Warner Bros. Creates Chinese Prod. Co.

The new production company, Flagship Entertainment Group, was announced as Chinese president Xi arrives today for his first state visit to the U.S.

China is the world's second-largest theatrical market, with box office sales of $4.82 billion in 2014, according to

The Hollywood Reporter

. (U.S. box office in 2014 was $10.3 billion.)

The joint venture is designed to capitalize on this rapidly growing market as well as the increasing demand for Chinese-language movies around the world. The partners also plan to use the new entity to deepen the cultural exchange between China and the U.S. as they look to share technical expertise and develop young Chinese talent.

“We look forward to working with CMC in this exciting new venture, as we gain additional insight into the Chinese film industry,” says Kevin Tsujihara,

Flagship Entertainment will be owned 51 percent by CMC–with Hong Kong broadcaster TVB holding 10 percent of the CMC-led consortium–and 49 percent by Warner Bros. The company will be headquartered in Hong Kong, with offices in Beijing and Los Angeles.

The first titles from the new company could be released as early as 2016 and will be distributed globally by Warner Bros.

"With the proliferation of platforms available to consumers, premium content is more valuable than ever,” says Ruigang Li, founding chairman, CMC. "This partnership with Hollywood’s most iconic studio will bring Warner Bros.’ deep experience in creative storytelling and unparalleled expertise in producing global titles to China’s film industry. It will also further CMC’s commitment to building a premier platform for making films that resonate with both Chinese and worldwide audiences, helping to enhance the cultural exchange between China and the rest of the world.”