Hong Kong's Golden Harvest Entertainment has signed a deal with developer China Resources Holdings to open a 12-screen cinema in the MIXc shopping mall in Shenzhen, southern China.

The first phase of the development, including seven screens and around 1,200 seats, is expected to open by Christmas next year. The second phase should be completed by mid-2005 or 2006. Shenzhen, which has a population of around five million, is immediately across the border from Hong Kong.

Golden Harvest recently sold its two existing mainland cinemas, both located in Shanghai, and withdrew from a third Shanghai development due to open early next year. However the sites were small and had no strategic importance in the vast mainland market, according to Golden Harvest managing director CK Phoon.

'If you want to remain competitive in China in 10 to 20 years time you must make provision for something big. We wanted to be part of this [Shenzhen] development, simply because it enables us to build a flagship,' said Phoon.

Golden Harvest aims to strengthen its distribution network in overseas Chinese markets. The company owns cinemas in Singapore and Malaysia and is understood to be in talks to acquire Warner Village in Taiwan.