Several of China's largest publishing and distributing giants have joined hands in investing in Xinhua Publications Distribution Group Corp, which was officially founded on Friday in Beijing.

Partner companies include Xinhua General Bookstore, one of China's largest book wholesalers, and China National Publications Import & Export (Group) Corp. Both companies are members of the China Publishing Group.

The State Postal Bureau, another partner of the new Xinhua Publications Distribution Group Corp, has taken the lion's share in newspaper and magazine distribution in China and has established a gigantic distribution network across the country.

The new company is viewed as China's answer to the fierce competition likely to come in the industry.

While foreign capital is not permitted in the book publishing sector, it is allowed in the distribution sector.

Since May this year, foreign investors have been allowed to sell newspapers, magazines and books in the local retail market. The wholesale market will be opened in December 2004.

The entire distribution sector should be fully liberalized within five years, to accord with China's World Trade Organization (WTO) commitment.

Dozens of foreign companies, including international big names such as German media conglomerate Bertelsmann AG, are already getting set to dig gold in the Chinese market, which is a great attraction because of its immense size.

Combining China Publishing Group's leading edge in book publishing and the State Postal Bureau's distribution network, the newly established Xinhua group is expected to be able to handle the competition after China' s entry into the WTO.

The most urgent job for Xinhua, according to Song Xiaohong, a member of the board of directors, is to restructure the partner companies' current resources.

The long-term objective, Song said, is to become the leading player in the distribution sector with 20 to 25 percent of market share.

(China Daily September 15, 2003)