China Media & Entertainment Law Report : China Media Lawyer & Attorney : Reed Smith Law Firm : Entertainment, Sports & Consumer Rights Law

The WTO released a landmark decision ordering China to ease some of its curbs on imports of American popular culture, noting that Beijing was breaching international trade rules by blocking foreign-owned companies from acting as importers and wholesalers of printed material and certain A/V products. The WTO found that China was requiring foreign companies to distribute their publications and A/V products through state-owned companies in violation of commitments to open the sales and distribution market in China and to treat foreign-owned companies similarly to domestic companies. The WTO Dispute Panel also ruled that China was in violation of its trade obligations because of the prohibition on foreign companies directly offering to Chinese consumers the ability to download music their computers and cell phones. The Dispute Panel ruled in favor of China in finding that (i) China’s criminal law was sufficient to deter piracy, and (ii) the requirement that foreign films be distributed through designated entities was consistent with existing trade rules.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In an effort to address issues hindering development of the audio-visual industry in recent years, on July 20, 2009, the General Administration of Press and Publication (“GAPP”) promulgated “Several Opinions Concerning the Promotion of Healthy and Orderly Development for China’s Audio-Video Industry”. The Opinions included 26 articles outlining the industry’s development and focus, industry policy on mergers and reorganization, financing, and cross-industry cooperation.

 Key points noted in the Opinions include:

• The promotion of corporative reform: A/V publication houses affiliated with higher learning institutions and local governments, excepting non-profit organizations, are asked to execute reforms before the end of 2009. Institutions affiliated with central government departments are required to complete the transformation before the end of 2010.
• Encouraging the establishment of A/V groups: Audio and video institutions with similar business scope are encouraged to establish joint trans-industrial and trans-regional companies, ultimately establishing three to five large comprehensive A/V groups and 10 to 20 distinct and specialized companies within three years.
• Restructuring of some A/V institutions: Large state-owned newspapers and publication groups are encouraged to incorporate A/V enterprises into their operations via acquisition.
• Establishment of a creative industry base: Beijing, Shanghai, Guangdong and other regions with competitive audio and video enterprises are encouraged to set up music and creative industry bases or parks.
• Digital transformation: Companies are encouraged to diversify publication channels through cooperation with telecom and network operators.
• Expand sales channels: A/V companies are encouraged to establish sales chains in supermarkets, shopping malls, gas stations, airports, restaurants, tourist spots, kiosks etc.

The Opinions also provide comments on preferential tax policies, revisions concerning regulations for audio and video products, and a crackdown on pirated items, pornography, and illegal publications.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In April 2009, the General Administration of Press and Publication (“GAPP”) released a set of opinions on publishing reform initiatives that establish timelines for increased privatization of the government-run industry. The “Guiding Opinions on Further Advancing the Reform of the Press and Publication System” (“Opinions”) provided the following key areas for reform work:

(1) Promoting the conversion of for-profit press and publishing agencies into enterprises and rebuilding them as market players

The Opinions require, before the end of 2009, the conversion to enterprises of for-profit press and publishing agencies of higher learning institutions and local governments that publish books, audio-visual products, and e-products. Conversion of central government publishing agencies is to be completed before the end of 2010. Non-profit press and publishing agencies are not subject to these requirements.

(2) After conversion, emphasis will be placed on promoting reorganization, while also accelerating the development of key media and publishing enterprises and strategic investors

The Opinions encourage the use of private investment to support the conversion process, especially by large State-owned enterprises. Publishers, in particular cross-regional businesses, that have satisfied all relevant requirements, are strongly encouraged to raise funds through public listings. The Opinions also set forth the goal of building, with government support, six or seven publishers in 3-5 years that have projected total assets and turnover exceeding ten billion yuan.

(3) Guiding the development of non-State-owned press and publishing studios and increasing publishing productivity

The Opinions recognize non-State-owned press and publishing studios as a boost to China’s cultural industries as a whole, and encourage their development in various forms in accordance with current regulations. The Opinions encourage non-State-owned publishing companies to cooperate with State-owned companies via capital investment and project cooperation.

(4) Deepening external exchanges and actively exploring the overseas market

The Opinions encourage domestic publishers to develop in overseas markets, including Hong Kong and Macao, by sole investment, joint venture, and/or cooperation.

Publishing Industry: History of Recent Reforms

In 2004, Chinese government authorities began initiating reform of the press and publication industries aimed at converting publishing agencies into for-profit enterprises and increasing private investment in the industry as a whole. Among the then existing 527 state-run publishing houses, only People’s Publishing House was to remain public while all other publishers were to be converted into for-profit enterprises.

In April 2005, the State Council issued “Several Decisions Regarding Non-publicly-owned Capital Investments in Cultural Industries”, which officially permitted non-publicly-owned capital investment in the cultural industries field, including investment into the publishing industry.

In October 2008, the State Council released guidelines related to the conversion of cultural for-profit institutions into enterprises and the support of cultural enterprises.

In 2008, GAPP, the Propaganda Department of the CPC Central Committee, and the Ministry of Finance released the “Notice on State-owned Asset Management in the Process of the Transformation and Restructuring of a Central Publisher,” aimed at preserving the value of State-owned assets invested in national-level publishers during the restructuring process.

In early 2009, the Chinese central government released its “Stimulation Plan for Cultural Industries,” indicating the government’s intent to develop cultural industries over a two to three year time span. As such, emphasis will be placed on fostering key cultural enterprises, planning public listings of cultural enterprises, and establishing bases for cultural industries. In July 2009, the Stimulation Plan was approved in principle by the State Council.

In March 2009, Liu Binjie, head of GAPP, revealed that a graded evaluation system would be applied to Chinese media agencies based on economic profitability, with less competitive media enterprises merging with larger groups. At present, more than 10 newspaper groups are preparing for public listings, with a total of 49 newspaper groups expected to gradually be listed.

Beijing Publishing House Group Restructured

Beijing Publishing Group Co., Ltd. (BPG), established on May 28, 2009, was formed by the restructuring of the Beijing Publishing House Group (BPHG) from an institutional organization into an enterprise. BPG was incorporated under the Company Law as a wholly state-owned company with the Beijing government as the sole shareholder. As part of the restructuring, BPHG was deregistered as a legal entity. A total of 28 publishing houses have now undergone reclassification from public institutions into for-profit corporations. Future plans call for only 4 public publishing institutions to remain under the ministry-level supervision, with the remaining 148 publishing entities all slated for enterprise reform.
 

• Email This
• Print
• Comments
• Trackbacks
• Share Link