Lu Xun , the father of modern Chinese literature, was very fond of woodblock-printed letter paper. He often went to Rongbaozhai to buy their letter paper. Scholar Zheng Zhenduo, who was to become a deputy minister of culture after the founding of the PRC, shared Lu Xun's fondness for the special paper.

But in the 1930s, the letter paper industry was in decline, in large part because of the political and economic upheaval China was suffering at the time.

Lu Xun and Zheng Zhenduo were afraid the art of printing decorative letter paper would disappear altogether so they collected as many samples as they could and compiled them into the Collection of Decorative Letter Paper in Peking. They entrusted Rongbaozhai with the job of publishing the book. In the following year, Rongbaozhai printed the Collection of Shizhuzhai Decorative Letter Paper.

In printing these compilations, Rongbaozhai was also able to collect the techniques of woodblock watercolor printing, which established a firm foundation for further development.

Zhang Daqian, together with his family and students, went to Dunhuang in 1941 to study the frescos in the Mogao Grottoes.

During the next two years, Zhang copied 276 frescos. Despite repeated offers to buy his work, Zhang Daqian, who lived by selling paintings, would not sell anyone the copies of the Dunhuang frescoes.

Rongbaozhai manager Wang Renshan, already a friend of Zhang's, suggested that the shop could try to copy the paintings using woodblock watercolor printing. The results surprised Zhang Daqian, who delightedly sent copies of the prints to his friends.

When Tian Yongqing created the prints of the Dunhuang fresco paintings, he also created a transition to a new stage of woodblock print art.

After the founding of the People's Republic of China, Zheng Zhenduo and other intellectuals helped Rongbaozhai to become a public-private joint ownership company. Many famous painters and artisans worked with the new company to help develop the art of woodblock watercolor printing.

The first color film produced by Wenhua Film Studio was a documentary focusing on the woodblock watercolor printing of Rongbaozhai.

The detailed accuracy of Rongbaozhai's woodblock print copies of paintings could frequently fool even the sharpest eyes.

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