China's Lucky Film Corporation, a long-time rival of Kodak and Fujifilm, became a wholly-owned subsidiary of China Aerospace Science and Technology Corporation (CASC) on Friday.

Lucky Film's merger with CASC is part of China's efforts to restructure its state-owned enterprises (SOEs).

Zhang Jianheng, general manager of Lucky Film, said the deal with CASC will create new business opportunities for Lucky Film as both companies are highly-related in the fields of new materials and new energy and the two firms are complementary in resources.

Founded in 1958, Lucky Film survived as China's only color film material producer and held its own through fierce competition with Kodak and Fujifilm, but the invention of the digital camera drove down profits in the traditional film material industry.

Since 2005, sales of Lucky Film's traditional color film materials dropped by 30 percent annually and contributed to about 1 percent of the corporation's total business revenue.

With some 7,300 employees, Lucky Film saw business revenue shrink to 3.4 billion yuan (532.6 million U.S. dollars) in 2010.

Faced with the industry's downfall, Lucky Film shifted its strategy in recent years toward developing optical thin films, printing materials, optical membrane materials, coating materials, photo chemicals, magnetic products and solar back sheets.

Zhang said after its merger with CASC, which is mainly engaged in developing carrier rockets, man-made satellites, manned space craft and missiles, Lucky Film will maintain its original brand and continue producing color film to meet market demands, particularly in developing countries.

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