Robin Li - founder and CEO of Baidu Inc, China's largest search engine -is getting into film production by establishing a new venture, Aquamen Entertainment, according to The Hollywood Reporter.

Aquamen Entertainment will be based in Los Angeles and the firm's first project will be a $40 million animation feature - Kong, based on the Chinese classic novel Journey to the West, according to the report.

The report also said that the venture will be run by South Korean filmmaker Jeongjung Kim and Chinese producer Gary Zhang.

Kong will be developed in partnership with a South Korean animation studio, but it is still unknown who Kim and Zhang will tap to direct the production, according to the report.

Shao Gang, deputy director of consulting for the culture and entertainment industry at Horizon Research Consultancy Group in Beijing, said the timing of Baidu's move into film production is to be commended.

"It's the right time for companies to consider investing in the content production sector while the big picture of the domestic online video broadcasting channels has almost been set, making it more difficult to exploit profit in the industry," Shao said.

Shao said the need to provide exclusive video content has become "more and more urgent" among online video providers in China.

"There will be a growing trend in the industry for content producers to team up with Internet media operators, as more and more industry insiders have found that content production develops far behind the content distribution platforms," Shao said.

Variety reported on Feb 10 that financing for the project is being assembled and "is expected to include" the Chinese Cultural Chamber of Commerce of the Private Sector (CCCC), a private trade organization formed in May.

In addition to being one of China's wealthiest men, Li - Baidu's CEO - is the president of the CCCC while Zhang serves as vice- chairman.

In November 2012, Baidu purchased a majority stake in iQiyi Inc, a leading online video platform in China. In May of last year, Baidu purchased PPStream Inc's online video business for $370 million to better compete with the country's top online video services provider. PPS will continue to operate as a sub-brand of iQiyi, according to a company statement.

The dominant online video platforms in China include Youku Tudou Inc and iQiyi Inc.

Lindsay Conner, a partner and co-chair of entertainment and media practice at Los Angeles-based Manatt, Phelps & Phillips, LLP, said in a January interview with China Daily that the entertainment industry in recent years has welcomed "increased investing activity between China and the US."

"This trend will grow stronger each year," he said. "Chinese investors looking to diversify their holdings have found excellent opportunities here. There will still be challenges, of course, but I expect Chinese investment in the US to be strong in 2014."

The IT giant reported total revenues of 8.89 billion yuan ($1.45 billion) in the third quarter of last year, up 42.3 percent year-over-year, according to the company's financial reports.

Analysts also said the Aquamen Entertainment deal will boost China's animation features production, which has lagged behind its Hollywood counterparts for a long time.

"Signs have shown that Chinese animated films are improving in quality thanks to the development of technologies and growing investment," said Liu Cuiping, a research manager at EntGroup Consulting, a Beijing-based entertainment industry consultancy.

Five domestic Chinese productions made it to the top 10 list of the highest-grossing animation features last year, with the most successful reaching fourth place, according to EntGroup Consulting.

Contact the writers at huangying@chinadaily.com.cn and jackfreifelder@chinadailyusa.com.

(China Daily USA 02/12/2014 page2)