Kung Fu Panda creator Dreamworks Animation SKG Inc plans to build a production studio in Shanghai with some of China's biggest media companies, a landmark deal that gives the company a foothold in one of the largest untapped markets for Hollywood.

The California-based animation studio behind Shrek agreed to form a joint venture with China Media Capital, Shanghai Media Group and Shanghai Alliance Investment Ltd. The deal was announced while Chinese Vice President Xi Jinping was visiting Los Angeles and wrapping up a U.S. visit.

The new family entertainment company will develop and produce Chinese animated and live-action content for distribution within China and around the globe, Dreamworks said in a statement on Friday.

The company also will pursue live entertainment, theme parks, mobile, online, interactive games and consumer products, a model similar to media giant Walt Disney Co .

Our goal is, for five or 10 years from now, to have the leading family-branded entertainment company in China, Dreamworks Animation Chief Executive Jeffrey Katzenberg said in an interview.

It's a pretty significant opportunity for us given the vast Chinese market for entertainment, he added.

The agreement gives Dreamworks Animation far greater access to audiences in China, where foreign-made films are now limited.

The Chinese companies will hold about 55 percent of the new studio, and Dreamworks Animation will own about 45 percent. It will initially be funded with cash and intellectual property valued at $330 million, the companies said.

The new studio will be called Oriental Dreamworks and will launch business operations in Shanghai later this year.

The venture's first animated feature film is planned for 2016, Katzenberg said. The studio likely will release one animated feature per year in 2016 through 2018 with the goal of increasing to two per year. A live-action movie could come out within two years.

Consumer products and live entertainment also could provide short-term revenue opportunities as soon as this year, Katzenberg said.

The Dreamworks Animation film Kung Fu Panda 2, released last year, was the highest-grossing animated movie in China with ticket sales of about $100 million.

The new studio's logo features a panda sitting on a crescent moon with a fishing poll, replacing the boy in the traditional Dreamworks logo. The moon is red, replacing the white moon that Dreamworks uses in the United States.

Other film studios, including Relativity Media and Legendary Entertainment, have also made deals to establish operations in China to reach the country's large market.

Shares of Dreamworks Animation rose 0.9 percent to close at $19.52 on Nasdaq.

(Reporting By Lisa Richwine; Editing by Gerald E. McCormick and Matthew Lewis)