Provisional Regulations on Foreign Invested Cinemas

Issued: October 25, 2000

Effective: as of the date of issue

Issuing Authority: Ministry of Foreign Trade and Economic Cooperation (MOFTEC), State Administration of Radio, Films and Television (SARFT) and the Ministry of Culture (MOC)

Main Contents: According to the Regulations, wholly foreign owned cinema enterprises are still prohibited in China. Foreign investor(s) may establish a Sino-foreign equity joint venture (EJV) or a cooperative joint venture (CJV) aimed at constructing (or re-building) and operating a cinema with Chinese partner(s). Foreign invested cinemas must be established under these following conditions: (i) in accordance with the layout and planning of local culture facilities; (ii) with at least RMB 10 million of registered capital; (iii) ownership or availability of a fixed operation site for the showing of movies; (iv) the cinema should not be named after a foreign media or cinema line; (v) the Chinese party should own at least a 51% stake in the case of a EJV, or, in the case of a CJV, have the controlling operating rights; and (vi) the term of the cinema shall be no longer than 30 years. The Regulations also set forth the procedures to establish such a cinema, which are very similar to the establishment of a foreign investment enterprise. The differences are that the application for the establishment of the cinema should be approved first by the local provincial level Commission of Foreign Economic Relations and Trade (COFERT) after solicitation of an opinion from the local authority for film administration. Afterwards, the approval opinion should be forwarded to MOFTEC. With joint approval from SARFT and the MOC, MOFTEC will issue a Certificate of Foreign Investment Enterprise to the proposed cinema. In order to lawfully show films, the cinema should also apply for a business license and a license for the operation of film showing from the local authority for film administration.