(Order 20 of the Ministry of Culture of the People's Republic of China and the Ministry of Foreign Trade and Economic Co-operation

At present the Administrative Measures of Chinese-Foreign Co-operative Audio-Video Products Distribution Enterprises is promulgated and shall come into effect as of January 10, 2002.

Sun Jiazheng, Minister of Culture of the People's Republic of China

Shi Guangsheng, Minister of Foreign Trade and Economic Cooperation

December 10, 2001)

Article 1 The Administrative Measures of Chinese-Foreign Co-operative Audio-Video Products Distribution Enterprises (hereinafter referred to as Measures) is enacted in accordance with laws and regulations including the Law of the People's Republic of China on Chinese-Foreign Contractual Joint Ventures, and the Administrative Statute on Audio-Video Products, with the view of expanding foreign cultural exchange and economic co-operation, and strengthening management on foreign co-operative audio-video products distribution enterprises. 

Article 2 The Measures shall apply to all Chinese-foreign co-operative audio-video distribution enterprises established within the territory of the People's Republic of China.

A co-operative audio-video products distribution enterprise referred to herein means an enterprise jointly established on basis of equity and mutual benefit, with the approval from relevant authorities of the Chinese Government, by foreign enterprises, other economic organizations or individuals (hereinafter referred to as foreign co-operators) and Chinese enterprises, other economic organizations (hereinafter referred to as Chinese co-operators) dealing with wholesale, retail or lease business of audio-video products.

An audio-video product referred to herein means an audio tape, a video tape, a record, an audio CD or a video CD with content in it.

Article 3 A Chinese-foreign audio-video products distribution enterprise shall comply with relevant laws and regulations to transmit thoughts, morals, science and technology, and cultures and knowledge contributing to the economic development and social progress.

Article 4 The legal business activities of a Chinese-foreign co-operative audio-video products distribution enterprise and the lawful rights and interests of all co-operative parties shall be protected by laws of China.

Article 5 The Ministry of Culture and the Ministry of Foreign Trade and Economic Co-operation (hereinafter referred to as MOFTEC) are responsible for the examination, approval, supervision and management of Chinese-foreign co-operative audio-video products distribution enterprises. Cultural administrative authorities and foreign economic and trade administrative authorities of local governments above county-level shall, according to their respective share of functions and responsibilities, perform routine supervision and management of the Chinese-foreign co-operative audio-video products distribution enterprises.

Article 6 The establishment and development of Chinese-foreign co-operative audio-video products distribution enterprises shall comply with the audio-video market development planning.

Article 7 The Chinese and foreign co-operators shall have the ability to hold an audio-video products distribution enterprise, assume civil liabilities independently, and leave no record of violation of laws for the three consecutive years previous to the application.

Article 8 The establishment of a Chinese-foreign co-operative audio-video products distribution enterprise is subject to the following requirements:

(1)   It shall acquire a status as an independent legal person;

(2)   It shall comply with requirements the State set for the establishment of an audio-video products distribution enterprise;

(3)   It shall possess capital corresponding to it scale of business;

(4)   The Chinese co-operators shall possess a share of rights and benefits no less than 51% of the total of the cooperative enterprise ;

(5)   The co-operative period shall not exceed 15 years.

Article 9 A Chinese-foreign co-operative audio-video products distribution enterprise applying for audio-video products chain business or selling audio-video products through internet shall first be approved according to relevant regulations on chain business or internet business of audio-video products distribution enterprises.

Article 10 If a Chinese co-operator takes state-owned assets as a co-operative qualification, it shall be approved by its upper-level state-owned asset evaluation administration, which shall, in accordance with relevant regulations on the evaluation of state-owned asset, appoint a evaluation agency to carry out asset evaluation on the state-owned asset to be taken as a co-operative qualification. The evaluation result shall be approved by state-owned asset administration of provincial level or above.

Article 11 The establishment of a Chinese-foreign co-operative audio-video products distribution enterprise shall go through the following procedures:

(1)   Chinese co-operators of the Chinese-foreign co-operative audio-video products distribution enterprise to be established shall make an application to the cultural administration of the province, autonomous region, or municipality directly under the leadership of the Central Government where it locates, which shall, when approved after examination, be submitted to the Ministry of Culture for approval. The Ministry of Culture shall make a decision approving or disapproving the project within 60 workdays, with a written explanation for disapproval.

(2)   Within 6 months after the approval of a project from the Ministry of Culture, the Chinese co-operator shall make an application of establishing a Chinese-foreign co-operative audio-video products distribution enterprise to the foreign economy and trade administration of the province, autonomous region or municipality where it locates, which shall, when approved, be submitted to the MOFTEC for approval. The MOFTEC shall make a decision on approval or disapproval of the project within 60 workdays, with a Certificate of Approval for Foreign Investment Enterprises when approved, or a written explanation when disapproved.

(3)   Within 30 days since the receipt of the Certificate of Approval for Foreign Investment Enterprises issued by the MOFTEC, the Chinese co-operator shall, on behalf of the Chinese-foreign co-operative audio-video products distribution enterprise to be established, apply for and receive a License for Audio-Video Products Business with the approval document from the Ministry of Culture and the Certificate of Approval for Foreign Investment Enterprises from the MOFTEC.

(4)   Within 30 days since receiving the License for Audio-Video Products Business issued by the Ministry of Culture, the Chinese co-operator shall go through the register procedure in accordance with regulations on industrial and commercial administration and receive a Business License for Corporate Legal Person, with the License for Audio-Video Products Business and the Certificate of Approval for Foreign Investment Enterprises.

Article 12 The Chinese co-operator shall, when makes the application for setting up the project, submit the following documents to the cultural administration:

(1) Application for setting up the project, which shall clearly carry the record of name, address, scope of business, sources and amounts of capital input of the Chinese-foreign co-operative audio-video products distribution enterprise to be established;

(2) A Project Proposal and a Feasibility Report compiled or recognized by all co-operative parties;

(3) Business license or registration certificates, certificates of credit and effective certificates of legal representatives of all co-operative parties;

(4)   (For Chinese co-operators taking state-owned asset as a co-operative qualification) Confirming documents from the state-owned asset administration on the evaluation report of state-owned asset;

(5)   Other materials required by the Ministry of Culture.

Article 13 The Chinese co-operator shall, when making the application for setting up the project, submit the following documents to the foreign economy and trade administration:

(1) An application for setting up the project;

(2) A Project Proposal or a Feasibility Report compiled by all co-operative parties and approved by the Ministry of Culture;

(3) The approval for setting up the co-operative project from the Ministry of Culture;

(4)   A contract and a constitution signed by representatives from all co-operative parties of the Chinese-foreign co-operative audio-video products distribution enterprise to be established;

(5)   (For Chinese co-operators taking state-owned asset as a co-operative qualification) Confirming document from the state-owned asset administration on the evaluation report of state-owned asset;

(6)   Certificates of business or registration certificates, certificates of credit and effective certificates of legal representatives of all co-operative parties;

(7)   The notification of the preliminary approval of the name of the enterprise;

(8)   A list of names of the chairman, vice-chairman and directors of the board of the enterprise, or director, vice-director, members of the joint administrative committee confirmed by all co-operative parties through negotiation;

(9)   Other material required by the MOFTEC.

Article 14 Examination and approval procedures shall be executed in accordance with article 11 of the Measures when involving major changes of the Chinese-foreign co-operative audio-video products distribution enterprise, including changes of investors, adjustment of investors' rights and profits proportion, changes of investment amount, co-operation conditions, scope of business, limit of business years, or establishment of branches.

Other changes of a Chinese-foreign co-operative audio-video products distribution enterprise shall be submitted to the MOFTEC for filing in accordance with regulations on foreign investment enterprises. Changes of legal address, representative, principal, or termination of business on expiration shall be reported to the Ministry of Culture for filing within 30 days.

Article 15 A Chinese-foreign co-operative audio-video products distribution enterprise shall conduct audio-video business within the approved scope of business.

Article 16 The License for Audio-Video Products Business of the Chinese-foreign co-operative audio-video products distribution enterprise shall be audited and examined by the Ministry of Culture once every two years.

Article 17 Chinese-foreign co-operative audio-video products distribution enterprises shall accept supervision and administration of cultural administrations in accordance with China's relevant regulations on audio-video products business.

Article 18 Chinese-foreign co-operative audio-video products distribution enterprises shall accept supervision and administration of relevant administrations in accordance with China's regulations on foreign capital enterprises.

Article 19 A Chinese-foreign co-operative audio-video products distribution enterprise shall not deal in audio-video products with contents prohibited by the State, published by non-audio-video publishers, copied by non-audio-video copiers, imported audio-video products without the approval of the Ministry of Culture, or audio-video products infringing copyrights of others.

Article 20 A Chinese-foreign co-operative audio-video products distribution enterprise shall not deal in import business of audio-video products.

Article 21 Chinese-foreign co-operative audio-video products distribution enterprises established without the approval of the Ministry of Culture and the MOFTEC, or dealing with audio-video products distribution business with foreign capital in other methods, shall be punished by relevant departments of the State, and those responsible shall be investigated.

Article 22 The establishment of Chinese-foreign co-operative audio-video products distribution enterprises by investors from Hong Kong SAR, Macao SAR or the region of Taiwan shall refer to these measures.

Article 23 The explanation of the Measures is subject to the Ministry of Culture and the MOFTEC.

Article 24 The Measures shall come into force as of January 10th, 2002.