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MARKET ACCESS ADVISORY
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Global Music Company Seeks Major Presence in China
Situation
A major global media company wanted to access the China market and become the industry leader there.
Challenge
The company's sector was categorized as a "restricted" industry, reducing its possibilities for success if it tried to enter the market through traditional means. There was no foreign player in this sector as yet and no laws or regulations that permitted foreign ownership.
Solution
Regulatory Issues
Our first step was to survey the current regulatory environment and informally canvas our
contacts within the central government to determine what was possible and what was not.
We also partnered with company officials to obtain relevant local licenses and determine
the most effective tax strategies.
Location
Sierra Asia senior executives then researched locations and determined that Shanghai was
the most receptive to the establishment of a foreign sound recording company. While
Shanghai cherished its traditional Chinese music, it also wished to build an entertainment
industry and become a prominent "cultural exchange" center. Because Shanghai was eager to
build its cultural industry, city officials became a strong ally in this venture.
Partner Selection and Relationships.
Through friends in the industry, we met with senior officials within Shanghai's propaganda
ministry, who welcomed our desire to bring the world's largest music company into China.
Senior officials were also pleased at the opportunity to help us find a local partner
closely affiliated with the ministry and to bind the interests of all those involved.
This positive reception paved the way for creation of mutually beneficial relationships within Shanghai's entertainment industry. To launch these relationships, we helped our client understand the cultural nuances of doing business in China and explained to the local government our client's approach to developing local markets. Our principals closely collaborated with the propaganda ministry to meld our approaches into a single approach that would work well in China. In addition, we brought in specialists to record and sell traditional Chinese music in the west, and partnered with a Shanghai investment fund that is the dominant player in the east China CD and music market.
Perhaps most important to our success was that the partners we found were not only key players in their industries and within the government, but were also enthusiastic, open-minded and sophisticated. When we petitioned the central government for licenses, we went as a unified team that included not only our venture partners in Shanghai, but also representatives of the Shanghai Municipal Government.
Most joint ventures that fail do so because relationships among the partners rupture. Out of our long-term relationships with the governments of Shanghai and China has grown a deep bond of trust, which proved critical to the success of our client's venture.
Negotiations
With five major trade negotiations in China under our belts, we were well equipped to advise our
clients on simultaneously forging strategies with their partners and the Shanghai government.
Our knowledge of China and negotiations track record, combined with our client's extensive knowledge
of the music industry and global practices, resulted in contracts that withstood international tests
and conformed to Chinese law and practice.
Approval
After concluding the negotiations, and with strong partners and strong relationships within the
government, Sierra Asia professionals assisted our client in navigating the approvals process. We
made certain that negotiations with the regulators were handled skillfully and that ministries and
agencies, whose assistance would be required in the future, were also brought into the process. We
built enthusiastic support for our client at the top levels of the Chinese government and within
the various bureaucracies.
Operations
Once all licensing, negotiations and approvals were in order, our executives concentrated on finding
creative and legal ways to import depreciated equipment, ultimately saving the joint venture millions
of dollars in the end. We also helped our client find a talented, savvy senior executive to run the
company.
