Paramount Pictures has entered into a “co-operation agreement” with CCTV’s China Movie Channel and Jiaflix Enterprises on the production of Transformers 4 in China.

Under the terms of the deal, signed April 1, the Chinese partners will help Paramount secure filming locations in China, cast local talent and help with post-production and theatrical marketing. Michael Bay is again returning to direct the film.

The two Chinese companies will also invest an undisclosed amount in the film and receive a share of box office. Under Chinese regulations, only China Film Group or Huaxia Film Distribution can legally distribute foreign films in China.

Paramount can apply for official co-production status, which would exempt the film from China’s revenue-sharing import quota, at a later time.

Transformers 4 is expected to be released in China on or around June 27, 2014. 

The Transformers films have all been huge hits in China with the last installment, Transformers: Dark Of The Moon, grossing $165m to become one of the top five highest-grossing films ever in the country.

China Movie Channel is a state-owned entity under broadcaster CCTV and regulated by China’s State Administration of Radio, Film and Television (SARFT). This deal marks the first time that it has been involved in a US or indeed any Western production.

Jiaflix is a privately owned online distribution company founded by Sid Ganis, Marc Ganis and Kenneth Huang. It has a deal with Paramount under which the studio will supply 250 films a year to the video streaming partnership between Jiaflix and China Movie Channel’s

US studios and independents are aggressively pursuing partnerships with Chinese companies and state-owned entities as the country’s box office is exploding and it became the world’s second biggest theatrical market with a final tally of $2.74bn last year.

However, Beijing-based DMG Entertainment jumped the gun a few years back when it announced that Looper and Iron Man 3 would be made as US-China co-productions. The move appeared to irk the Chinese authorities, which denied full co-production status to the two films. Under Chinese regulations, co-production status is only officially conferred when the completed version of the film passes censorship.

DMG recently announced that it had cooperated with Marvel Studios on Chinese elements in Iron Man 3 but decided not to pursue co-production status.

Commenting on the China Movie Channel and Jiaflix, Paramount vice chairman Rob Moore said: “We are excited by and grateful for the opportunity to work with China Movie Channel and Jiaflix Enterprises on the production and promotion of Transformers 4. We see this relationship as a reflection of the global power and appeal of both this unique franchise and Michael Bay’s talents as a filmmaker.”

“China Movie Channel and our official movie web-site have been long termed trusted partners with Jiaflix,” said China Movie Channel chairman Yan Xiaoming. “We have been working together in the field of importing Hollywood movies for Chinese television and internet, including Paramount movies, as well as introducing Chinese movies to the North America market and are very delighted with the results we have accomplished together.”