Inception starring Leonardo di Caprio. Photo / Supplied
A Hollywood-China movie production venture that plans to make big budget films for worldwide audiences has been cleared for an infusion of US$220.5 million ($288 million) from an unlikely source - a construction company.
Shareholders of Hong Kong's Paul Y. Engineering on Tuesday approved the investment in the joint venture that is also aimed at China's increasingly lucrative film market.
The construction firm, which says it wants to diversify and thinks the movie industry has strong growth potential, is taking a 50 per cent stake in the production company, Legendary East, in exchange for the investment.
"Diversification into some unremarkable business is totally useless. Profit margin would be low, risk high," Paul Y. chairman James Chiu said.
"We decided to seek an innovative growth avenue."
After the deal, Hollywood production house Legendary Entertainment will have a 40 per cent stake while China's Huayi Brothers Media Corp will have 10 per cent.
Legendary Entertainment has produced global blockbusters including Inception and the two Hangover movies while Huayi releases include the hit Feng Xiaogang disaster epic Aftershock, the kung fu drama Shaolin and the Tsui Hark fantasy epic Detective Dee and the Mystery of the Phantom Flame.
Paul Y. executives promised to leave the movie making to the experts.
"What we're bringing to the table is, practically, cash," deputy chairman Tom Lau said.
"We do not understand the business of motion pictures nor do we pretend that we can contribute" anything more than money.
Legendary and Huayi executives will control the film development and approval committees "completely", Lau said.
The Hong Kong-based venture, which was announced in June, plans to make one or two big budget movies a year starting in 2013 for worldwide audiences that are also commercially viable in China.
The movies will be mainly in English and feature themes based on Chinese history, mythology or culture.
Beijing-based Huayi will distribute the movies inside China while Warner Bros will handle international distribution.
Movies produced by the partnership will be allowed to bypass Chinese import restrictions that effectively limit the country to about 20 foreign blockbusters a year.
Chinese box office takings surged 64 per cent to US$1.5 billion in 2010 and are expected to grow 30 per cent this year to US$2 billion.
Legendary East said in August its first film, The Great Wall, will be directed by Edward Zwick and look at how the Great Wall of China came to be built.
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