New partnerships in China depart from equity joint-venture structures

Eastman Kodak's conclusion of a landmark US$490 million deal to take control of three mainland state-owned film producers brings to a close one of the most contentious mainland foreign investment negotiations in recent memory.

Kodak will partner with Shantou Era Photo Material Industry Corp and Xiamen Fuda Photographic Materials Co through the creation of a limited-liability firm, Kodak (China) Co.

The US manufacturer will simultaneously partner with a third photographic enterprise - Wuxi Aermei Film and Chemical Corp - through the formation of a second limited-liability partnership, Kodak (Wuxi) Co.

The partnership arrangement gives Eastman Kodak control of the three mainland producers, through an 80 per cent shareholding stake in Kodak (China) Co and a 70 per cent interest in Kodak (Wuxi) Co.

Kodak's paid-in capital participation in the two companies amounts to $380 million, but company officials said that the firm was considering additional investments during the next several years which would raise its mainland investment to about $1 billion.

Monday's deal also gives the US manufacturer an exclusive central government guarantee that Kodak will remain the only foreign, sensitised-goods producer allowed to invest in mainland film manufacturing during the next four years.