Australia's Adelaide Motion Picture Company (AMPCO), Hong Kong's Salon Films and Hengdian Film Productions from China's Zhejiang Province are forming a China-Australia co-production alliance.

The three companies signed a Memorandum Of Understanding in Hengdian in Zhejiang province to shoot three movies starting from December. The first film will be family adventure The Last Dragon.

AMPCO principal Mario Andreacchio will direct the English-speaking film with Sam Neill, Vince Colosimo and Louis Corbett heading the cast.

The Chinese cast is yet to be announced. The film is a contemporary story about an Australian boy who travels to China to visit his archaeologist father andbecomes embroiled inthe legend of a Wei Dynasty emperor and his dragon.

The budget of the film is set between $10m-$20m, according to Fred Wang, principal of Salon Films. Salon and Hengdian will co-finance the film, along with backing from theSouth Australian government and banks in Hong Kong. LA-based Porchlight Entertainment is handling international sales.

The film marks the first project developed on the basis of the co-production treaty between China and Australia which is close to being completed.

'We have set up a major conduit and template for doing co-productions with China and it is structured, ordered and transparent. By working with us and Salon, producers will no longer have to work it out each time,' Andreacchio told Screendaily.

At the press conference, South Australia PremierMike Rann saidmore funding would be available for future co-productionsunder Australia's newproducer offset.

The Last Dragon will be shot in HD, mostly at Hengdian World Studios, the film studio under Hengdian Entertainment.Some of the visual effectswork will take place at the studios of South Australia Film Corporation. Production is tentatively scheduledto start atthe end of this year forrelease in late 2009.

The film also marks the first production of Hengdian Film Productions. Set up in January, 2008, the company is the film production wing of Hengdian Entertainment.

The companywas previously known for its Hengdian World Studios, which has hosted major shoots including The Forbidden Kingdom and The Mummy: Tomb of the Dragon Emperor.

Now Hengdian Entertainment plans to expand into film production, distribution and exhibition. The companyalso owns a cinema circuit witheight cinemas insouthern and easternChinese cities.

Sandy George in Sydney contributed to this report.