The first two parts of “Kung Fu Panda” brought the DreamWorks studios more than $600 million each worldwide only from ticket sales. The studio announced it started work on “Kung Fu Panda 3” which will be co-produced in China and released in 2016.

DreamWorks Animation announced it has closed a deal with Chinese partners to launch a new joint venture and co-produce “Kung Fu Panda 3”. In fact, for the most part, “Kung Fu Panda” 3 will be produced in China, joining “The Expendables 2” and “Iron Man 3”.

It’s the birth of a new trend in Hollywood movie producing. If “The Expendables 2” and “Iron Man 3” have already started the collaboration with Chinese partners in Shanghai, “Kung Fu Panda 3” will be the first major Hollywood animated film to get the same treatment.

“We have formed what we think is a very valuable strategic partnership to make world class feature animation” said Katzenberg of the deal to produce “Kung Fu Panda 3” in China. “We’re very confident that the creative talent exists here in China. We’ve very enthusiastic about building a studio” the chief executive of DreamWorks Animation said.

The actual company that will produce “Kung Fu Panda 3” is a new joint venture called Oriental DreamWorks. Jeffrey Katzenberg, chief executive officer of DreamWorks Animation, said the venture will invest some $3.1 billion in the construction of an entertainment center in Shanghai. His goal is to have the Shanghai entertainment center rival Broadway in the United States and West End in UK.

Katzenberg added Shanghai is “an incredible metropolis”. It “has many beautiful aspects to it but it doesn’t have that sort of cultural, entertainment center to it, and that’s what sort of got us started on this idea” said DreamWorks’ CEO.  The Shanghai entertainment center will be a “celebration of great theater, great art, great culture, great music, all in one place”.

DreamWorks Animation’s plan to produce “Kung Fu Panda 3” in China is great news for Hollywood. Not only did ticket sales rose 35 percent in China last year, but it gives the studio access to a market that is limited. China allows only 34 foreign films to be screened each year, so co-producing a movie within its territory might help expand that number.