Following its groundbreaking deal last July to build a circuit of up to 10 cinemas in China in a joint venture with Shanghai Film Group, Warner Bros. International Theatres (WBIT) has agreed a new deal 'in principle' with Guangzhou Performance Co to invest an estimated $30m to build 8 - 10 state-of-the-art multiplex cinemas in southern China over the next few years.
The latest deal is still awaiting government approval, but if it goes ahead, it will see China become a new growth market for cinema services as well as foreign film product. Other exhibitors expected to take advantage of new investment regulations include Loews.
Previously, foreign companies were restricted to a 49% holding stake in joint venture cinemas and only with the approval of local government bodies.
However, in December 2003, China passed new legislation allowing foreign investors to own up to 75% in joint venture cinemas in seven mainland Chinese cities effective from Jan 1 this year.
The seven cities are Beijing, Shanghai, Guangzhou, the southwestern city of Chengdu, the northwestern city of Xi'an, the central city of Wuhan and the eastern city of Nanjing.
According to the new deal between WBIT and Guangzhou Co, the two companies will establish a separate joint venture for each of the new cinemas individually, according to Chinese corporate law. It is expected, however, that new legislation to allow a general holding company to operate across the various Chinese provinces will be established in the future.
WBIT is believed to have even greater plans for the territory, involving other partners - where in addition to bringing cash investment and the crucial elements of the Warner Bros. brand and product - it will additionally act in a management capacity for local cinema developments.
WBIT has made a name for itself in the international exhibition industry as being a pioneer in establishing a modern cinema infrastructure in underdeveloped markets - and crucially - always working with local partners.
The company recently sold its UK multiplex estate to SBC having developed a leading circuit in the territory, in order to pursue its business plan of developing new markets.