Foreign Investment Restrictions on Book

Foreign Investment Restrictions on Book

Distribution and Retailing

Introduction

In Canada, books played an important role in the culture life and education. Research done by McClleand and Stewart in 2006 demonstrated that 75% Canadian read a book last year, while only 25% of American read a book last year. In addition, book is significant in education. High quality books provide useful information to students and general readers. However, due to the limited economies scale and the high distribution cost, Canada book distribution and retailing companies always face some financial difficulties. The small population and the high distributed cost lead a low profit margin. In the early 1970s, Canadian’s most famous publisher, Ryerson press and Gage education publishing were sold to American interests (McClleand & Stewart, 2006). After that, Canadian publishing industry was almost disappeared due to the bankruptcy of that company. From that time on, the governments start to issue some policy to protect the book industry in Canada. The Foreign Investment Restrictions on book distribution and retailing were issued at that period of time.

Commitments of the Foreign Investment Restriction

Under the Investment Canada Act, foreign companies are restricted from investing in book distribution and retailing system in Canada. It mainly effect on the Canadian controlled joint ventures and the net benefit to Canada. In addition, this policy is designed to encourage efficient and effective book distribution (Sarah, 2006).

For the compatible with national cultural policies, foreign investments are maximum limited by 49% of all shares of the controlled joint ventures. For example, for a non-Canadian controlled business, it is not allowed to merge a Canadian controlled company that is in financial problems if it takes up the shares that is excess 49%. Furthermore, it will not take effect for a native merge when there is a full and fair opportunity. Polices also...