Beijing and Los Angeles-based DMG Entertainment will co-produce Iron Man 3 with Walt Disney Co and Marvel Studios.

Under the terms of the co-production agreement, DMG will invest in the film, manage the Chinese co-production process and jointly produce the film in China.

DMG announced the co-production deal at a press conference in Beijing today (April 16).

In addition, DMG and Disney Greater China will establish a strategic partnership in film production and distribution, with Iron Man 3 as the first project of the partnership. 

“The co-production of Iron Man 3 in China is testimony to the importance of this audience to Disney and the local industry capability to deliver a blockbuster title,” said Stanley Cheung, managing director of Walt Disney Co, Greater China.

The film is expected to start shooting in the US in May and begin location filming in China in late summer 2012.

Rob Steffens, Marvel Studios general manager of operations and finance, said he was confident Marvel’s stories would work in China, “and adding a local flavor, and working with our new local partner, will enhance the appeal and relevance of our characters in China’s fast-growing film marketplace.”

The total budget of the film and DMG’s investment in the film were not revealed. DMG chairman Peter Xiao said the film will be the company’s biggest investment, “in a film that is costing at least RMB1bb ($158m).”

Xiao said Iron Man 3 will be structured as a US-China co-production with Chinese elements, possibly a Chinese-related story or Chinese character. But it is not confirmed whether there will be a Chinese actor joining the film, starring Robert Downey Jr., Gwyneth Paltrow and Don Cheadle.