Circular on Matters Relevant to the Implementation of the «Tentative Provisions for the Administration of Sino-foreign Equity and Cooperative Joint Ventures that Produce and Distribute Radio and Television Programmes»

(Issued by the State Administration of Radio, Film and Television on February 25 2005.)

On February 25 2005, the State Administration of Radio, Film and Television (SARFT) issued the Circular on Matters Relevant to the Implementation of the «Tentative Provisions for the Administration of Sino-foreign Equity and Cooperative Joint Ventures that Produce and Distribute Radio and Television Programmes» to radio, film and television bureaux (offices) of the provinces, autonomous regions and municipalities directly under the central government. The Circular states that the SARFT and Ministry of Commerce, Tentative Provisions for the Administration of Sino-foreign Equity and Cooperative Joint Ventures that Produce and Distribute Radio and Television Programmes (Order of SARFT No.44) were formally implemented on November 28 2004. With a view to further standardizing the administration of Sino-foreign equity and cooperative joint ventures that produce and distribute radio and television programmes (Joint Ventures), issues that require attention in the course of implementation are hereby set forth as follows:

1. All regions need to fully recognize the importance of standardizing and strengthening the administration of Joint Ventures and practise governance in strict accordance with the law. Permitting the establishment of Joint Ventures is necessary in order to intensify the reform of the radio and television industry, further expand the scale of China's programme production industry and improve programme production capabilities and standards and it is also required in order to further increase the international market share and influence of China's radio and television programmes. Additionally, it must be recognized that the radio and television programme production industry has a strong ideological component, therefore, it is imperative, when introducing mature operation concepts and methods from foreign programme production markets, to firmly control the ideological content of the various types of products produced by Joint Ventures and be aware of the political leanings and backgrounds of foreign partners in order to prevent the infiltration of undesirable thinking and culture into our programme production sector by way of equity and cooperative joint ventures. The authority to verify and examine the entity, funds and reputation of a potential partner shall be exercised in strict accordance with laws and regulations. Long-term interests may not be ignored for the sake of short-term benefits.

2. The authority to conduct preliminary examinations of Joint Ventures shall be duly exercised so as to ensure that the examination and approval of Joint Ventures is conducted in a compliant and orderly manner. The examination of the qualifications, funds, contracts, reputations, corporate logos and other such conditions of applicants shall be duly conducted in strict accordance with the Order of SARFT No.44. Furthermore, in the course of actual work, attention shall be paid to adhering to the following principles:

(1) Foreign partners must be professional radio or television enterprises, including radio stations, television stations and professional film and television programme production organizations. Among the domestic partners, one party shall be an organization that produces and distributes radio or television programmes or one that produces television dramas. Domestic broadcasting organizations, such as radio stations, television stations, etc., may not cooperate with foreign organizations in establishing Joint Ventures.

(2) Given that Joint Ventures have only recently been permitted and with a view to avoiding the wastage of resources and to promoting rapid brand creation by Joint Ventures, pursuant to Item (1) of Article 6 of the Order of SARFT No.44, foreign partners to Joint Ventures whose establishment has been approved and Joint Ventures whose establishment has been approved by SARFT may not, in principle, apply to establish a second Joint Venture. Under exceptional circumstances, an application can be made for a second Joint Venture but only if the local provincial level radio and television administrative department first explains the special circumstances to SARFT for its examination and SARFT gives its consent.

(3) Pursuant to Item (7) of Article 6 of the Order of SARFT No.44, if any of the parties among the Chinese applicants has a Permit to Produce and Distribute Radio or Television Programmes or a Television Drama Production Permit (Type A), it shall not have a record of improper conduct, such as a warning given, a notice of criticism circulated or a suspension of its production qualifications imposed by the radio and film authority at or above the provincial level during the three years preceding the application date. If less than three years have elapsed since the issuance of the relevant applicant's Permit to Produce and distribute Radio or Television Programmes or Television Drama Production Permit (Type A), it may submit the application for a joint venture only after three years have elapsed.

If a party among the Chinese applicants does not have the qualifications either for a Permit to Produce and Distribute Radio or Television Programmes or a Television Drama Production Permit (Type A), it shall not have any record of violations of the law or regulations with the local administration for industry and commerce, tax department or other departments during the three years preceding the application date. If less than three years have elapsed since the registration of its legal person organization with the administration for industry and commerce, it may submit the application for a joint venture only after three years have elapsed.

The foreign partner shall not have any record of unfriendliness toward China during the three years preceding the application date.

(4) If a Joint Venture is to produce television dramas, it is required to apply for and obtain a Television Drama Production Permit (Type B) by the procedure specified in the Provisions for the Administration of the Production and Distribution of Radio and Television Programmes (Order of SARFT No.34). Regardless of whether a Chinese partner to the Joint Venture is an organization with a Television Drama Production Permit (Type A), if television dramas are to be produced in the name of the Joint Venture, a separate application for a Television Drama Production Permit (Type B) needs to be made in accordance with provisions.

(5) If the existing legal person organization of a partner to a Joint Venture undergoes a change, such as de-registration, closing down, etc., thus requiring a change to the existing entity that serves as a partner in the Joint Venture or in the Joint Venture's equity structure, the same shall be reported in accordance with Article 10 of the Order of SARFT No.44 to the Joint Venture's examination and approval authority for examination and approval. If the entity serving as a partner in the Joint Venture or the equity structure of the Joint Venture is not changed, the procedures for the de-registration of the Joint Venture shall be carried out.

(6) If a joint venture motion picture production company established with the approval of SARFT, or another type of Sino-foreign equity or cooperative cultural joint venture established, before the issuance and implementation of the Order of SARFT No.44 engages in the production and distribution of radio or television programmes, it must carry out examination and approval procedures in accordance with the Order of SARFT No.44.

(7) If a domestic organization with a Permit to Produce and Distribute Radio or Television Programmes or a Television Drama Production Permit (Type A) intends to transfer shares or equity to a foreign organization or to seek financing abroad, thereby changing its equity structure, it must carry out examination and approval procedures with reference to the Order of SARFT No.44.

3. The routine administration of Joint Ventures shall be strengthened so as to ensure the healthy development of such Joint Ventures. Special attention shall be paid to the following points in the course of work:

(1) SARFT or the provincial level radio and television departments authorized by it shall strengthen their vetting of the topics and content of programmes produced by Joint Ventures and duly supervise whether Joint Ventures carry out their various business activities within their approved scopes of business. The various types of programmes produced by Joint Ventures shall be administered as programmes produced in China. It is strictly forbidden to import foreign channels or various types of programmes and claim that they were produced by a Joint Venture.

(2) Information on the programmes produced and distributed (including those distributed abroad) each year by a Joint Venture shall be reported to the local provincial level radio and television department for the record by January 31 of the following year. If, among the total number of programmes it produces in any year, its radio or television programmes that deal with Chinese topics do not meet the 2/3 requirement, it shall be given a warning. If it fails to satisfy the specified requirement for three years in succession, its qualifications to produce and distribute programmes may be suspended and it shall be required to take genuine measures to effect rectification. Once such conditions as the topics selected for its programmes, production plan, funding, etc. can ensure the satisfaction of the requirement to produce 2/3 or more of programmes that deal with Chinese topics, its operational qualifications will be restored. The provincial level radio and television authorities shall report on their examination of the production performance of Joint Ventures to the Social Administration Department of the State Administration of Radio, Film and Television for the record by February 15 of each year.

(3) Joint Ventures may not participate in the operation of the frequencies and channels of domestic radio and television stations. If it is discovered that a domestic radio or television broadcaster, ostensibly as a Joint Venture, has handed over the operation of its frequency or channel to a foreign organization or is operating the same in cooperation with a foreign organization, the radio and television department at the provincial level or above shall resolutely put a halt to the same. If the circumstances are serious, the necessary administrative punishment shall be imposed on the concerned organization in accordance with the Regulations for the Administration of Radio and Television.

(4) The operation and management of a Joint Venture shall be steered by the Chinese party and the powers and rights of the Chinese party may not be entrusted or delegated to the foreign party.

4. The administration of Joint Ventures is a completely new task for radio and television departments. In the course of actual administrative work, radio and television departments must perform their government duties transparently by clearly announcing to the public the substance of their duties, including their administrative duties, the specific departments that accept applications, their work procedures, the approval deadlines and supervision mechanisms, etc. When new circumstances are encountered in the course of work, the department concerned shall promptly communicate with SARFT and request instructions so as to resolutely prevent such phenomena as policy arbitrariness or different policies being practised by different departments, etc. from arising. The good image of a reputable government governing in accordance with the law shall be established through conscientious and strict administration and by continuously improving administrative work standards.