HONG KONG — A film mainly shot in funeral parlors and morgues has broken box office records — and taboos — in Hong Kong, surprising even its own stars and demonstrating that the local film industry is down but not out.

Once a powerhouse of Asian cinema, dazzling the world with kung fu epics and crime classics, Hong Kong’s film business has suffered a prolonged decline due to a combination of dwindling resources, tougher international competition and increased political censorship. These factors have contributed to a drop in both the number of local productions and their performance at the box office.