Filling the Gap: Foreign Acquisitions in the Publishing Distribution Sector

By Philip Qu and Anna Zichterman, TransAsia Lawyers, Beijing

Equity investment in the Chinese media industry has been off-limits to foreign companies for years. Foreign participation has thus far been limited to contractual-based cooperation, such as copyright licensing deals and media technology transfers, as the main channel into the restricted publishing and broadcasting sectors.  More recently, the People¡¯s Republic of China (PRC) government has changed its tack, allowing for the privatization of, and even foreign investment in, the ¡°commercial¡± aspects of the media industry, including distribution as a first step. 

The Administration of Foreign-invested Books, Newspapers and Periodicals Distributors Procedures (FIE Distribution Procedures)¹ took effect on May 1 2003 as the key piece of legislation governing foreign investment in the publications distribution sector, and outline the application and approval procedures for establishing joint ventures and wholly foreign-owned enterprises in this sector.    Importantly, the measures specifically permit equity investment in an existing domestic enterprise via acquisition, thus allowing foreign investors to take advantage of local brands and the existing infrastructure in the industry.