A new round of competition is expected to emerge in China's upmarket printing sector with the arrival of one of the world's largest media conglomerates, Germany's Bertelsmann. Chairman and chief executive Thomas Middelhoff last week signed a letter of intent with two mainland partners to form a printing joint venture in Shanghai, clearing the way for one of the mainland's largest printing companies. Bertelsmann already has built the mainland's largest book club network, with 1.5 million members. The printing arm it is setting up will diversify its publication business. It will hold half the joint venture while partners Shanghai Packaging Group and Shanghai Printing Group will have the other half. The first phase of investment is US$29 million. The project will provide printing services for books, magazines, newspapers and packaging materials businesses under the management of the German firm. Industry experts expect competition in the sector to heat up. There are only a handful of foreign companies in the restricted sector allowed to print books, magazines and newspapers. 'Foreign firms are allowed to form joint ventures with mainland partners to operate printing business, but Beijing has limited the scope of printing business for those foreign companies by restricting the number of publication printing licences,' Hong Kong-listed Leefung-Asco Printers Holdings chief finance officer Steven Lo Kin-cheung said. His company and Hung Hing Printing hold licences to print publications. Hong Kong company C&C Printing also holds a licence to run a printing factory with mainland partners. Mr Lo expected cash-rich Bertelsmann would be a competitive player in the growing mainland industry. Leefung-Asco had about 40 per cent market share in the mainland's colour magazine printing business with more than 100 titles. Revenue from mainland book sales last year was 37.7 billion yuan (about HK$35.33 billion). A mainland publisher said between a quarter and a third of sales involved printing cost, giving a clue to the market size. Analysts said the German media giant had found a way of getting a slice of the cake by investing in hardware printing operation rather than in the software content business. Beijing recently tightened control over the media by banning non-state funds from investing in media companies. But it has pledged to open retail and wholesale distribution outlets. There were expectations of a relaxation in the printing business. During the past seven years, Bertelsmann has been the most aggressive foreign media firm chasing a foothold in the mainland book-sales sector. Since 1997, it has been mailing books to its club members nationwide. In 2000, it launched a mainland version of Amazon.com's online bookstore - BOLChina.com.