Xinhua Bookstore Head Office will team up with a foreign company and other domestic investors to set up a joint venture later this month.

The new company - Xinhua Publications Circulation and Distribution Co Ltd - will be officially established in Beijing on April 24, Zhang Yashan, director of the general office of Xinhua Bookstore Head Office, told China Daily yesterday.

State-owned Xinhua Bookstore Head Office will peel off its core book distribution business and transfer related assets to the new venture.

Zhang refused to give further details, saying that "all information will be issued at the company's establishing ceremony."A report from the Market News said that Xinhua Bookstore Head Office will be the largest shareholder, owning a 40 per cent stake in the new company.

A United Kingdom-based investment firm called Pacpoly will invest 100 million yuan (US$12 million) in the new company, it said.

A report from the Southern Metropolis Daily said the foreign company, as the second largest investor, will hold 23 per cent of Xinhua Publications Circulation and Distribution Co Ltd.

The other nine shareholders, including State-owned publishing companies and private investors, will hold the remaining 37 per cent of the shares.

The report quoted an official surnamed Cai from the Xinhua Bookstore saying the company had signed letters of intent with its partners last August, but had only got government approval recently.

The new venture eventually aims to get listed on an overseas market, the report said.

The restructuring of the Xinhua Bookstore Head Office has caught the attention of the industry, as the Xinhua Bookstore network, with more than 12,000 outlets around the country, previously monopolized almost 90 per cent of book sales in China.

With its commitment to the World Trade Organization, China has allowed foreign and private investors to engage in the book retail business since May, 2003, and fully opened the book distribution sector in December last year.

With coming challenges from private and foreign companies, Xinhua Bookstore at all levels is seeking further reform and development.

The restructuring of the Xinhua Bookstore Head Office may provide a model for the reform of China's traditional publication sector, analysts said.

(China Daily April 15, 2005)