Warner Music Asia Pacific president Lachie Rutherford today (Dec. 6) confirmed that Warner Music International is setting up a majority-owned distribution joint venture in mainland China.

Warner Music Asia Pacific president Lachie Rutherford today (Dec. 6) confirmed that Warner Music International is setting up a majority-owned distribution joint venture in mainland China.

Rutherford tells Billboard.biz that WMI recently received formal approval from the Chinese government to set up a distribution subsidiary in Shanghai. Hong Kong-based Warner Music China will own a majority stake in the new company, with an unnamed local wholesale firm holding a minority share.

"We will aiming to enhance our new-media capacity in China," Rutherford says.

Industry observers say the move will have a major impact on the way the Chinese music industry is run by bringing it more in line with international business practices.

In the past, non-mainland companies could not own a majority stake in mainland China distribution companies. However, under the Closer Economic Partnership Arrangement, which came into effect at the start of 2004, Hong Kong-based companies are allowed to invest in publishing and distribution services in mainland China.