The venture, China Film Shougang GDC Technology Digital Cinema Construction Ltd, plans to build 700 digital cinema screens in China by the end of the year.
China Film will have a 51% stake in new company, while Shougang Group will hold a 49% share.
Shougang Group is also the holding company of digital cinema provider GDC Technology. Shougang's Hong Kong subsidiary, Shougang Holding HK Ltd, owns 75% of the stocks of GDC Technology.
The investment of the new venture is estimated at $103m (RMB800m), according to China Film Group chairman Han Sanping. 'And we hope to make the number of digital screens in China reach 2,000 by the end of 2008,' he said.
There are currently 200 digital screens in China which accounted for nearly 10% of total box office grosses in 2006, according to statistics from China Film Group.
GDC Technology began co-operating with China Film Group in 2001 when the corporation began to develop a digital cinema chain. Currently, more than 95% of the digital screening facilities in China are provided by GDC Technology.
The joint venture also marks another step forward into the cultural and entertainment industry for Shougang Group. The 80-years old iron and steel industry state-owned enterprise acquired majority shares of GDC Holdings in 2004, through its Hong Kong subsidiary Shougang Concord Grand (Group) Ltd.
It is also the holding company of Beijing-based entertainment company Concord Creation International, which invested in 2006 hit Crazy Stone and Susie Au's Ming Ming, starring Zhou Xun.
According to Wang Chinghai, CEO of Shougang Group, the group's business in Beijing City is gradually shifting from engineering to the cultural industry, which is a new direction following a government policy to move heavy industry out of Beijing city.