China planned to tackle the problem of irregular and unauthorized foreign involvement in its closed cable-TV market and singled out Citic Pacific, a Hong Kong listed concern, as an example of a company that would have to be dealt with.
Xu Guangchun, minister at the State Administration of Radio, Film and TV (SARFT), the industry regulator, said overseas companies - including those from Hong Kong, Macao and Taiwan - were forbidden from taking direct equity stakes in mainland cable-TV concerns.
He added that Citic Pacific, a Hong Kong-registered company with a mainland parent, was considered a "genuine Hong Kong company".
Citic Pacific took a 34.9 percent stake in the mainland cable TV network Citic Guoan Information Industry Co in November last year.
He did not elaborate on what steps would be taken to deal with Citic Pacific's anomalous investment in Citic Guoan, but his remarks contrasted with recent reassurances from senior Citic Pacific executives that the company's cable TV investments in the mainland were safe.
Citic Guoan has recently been attracting adverse attention within the mainland's cable TV industry by appearing to challenge some provincial cable companies, such as those owned by the Hunan provincial branch of Sarft.
SARFT has ambitions to build up a nationwide cable TV network of its own and therefore is concerned by the prospect of competition from companies as substantial as Citic Pacific.
Mr. Xu added that Citic Pacific was just one of several overseas companies that had employed unauthorized means to invest in the cable TV industry. "Now we are meeting a lot of new problems - we have to deal with them on an individual basis," he said. "It is going to be a gradual process."
However, one creative foreign investment model that aims to circumvent the ban on direct investment and secure a share of cable companies' revenues was not illegal, Mr. Xu said. The model, being employed by DVN, a Hong Kong-listed company, is to lease equipment to local cable TV companies in return for a share of the subscription revenue. DVN has so far signed contracts with local cable TV stations that give it access to over 30m subscribers. There are believed to be some 90m-100m cable TV subscribers in China. "The general spirit is that any operations [between foreign and domestic entities] should be mutually beneficial," Mr. Xu said.
(Eastday 09/05/2001)
