Disney and Marvel made a deal with Chinese company DMG Entertainment to co-produce the film.
In the past director Shane Black denied rumors that The Mandarin is the antagonist in the third flick, stating that the character is a racist caricature. As true as it may be, it didn’t stop people from initially thinking that recently cast Sir Ben Kingsley would portray The Mandarin. The news of China being one of the shooting locations only strengthens the rumor.
The Mandarin is one of Iron Man’s greatest enemies, but the name is ridiculous. Nonetheless, the character would make a great villain for the third movie. Especially since Jon Favreau was setting The Mandarin up as the villain in the previous films. Black just needs to give him a different name and it’d be perfect.