China's largest private film company has reached an agreement with an unnamed United States company to co-produce and distribute at least 18 feature films by the end of 2017.
The agreement, reached through Huayi Brothers Media Corp's wholly owned US subsidiary, signals that the Chinese entertainment conglomerate aims to increase co-operation with major screen markets globally.
Under the agreement, Huayi will take a direct share of global revenues, profits in proportion to its equity in the films, and the distribution fees. It also retains distribution rights in Hong Kong, Macao, Taiwan and Singapore.
It is the first such formal agreement between a Chinese company and Hollywood and the first time that a Chinese film company will take proportional profits at the global box office.
It will also pave the way for Huayi to make further inroads into the international market and strengthen the operation of its film business.
Movie mogul and Huayi Brothers Media Corp chief Wang Zhongjun said in a statement, "In the future, Huayi will comprise two sections－the stable domestic market and the increasingly expanding international market."
Wei Huan, research manager at entertainment industry consultancy EntGroup, said, "The agreement signals that the Chinese side is seeking new co-operation in a more active way. ...
"The co-production will also help Huayi to gain some 'invisible resources', including Hollywood film production experience, film-star resources and the industrial process of filmmaking."
Record Spring Festival box office takings produced revenue of 4.05 billion yuan ($647.6 million) in February, with China, the world's second-largest market, surpassing that of the US for two consecutive months, according to EntGroup.
Wei said, "The US has a high regard for Huayi's brand reputation, given its traditional advantages and resources as a significant player in the mainstream Chinese film market and its determination on content creation.
"The US also values strong demand in the Chinese market and audience consumption potential for Hollywood blockbusters."
In November, technology giant Alibaba Group and Tencent Inc agreed to invest a combined 2.8 billion yuan ($622.6 million) to raise their stakes in Huayi Brothers Media Corp. Ping An Insurance Group and Citic Construction Co have also raised their stakes in the company.
Shares in Huayi Brothers rose by 1.83 per cent in trading on Tuesday.