get into the Taiwanese market. For these filmmakers, including King Hu and Li Han-Hsiang, Taiwan offered a work environment which Hong Kong could not provide.
While the Shaw Brothers, the largest film studio in Hong Kong, was more concerned with mass-market taste and box office success, the KMT government, with its substantial financial support and considerable creative freedom, gave Hu and Li the opportunity to pursue their artistic ambition. These Mandarin-speaking directors presented an imagined Chinese world which looked distinctively different from that created by Mainland China and their works in the Taiwanese period, with more philosophical reflection and intellectual ambition, stylistically and aesthetically surpass those made by the Shaw Brothers studio. King Hu in particular created his signature style of wuxia while he was working in Taiwan.