Laws of the People's Republic of China

the State Administration of Press and Publication, the Ministry of Foreign Trade and Economic Cooperation

Decree of the State Administration of Press and Publication and the MOFTEC of the PRC

No.18

The Measures for the Administration of Foreign-Invested Books, Newspapers and Magazines Distribution Enterprises, as passed at the 3rd Administrator's Meeting of the State Press and Publication Administration on December 17, 2002 and at the 4th Ministerial Meeting of the MOFTEC on March 7, 2003, is hereby promulgated, which enters into force on May 1, 2003.

Administrator of of the State Administration of Press and Publication Shi Yanyuan

Minister of the MOFTEC Shi Guangsheng

March 17, 2003

Measures for the Administration of Foreign-Invested Books, Newspapers and Magazines Distribution Enterprises

Article 1

In order to expand foreign exchange and cooperation and strengthen the administration over foreign-invested books, newspapers and magazines distribution enterprises, the Measures are hereby formulated according to the Law of Sino-Foreign Equity Joint Ventures of the PRC, the Law of Sino-Foreign Cooperative Joint Ventures of the PRC, the Law of Solely Foreign-funded Enterprises of the PRC, the Regulation on Administration of Publication of the PRC and the relevant laws and regulations.

Article 2

The Measures are applicable to the foreign-invested books, newspapers and magazines distribution enterprises established in the territory of the PRC.

The books, newspapers and magazines herein refer to those published by the publishing units approved by the publication administrative department of the State Council.

The distribution business herein refers to wholesale and retail of the books, newspapers and magazines.

The foreign-invested books, newspapers and magazines distribution enterprises herein refer to the books, newspapers and magazines distribution enterprises in the nature of Sino-foreign equity joint ventures or cooperative joint ventures jointly established in the principle of equality and mutual benefits with approval by the relevant department of the Chinese government according to law by foreign enterprises, other economic organization or individuals (hereinafter referred to as foreign investors) with Chinese enterprises or other economic organizations (hereinafter referred to as Chinese investors) and those solely established by foreign investors in the territory of the PRC.

Share-participation or M&A of foreign investors in domestic-invested books, newspapers and magazines distribution enterprises is one of the modes for the establishment of foreign-invested books, newspapers and magazines distribution enterprises. In case of share-participation or M&A of foreign investors in domestic-invested books, newspapers and magazines distribution enterprises, the enterprises shall go through the formalities for conversion into foreign-invested enterprises according to the Measures.

Article 3

The foreign-invested books, newspapers and magazines distribution enterprises to be established with application are limited liability companies or joint-stock companies.

Article 4

In case of undertaking of the distribution business of books, newspapers and magazines, the foreign-invested books, newspapers and magazines distribution enterprises shall abide by the Chinese laws and regulations.

The normal operation and business of foreign-invested books, newspapers and magazines distribution enterprises, as well as the legitimate rights and interests of the parties thereto are protected by the Chinese law.

Article 5

In selecting the sites for operation and business, the foreign-invested books, newspapers and magazines distribution enterprises shall be in compliance with the requirements for urban planning.

Article 6

The administrative department of the press and publication of the State Council and the administrative department of foreign trade and economic cooperation under the State Council shall be in charge of the administration over the examination, approval and supervision of foreign-invested books, newspapers and magazines distribution enterprises.

The administrative department of the press and publication and the administrative department of foreign trade and economic cooperation at and above county level shall in compliance with their function division be responsible for the supervision administration over the foreign-invested books, newspapers and magazines distribution enterprises in their corresponding administrative areas.

Article 7

For establishing foreign-invested books, newspapers and magazines wholesale enterprises, the following conditions should be met:

(1)

Chinese and foreign investors shall be independently capable of civil liabilities in the capacity for undertaking of the distribution business of books, newspapers and magazines, without records of violation of law or breach of disciplines in the past three years;

(2)

The legal representative or general manager shall have obtained the professional qualification certificate for distributors of publications above medium level and the professional distributors shall have obtained the qualification certificate for distributors of publications above primary level;

(3)

Having the fixed business site pertinent to the wholesale business with business area no less than 50m2, and the business area of independently engaged operation site no less than 500m2;

(4)

Registered capital no less than RMB30m; and

(5)

Operation term no more than 30 years.

Article 8

For establishing foreign-invested books, newspapers and magazines retail enterprises, the following conditions should be met:

(1)

Chinese and foreign investors shall be independently capable of civil liabilities in the capacity for undertaking of the distribution business of books, newspapers and magazines, without records of violation of law or breach of disciplines in the past three years;

(2)

The legal representative or general manager shall have obtained the professional qualification certificate for distributors of publications above medium level and the professional distributors shall have obtained the qualification certificate for distributors of publications above primary level;

(3)

Having the fixed business site pertinent to the business;

(4)

Registered capital no less than RMB5m; and

(5)

Operation term no more than 30 years.

Article 9

In case of investment participation with state-owned assets (including capital contribution after pricing or pricing as cooperative terms), the Chinese investors shall go through the formalities for appraisal of the state-owned assets and confirmation (or filing) of the appraisal results in compliance with the relevant state provisions.

Article 10

Prior to establishing the foreign-invested books, newspapers and magazines distribution enterprises, application documents should be submitted to the administrative department of the press and publication of the provinces, autonomous regions, and municipalities directly under the Central Government where the enterprises are located:

(1)

Application for the establishment of the foreign-invested books, newspapers and magazines distribution enterprises.

(2)

Project proposals and feasibilities study report signed by the legal representatives or the general managers of both parties to the investment that have been compiled or recognized jointly by both parties. The project proposals shall indicate the following items:

1.

Names and residential places of investors of both parties;

2.

the name, legal representative, place, business scope, registered capital and total investment of the foreign-invested books, newspapers and magazines distribution enterprises to be established; and

3.

Means of investment contribution by both parties and amount of contribution.

(3)

Business licenses or incorporation registration certification and qualification certification of investors, as well as the valid certification and professional qualification certificates of the legal representatives of both parties.

(4)

In case the Chinese investors of the Sino-foreign equity joint venture or the cooperative joint venture participate in the investment with state-owned assets, the report on the appraisal of the state-owned assets and the documents relating to the confirmation (or filing) of the appraisal results should be submitted.

Within fifteen working days upon receipt of the application documents, the corresponding administrative department of the press and publication of provinces, autonomous regions, and municipalities directly under the Central Government shall put forth opinions on review and examination, which then should be submitted to for examination and approval by the administrative department of the press and publication of the State Council.

Article 11

In submitting the application for foreign-invested books, newspapers and magazines distribution enterprises, the administrative department of the press and publication of provinces, autonomous regions, and municipalities directly under the Central Government shall present the following documents to the administrative department of the press and publication of the State Council:

(1)

the application documents stipulated by Article 10 of the Measures;

(2)

the opinions on review and examination by the administrative department of the press and publication of provinces, autonomous regions, and municipalities directly under the Central Government;

(3)

other documents as specified by the provisions of laws and regulations.

Within thirty working days upon receipt of the application and the opinion on review and examination, the administrative department of the press and publication of the State Council should make decisions on whether or not the approval is granted, which should be notified in writing to the applicant by the administrative department of the press and publication of the provinces, autonomous regions, and municipalities directly under the Central Government, and in case no approval is granted, the reasons thereof should be given.

Article 12

Upon obtaining the approval document from the administrative department of the press and publication of the State Council, the applicant should according to the relevant laws and regulations submit application to the administrative department of foreign trade and cooperation of the provinces, autonomous regions, and municipalities directly under the Central Government where the enterprises are located, with the following documents submitted:

(1)

The application documents specified by Article 11 of the Measures and the approval documents granted by the administrative department of the press and publication of the State Council;

(2)

The contract and articles of association of the foreign-invested books, newspapers and magazines distribution enterprises signed by the legal representatives or authorized representatives of the parties to the investment;

(3)

Lists of the name and certification documents of the directors of the foreign-invested books, newspapers and magazines distribution enterprises to be established;

(4)

Certificate on pre-verification of the name of the enterprises issued by the administrative department of industry and commerce; and

(5)

Other documents specified by the provisions of laws and regulations.

Within fifteen working days upon receipt of the application and the relevant documents, the administrative department of foreign trade and economic cooperation of the provinces, autonomous regions, and municipalities directly under the Central Government put forth the opinions on review and examination, which should be submitted for examination and approval by the administrative department of foreign trade and economic cooperation of the State Council.

Article 13

In submitting the application for foreign-invested books, newspapers and magazines distribution enterprises, the administrative department of foreign trade and economic cooperation provinces, autonomous regions, and municipalities directly under the Central Government shall present the following documents to the administrative department of foreign trade and economic cooperation of the State Council:

(1)

the application documents stipulated by Article 12 of the Measures;

(2)

the opinions on review and examination by the administrative department of foreign trade and economic cooperation of provinces, autonomous regions, and municipalities directly under the Central Government;

(3)

other documents as specified by the provisions of laws and regulations.

Within thirty working days upon receipt of all the documents specified, the administrative department of foreign trade and economic cooperation of the State Council should make written decisions on whether or not the approval is granted, and in case the application is approved, the Certificate on Approval for Foreign-Invested Enterprises should be issued.

Article 14

Within 90 days upon obtaining the approval, the applicant of the foreign-invested books, newspapers and magazines distribution enterprises shall carry the approval documents and the Certificate on Approval for Foreign-Invested Enterprises and go to the administrative department of the press and publication of provinces, autonomous regions, and municipalities directly under the Central Government for obtaining the License of Publication Business. Then the applicant shall carry the License of Publication Business and the Certificate on Approval for Foreign-Invested Enterprises and go to the local administrative department of industry and commerce for obtaining the business license by force of law before undertaking of the distribution business of books, newspapers and magazines.

Article 15

In case the foreign-invested books, newspapers and magazines distribution enterprises established with approval apply for alteration of the investors, registered capital, total investment, business scope, or operation term, corresponding formalities should be handled with for alteration and registration in compliance with Article 10 through Article 14 .

In case of alteration of other items by the foreign-invested books, newspapers and magazines distribution enterprises, application should be submitted for approval or filing by the administrative department of foreign trade and economic cooperation of the State Council State Council in compliance with the provisions of foreign-invested enterprises. In case of alteration of the enterprise name, place, legal representative, principal responsible persons and termination of the operation and business upon the expiration term of the business term of the foreign-invested books, newspapers and magazines distribution enterprises, filing should be made within thirty days with the local administrative department of the press and publication of the provinces, autonomous regions, and municipalities directly under the Central Government.

Article 16

In case of renewal of the business term of the foreign-invested books, newspapers and magazines distribution enterprises upon it expiration, the application should be submitted to the administrative department of foreign trade and economic cooperation of the State Council 180 days prior to the expiration of the business term, and the administrative department of foreign trade and economic cooperation of the State Council shall make written decisions on whether approval would be granted within thirty days upon receipt of the application. And in case of approval granted, filing should be made within thirty days with the local administrative department of the press and publication of provinces, autonomous regions, and municipalities directly under the Central Government.

Article 17

The Measures are applicable to investors from Hong Kong and Macao Special Administrative Regions and Taiwan Area when they establish books, newspapers and magazines distribution enterprises in other provinces, autonomous regions, and municipalities directly under the Central Government of the PRC.

Article 18

In case the foreign-invested books, newspapers and magazines distribution enterprises are designated to online sales, chain operations, reader clubs and other relevant businesses, the formalities should be handled with according to the provisions of Article 7 through Article 14 of the Measures.

Article 19

The Measures shall enter into force as of May 1, 2003.

The provisions in the Measures on the establishment of foreign-invested books, newspapers and magazines wholesale enterprises shall come into force as of December 1, 2004.