Korea's MK Pictures has signed a memorandum of understanding with China's Eastern Dragon and Beijing Polybona Film Publishingto enter into a partnership encompassing several areas of the film business.

The MOU, signed on Dec 14, coverscollaboration in the construction and management of multiplexes, filmproduction and distribution, talent management and advertising.

Although the mainland China box office was only around one quarter the size of South Korea's last year, MK Pictures said in a statement that "explosivegrowth is expected around the 2008 Olympics" and that "this MOU is the firststep to entering the China market".

"We're planning to activelycarve out markets in China and Asia through continuing partnerships with capable Chineseentertainment companies," MK Pictures said.

Polybona and Eastern Dragonand are both subsidiaries of the state-owned Poly Group which is involved inreal estate, defense products and technologies and the entertainment business.

Eastern Dragon is mostlyfocused on film production while Polybona is involved in both production anddistribution. Founded by former China Film distribution executive Yu Dong in1999, Polybona is one of China's most dynamic new distribution companies and has amarket share of around 25%.

Polybona is also stepping upits involvement in film production and is currently co-producing Wilson Yip's$10m kung-fu action movie, Dragon TigerGate, with Hong Kong's Mandarin Films. The company is also entering themultiplex business and opened its first cinema - a nine-screen complex in Chongqing - last month.

MK Pictures, formerly calledMK Buffalo, was formed by a merger in 2004 between Myung Film (The Isle) and Kang Je Gyu Film (Taegukgi). The company has producedpictures such as Quinzaine entry The President'sLast Bang and also recently launched a distribution arm. Its first release,When Romance Meets Destiny, hasclocked up more than two million admissions.

With the Chinese governmentcurrently drafting new rules per foreign investment in Chinese cinemas, it isunclear as to how great a role MK Pictures might play in the establishment ofmultiplexes, but the deal is anticipated to add power to distribution of MKPictures' films within China.