Foreign Control Allowed in Qualified Sino-Foreign Printing Ventures Under China’s New Demonstration Enterprise Rules

The General Administration of Press and Publication has introduced the Measures for the Administration of National Printing and Reproduction Demonstration Enterprises, creating a framework for recognizing and supporting model enterprises in the printing and replication industry. The Measures came into force on January 1, 2012.

A key change is that Sino-foreign joint venture and Sino-foreign cooperative publication printing enterprises included in the demonstration enterprise list may be controlled or dominated by the foreign partner, replacing the earlier rule that such businesses had to be Chinese-controlled.

The Measures also set a development target: by the end of the 12th Five-Year Plan period, China is to develop about 100 national printing demonstration enterprises and about 10 national optical disc replication demonstration enterprises.

To qualify as a demonstration enterprise, a company must meet eight conditions. These include lawful and compliant operations with no administrative penalties from press and publication authorities in the past three years; key economic efficiency indicators and overall labor productivity among the top of the domestic industry; and profitability in the past three financial audit years.

Other conditions cover advanced key production equipment; R&D spending reaching a certain share of sales revenue; a national- or provincial-level enterprise technology center or R&D institution; no major safety accidents in the past three years; and active green production, with printing enterprises required to meet national green and environmentally friendly printing standards.

Enterprises must also have strong management and technical R&D teams, and the province (autonomous region or municipality) where they are located must offer practical support policies and measures. Many conditions come with more specific numerical targets. To help printing enterprises go global, the Measures set out dedicated application conditions for export-oriented printing enterprises.

Demonstration status is granted through voluntary application, followed by preliminary review, final review and recognition. The General Administration applies dynamic management; enterprises that fail the annual assessment or commit serious violations will have their designation revoked.

According to the arrangement, through recognition, designation, support and promotion, the General Administration aims to optimize the industrial structure, cultivate competitive enterprises, accelerate independent innovation and technological progress, encourage energy conservation and emissions reduction, promote green printing, and guide industrial transformation and upgrading. It recommends that local governments provide support and rewards to recognized demonstration enterprises.

The industrial support policy is particularly noteworthy: Sino-foreign joint venture and Sino-foreign cooperative publication printing enterprises, other printed matter printing enterprises, or read-only optical disc replication enterprises recognized as demonstration enterprises may be controlled or dominated by the foreign party, but the Chinese party's proportion or equity interest must not be less than 30%. This breaks the previous Chinese-control requirement. Industry observers said at the time that 2012 marked the 10th anniversary of China's WTO accession, and the policy further expanded China's openness to foreign investment. In project funding, the General Administration gives priority to industrial development projects and development funds for recognized demonstration enterprises.

On management measures, recognized demonstration enterprises may, when taking on commissioned printing or replication of overseas products, have approval procedures appropriately simplified based on actual management needs to improve approval efficiency.

In selection and awards, recognized demonstration enterprises are given priority under equal conditions. This article is based on a report from China Packaging Network (pack.cn); original link: http://news.pack.cn/show-362115.html