Newsletter
NEW RULES ON FOREIGN IN-VESTED BOOKS, NEWSPAPERS AND PERIODICAL DISTRIBUTION ENTERPRISES
To promote the development of the distributive trades, and to fulfill its WTO accession com-mitments, the PRC is gradually relaxing controls on cultural and news products, and replacing current controls with appropriate market regu-latory mechanisms. In line with this policy ori-entation, on 17 March 2003 the PRC State Council's Central Administration of Press and Publishing and the Ministry of Commerce jointly promulgated the Measures on Administration of Foreign Invested Book, Newspaper and Peri-odical Distribution Enterprises, which took ef-fect on 1 May 2003. The introduction of the measures provides a feasible route for foreign and Taiwanese investments in PRC's book, newspaper and periodical distribution enter-prises.
The measures contain detailed provisions con-cerning the timing, conditions and scope of the opening of the RPC book, newspaper and peri-odical distribution market, and the procedures for the review of investment applications and for the registration of investments. The measures distinguish between wholesale and retail distri-bution, imposing different conditions for in-vestment and envisaging different timescales for their liberalization. In broad terms, because of the more far-reaching impact of wholesale business, higher investment thresholds are im-posed than for retailing. For example, the minimum registered capital for an investment in wholesale business is RMB30 million, and the business premises must exceed a certain floor area. In terms of timing, foreign and Taiwanese investors may invest in retail business since 1 May 2003, but are not allowed to invest in wholesale business until the end of 2004.
Another noteworthy feature of the measures is that the scope of permitted business includes online sales, chainstore operations and readers' clubs, thus giving foreign and Taiwanese inves-tors scope for relatively flexible business opera-tions. Conversely, however, the measures also limit the operating freedom of foreign and Tai-wanese investors in various ways. For example, the legal representative or general manager of a foreign - or Taiwanese-invested enterprise, and its personnel responsible for publication, must possess qualifications issued by the PRC au-thorities.
In terms of approval and registration procedures, a foreign investment in a book, newspaper and periodical distribution enterprise must first be reviewed and approved by the press and pub-lishing authorities and the foreign trade authori-ties, and the relevant certificates and licenses issued, before application for a business license may be made to the local industry and commerce administration where the enterprise is to be lo-cated.