LONDON (CNNfn) - The Chinese government announced Friday that entertainment industry players must form joint ventures with local companies if they want to tap the country's huge potential.
The move could hit plans by Walt Disney Co. (DIS) to build a new theme park in Hong Kong or Shanghai and dampen interest in parks and movie theaters from other industry players including Universal Studios, owned by Seagram (VO), and Denmark's Lego.
The new regulations come into force on July 1 and expressly forbid overseas investors from developing wholly-owned projects, according to the official Xinhua news agency.
Officials from Shanghai last month urged Disney to build a theme park in the prosperous east coast city. Shanghai is competing with Hong Kong and Kuala Lumpur to host the first Disney park in Asia outside Japan.
Hong Kong officials suggest Disney will make a decision in June, despite the depressed economic climate in the region. The former U.K. colony retains autonomous status since the handover to China in 1997 and it remains unclear whether the investment ban would apply there as elsewhere in China.
While Disney does not wholly own its parks in Tokyo and Euro Disney near Paris, the uncertain business climate in China may make it more difficult to raise outside funding for a China project.
The development of a huge and prosperous middle class along China's coastal strip has attracted entertainment players despite a legacy of hostile trade relations.
Entertainment and technology companies have called on China to intensify its efforts to crack down on illegal piracy of music, video and computer products.
Jack Valenti, chairman of the Motion Picture Association of America, last week proposed expanding the number of U.S. films China allows into the country each year. He said Hollywood would invest millions of dollars to build new theaters if access to the country's movie audiences was opened up.
-- from staff and wire reports