This is from a foreigner's own experience.
I am thoroughly convinced that using films is an excellent way of teaching in China. I am presently teaching three film courses.
For language teaching they have several advantages
1. They present more natural language than can be found in most readings in Chinese textbooks.
2. They give students lots of context which helps them to learn how to use context in listening.
3. The students love them, so they are highly motivating.
There are problems, of course
1. You have to choose films that are culturally appropriate and that present language at a level that is accessible to the students you are teaching.
2. You have to overcome the students' tendency to "read smart and view dumb," that is their tendency to see films as entertainment rather than as learning texts.
3. You have to overcome the students' belief that they have to understand every word to understand. Maybe we should call this extensive listening as opposed to intensive listening.
4. You have to teach the films rather than simply show them. How you teach them depends on the students' level and the purpose of your course.
I agree with what some other people have said -- that contemporary films sometimes have problems with slang and cultural references that are difficult for students and not very useful for their language learning. Try some older films. Look over the 100 best list published last year. I have had good experiences with Alfred Hitchcock (Rear Window, North by Northwest), One Flew Over the Cuckoo's Nest, Stagecoach, American Graffiti, Groundhog Day, Forrest Gump, Blade Runner (advanced), Searching for Bobby Fisher, Witness, High Noon, Dances with Wolves and others. They all know about the list, but don't let them talk you into The Graduate or Pulp Fiction. Woody Allen is mostly incomprehensible except for The Purple Rose of Cairo, which is excellent for teaching. Physical as opposed to verbal humor is good. They love Groundhog Day and Nine to Five because they get the jokes. Both have deeper levels of meaning that make for good discussions. Among new films The Truman Show is good. Accessible and interesting cultural content.
Any film that involves going to or being in an unfamiliar place is good because the students can identify with the characters difficulties in understanding language and culture. Starman, E.T., and Witness fall into this category and are all good choices. The mentally retarded are good because they use simple language and other characters struggle to make them understand. Forrest Gump, Rain Man.
They are always after me to show the latest films. I tell them I am a teacher and not a PR agent for Hollywood. Then I show them an old film and make them love it. Once they have had that experience they settle down.
Linell's cardinal rules for teaching with movies
1. Never show a 2-hour film in a 2-hour class. Always multiply the viewing time by at least 2 when planning your lesson. A two hour film requires 4 hours of class time - or more, depending on what you do with it. Plan ahead for pauses. If you don't your students will succumb to the hypnotic effect and become passive viewers. You don't expect to read a story in one sitting, so there is no reason to expect to view a film in one sitting.<
2. Tell students that film is the great art form of the 20th century. They can and should learn to read a film just as they learn to read a book. Visual literacy is as essential as language literacy. We live in an age of images. They need to become intelligent viewers of images, etc. etc. etc. That is, tell them that they are training their minds and eyes as well as their ears.
3. Give them some knowledge of the art of filmmaking. Introduce vocabulary (as needed for particular films) such as genre, chase scene, shoot out, documentary, nonfiction feature film, flashback, fade, camera angle, etc. Ask questions such as, what clues did you get in the first 5 minutes that this film is a comedy?
4. Encourage students to make connections: I organize film viewing around themes. For second year students I am showing films on the theme of identity, because at their age it is a relevant issue. For 3rd year students I am doing a course in genres. I select two or three films in one genre and help them compare. I am also teaching a course in "American culture through film" for another university. I choose films that show changes in American society from the 50's to the present.
5. Stay active and keep the students active. Plan the lesson with the same attention to purpose and student participation as you would any other class.