Japan's Kadokawa Holdings has made an aggressive move into the Chinese andSouth-East Asian film markets by forming a wide-ranging partnership withIntercontinental Group in Hong Kong.

The tie-up - announced by Kadokawachairman Tsuguhiko Kadokawa and Intercontinental chiefs Terry Lai and Rigo Jesutoday in Hong Kong - covers every stage of the filmedentertainment food chain from production and distribution to cinema managementand multimedia content provision. It also sees Kadokawa take an unspecified majoritystake in Intercontinental.

The deal enables theJapanese giant to gain a foothold in Hong Kong, mainland China and other territories in South-East Asia. "By acting as a kind of liaison or agent forKadokawa, we can expand the market for Japanese content in South-East Asia," said Jesu who runs Intercontinental with his wifeand partner Lai.

He added that, in themainland China market, Kadokawa stands to benefit from theconcessions granted to Hong Kong companies under CEPA(Closer Economic Partnership Arrangement), which entered its third phase thisyear.

Meanwhile, Intercontinentalwill be able to expand significantly following the investment from Kadokawa.The company, which has long been one of Hong Kong's leading distribution and exhibition companies, plans to enterproduction and also build cinemas and launch a distribution outfit in mainland China.

Although details have yet tobe hammered out, the two companies said the partnership covers the followingareas:

Film production - the partners plan to co-produce feature films aimed at the Hong Kong, mainland China and South-East Asian markets, in some cases using material sourced from Kadokawa's vast content archives.

Film and video distribution - Intercontinental will release Kadokawa products in Hong Kong and the partners will work together to expand their distribution network in other territories including mainland China.

Cinema development - Following Kadokawa's investment, Intercontinental plans to expand its MCL cinema chain in Hong Kong from four to ten sites and also work with mainland companies to open ten luxury cinemas in China. A five-screen complex is Shenzhen is already under construction and set to open next April.

Multimedia content - the partners will also work together on internet operations, print publications and mobile telephone content.

The aggressively expandingKadokawa Group has ties to Hollywoodthrough its Kadokawa Pictures outfit and investment in DreamWorks and recentlyformed a similar alliance with Korean giant CJ Entertainment. It also recentlyannounced a joint venture with Hong Kong's Sun Wah Media tobuild 20 multiplex cinemas in mainland China.

Launched in 1969 and one ofthe first companies to import Western films into Hong Kong, Intercontinental isinvolved in promotions, merchandising and internet commerce, in addition to itscore businesses of film and video distribution and exhibition. The company isthe sole distributor for Buena Vista in Hong Kong and also handles video distribution of the remastered Shaw Brothers andFortune Star libraries.