In the interests of opening up and reform, attracting foreign capital, importing advanced technology and equipment, and invigorating China's film industry, the State Administration of Radio, Film and Television, the Ministry of Foreign Trade and Economic Cooperation, and the Ministry of Culture promulgated in October 2000 the Interim Provisions on Foreign Investment in Cinemas. This was executed in line with relevant laws and regulations, including the Law of the People's Republic of China on Chinese-Foreign Equity Joint Ventures, the Law of the People's Republic of China on Chinese-Foreign Contractual Joint Ventures, and the Film Administration Regulations. According to the Interim Provisions, foreign companies, enterprises and other economic organizations or individuals (the foreign partner) are permitted to establish with Chinese companies and enterprises (the Chinese partner) Chinese-foreign equity joint ventures and Chinese-foreign contractual joint ventures in China to engage in the construction and renovation of cinemas and in film projection business. For the time being, wholly foreign-owned cinemas are not permitted in China.
1). Foreign-invested cinemas are subject to the following requirements:
a. They must conform to the planning and overall arrangement of the local cultural facilities;
b. Their registered capital must be no less than 10 million yuan;
c. They must have fixed business (projection) premises;
d. No Chinese-foreign equity or contractual joint venture cinemas shall be named after a foreign film and television (media) business or cinema;
e. The proportion of the Chinese investment in the registered capital of an equity joint venture cinema should be no less than 51 percent. For a contractual Sino-foreign joint venture cinema, the Chinese partner should have the leading operation right.
f. The duration of the Chinese-foreign equity or contractual joint ventures shall be no longer than 30 years;
g. They must conform to the relevant laws and regulations of China.
2). The following procedures shall be followed for the establishment of foreign-invested cinemas:
a. The Chinese party of the joint venture should file an application with the provincial-level foreign trade and economic cooperation department of the locality where the joint venture is to be located and submit the following documents:
(1). Project application;
(2). Legal status and credit status documents of the Chinese partner and documents on the land-use rights of the joint venture cinema;
(3). Legal status document, credit status document provided by a bank and financial status document provided by an accounting firm of the foreign partner;
(4). Notice of approval of the name of the foreign-invested cinema issued by the administrative department for industry and commerce;
(5). Feasibility study report, contract and articles of corporation;
(6). Other documents as required by relevant laws, regulations and the examination and ratification authorities.
b. The locale provincial-level authorities of foreign trade and economic cooperation shall, after soliciting the opinions of the provincial-level film administration, submit its approval to the Ministry of Foreign Trade and Economic Cooperation.
c. After soliciting the opinions of the State Administration of Radio, Film and Television and the Ministry of Culture, the Ministry of Foreign Trade and Economic Cooperation shall carry out an examination in line with the relevant laws and regulations concerning foreign investment, and, upon approval, shall issue an Approval Certificate for Enterprises with Foreign Investment confirming the eligibility of the relevant venture.
d. The approved foreign-invested cinema shall, within one month from the date of receipt of the Approval Certificate for Enterprises with Foreign Investment issued by the Ministry of Foreign Trade and Economic Cooperation, undergo registration formalities with the state administrative department for industry and commerce.
e. When construction or renovation of a foreign-invested cinema has been completed and passed acceptance check by relevant departments, the foreign-invested cinema shall, with its Approval Certificate for Enterprises with Foreign Investment, and its business license, apply with the film administration department of the locale provincial government for a film projection business permit before commencing film projection business.
3). Other stipulations
a. Foreign-invested cinemas shall comply with relevant laws and regulations of China, operate according to the Film Administration Regulations, and be subject to the supervision and administration of the relevant departments of the Chinese government. A permit for public film projection is prerequisite for all films screened. The cinemas are not allowed to show pirated or smuggled films, nor to show videos, VCDs and DVDs for profit.
b. State-owned assets contributed in the form of investment by the Chinese partner in the joint venture shall be assessed according to the relevant regulations of the state-owned assets assessment administration, and reported to the state-owned assets management authorities at or above the provincial level for confirmation.
