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BEIJING Steering your way through the murky waters of exhibition in China, with its tough regulatory environment and difficult operating conditions, is a difficult task, but it is one the giant screen exhibitor Imax has managed to master more successfully than most.

Imax Corp.’s co-CEO and co-chairman Rich Gelfond says the key to thriving in China is relationship building and being present in the market.

He should know — he made his comments shortly after he formally signed the company’s largest multiple-theater deal in Asia, a link-up with Chinese exhibitor Wanda Cinema Line to install 10 Imax screens in China, Jan. 10.

One or two screens will be ready by the fall, and Imax and Wanda have settled on a few more locations. Imax expects to have 40 screens in China by 2012. These will break down into 26 commercial screens and 14 institutional ones in venues such as museums.

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And the next step is to put local product onto those enormous screens.

“I’m trying to work out a way of taking a Chinese-produced film and turning it into an Imax film to be shown in Chinese-speaking markets, such as China and Taiwan and Singapore. It will be a blockbuster and we’re targeting 2009 or 2010,” he says.

China’s growing middle class has proven ripe for Imax, which has managed to overcome the challenges of the country’s notoriously thorny exhib biz.

Imax has also been canny in its choice of partners in Hong Kong and China. Wanda Cinema Line is the fastest growing exhib in China with 121 screens in 15 locations. The Imax screens are to be installed in new multiplexes in cities including Changsha, Changchun, Beijing, Chongqing and Wuxi.

Last year Imax launched a deal with Lark Intl., which runs multiplexes in Hong Kong under the UA brand, to open Imax cinemas in Hong Kong and in parts of southern China including Guangzhou, Shenzhen, Wuhan and Hangzhou.

Imax has done well in Hong Kong. “Beowulf” grossed more than $49,000 in its first four days in the Lark Imax theater in Hong Kong, quite a take considering it has only 200 seats.

There are 14 Imax screens in operation in mainland China and Hong Kong, of which 12 are on the mainland.

The Chinese appetite for Imax is healthy. “Spider-Man 3” grossed over $620,000 from four Imax screens in Beijing, Shanghai, Wuhan and Dongguan.

China goes to extraordinary lengths to protect and bolster its domestic film business, introducing blackout periods for foreign movies — including a current lengthy one — and curtailing movie runs if they threaten domestic box office. Gelfond says local content is vital.

“You can’t build a business worldwide premised only on releasing Hollywood movies. You have to understand that local content needs to play a role. This also applies to India,” he says.

There’s no doubt China is a good market. Most recent data show there are only 1,325 theaters with just over 3,000 screens in China: an astonishingly low ratio of one screen per 428,477 people. The U.S. has about one screen to 8,000 people.

The first three screens will use Imax’s economical MPX theater technology, the remaining seven its new digital projection technology, and any screens rolled out after 2009 will use digital technology, Gelfond says.