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China Eases Restrictions on Foreign Investment in Entertainment

Rebecca Davis 宝安外语协会 2021-07-15

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Foreign investors are now allowed to establish entertainment venues in China without investment restrictions or local partners, according to new legal amendments.


This opens the doors to future wholly-foreign owned cinemas in the world’s largest film market. It also could potentially be big news for U.S. entertainment companies looking to operate theme parks in the country.


Previous rules required them to partner up to form joint ventures with local firms, as did Disney to open its lucrative Shanghai Disneyland theme park and as Universal was obliged to do for its nearly completed theme park near Beijing.


The changes emerge from China’s State Council, the country’s top governing body, via an “amendment and repeal of certain administrative regulations,” and were announced via the country’s ministry of culture and tourism on Monday.


Regulations previously stipulated that foreign investors could only participate in the entertainment venue business via joint ventures or cooperation with local counterparts in which a Chinese party acted as the controlling shareholder. 


Now it states simply that “foreign investors may establish entertainment venues in China in accordance with the law.”


This change in wording appears to further formalize a previous 2019 legal amendment that in principle allowed foreign investors to wholly own cinemas.


The new wording also broadens the policy out to all entertainment venues, not just movie theaters.


The latest development marks the last step in the exhibition sector’s slow opening up to non-Chinese investors.


Before 2000, foreign investors were banned entirely from investing in cinemas. Policies relaxed from 2000 to 2003, when they were allowed to invest up to 49% equity in exhibition firms. 


There was then a trial period from 2004 to 2005 during which foreigners were allowed to invest up to 75% equity in seven pilot cities. That policy was abandoned, however, and foreigners could once again invest no more than 49% up until 2019.


Despite China’s booming movie market, investing in the country’s exhibition sector has not so far proved very attractive to foreign players, few of whom have dipped a toe in its waters. 


The ending of the 2004-05 experiment preceded the withdrawal from China of Warner Brothers International Theaters, which had opened a handful of complexes.


Wholly foreign-owned cinemas would still have to abide by China’s strict censorship rules, and would not be able to screen content without prior approval from government authorities.


Source: Variety



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