The US$30-million facility, which will be managed by R.R. Donnelley, will start operation later this year in the city, printing high-quality telephone directories, books and magazines.

Prior to China's entry into the World Trade Organization, foreign-funded printing companies were allowed to print packaging material. However, as there were no specific rules on media printing for the overseas-funded ventures, several joint ventures on China's mainland have for years also printed magazines for Chinese media outlets.

"This joint venture will provide new opportunities for Chinese publishers to develop their business and for Western publishers to expand into China," said William L. Davis, chairman, president and chief executive officer of R.R. Donnelley.

Both companies declined to say how much R.R. Donnelley will invest in the joint venture and what percentage of the new company it will own. Under Chinese law, foreign investors are not allowed to own more than 49 percent of a media-printing company.

Regulations on foreign-funded printing companies in China were very murky prior to January when the government announced new rules opening the package- printing sector up to wholly owned foreign enterprises and allowing overseas investment in the media- printing sector for the first time.

"Surely, the government wants to do something to further activate the media publication market," said an official at the State Press and Publication Administration, who declined to be identified. "We're receiving more applications from overseas companies, such as German-based Bertelsmann."

Currently, China has about 180,000 printing firms, generating 150 billion yuan (US$18 billion) in revenue a year, according to industry sources. But per capita consumption of printed material in China is only 1 percent of consumption in many developed nations, such as Germany.

The government, however, is weary of allowing foreigners to much access to the media sector.

"Currently, the government still limits the number of foreign-invested companies (in the media sector) as it needs to keep a balance between industry development and the rising influence of foreign culture," said Yin Yijian, an analyst with Shenyin & Wanguo Securities.

(eastday.com June 11, 2002)