Eastman Kodak's full respect for China Lucky Film Corp's three co-operation principles was the key factor which helped the company win out over Fuji Film to form a partnership with Lucky, a senior official at Lucky said yesterday.

The three principles are allowing Lucky to maintain its brand, majority ownership and management control in the joint venture.

"This ensures that the 'Lucky' brand will not disappear in the market, but will get further development," Lucky President and Chief Executive Officer Du Changtao said yesterday.

"What we selected is not only capital and technology, but a partner with which we can support each other and seek developments in the future," Du said.

Kodak and Lucky formally inked their US$100 million 20-year co-operative agreement yesterday in Beijing. The two announced such a partnership last week in both the United States and China.

Fuji had also tried to explore co-operation with Lucky over the past few years but it finally lost that opportunity, which experts say will put it in an inferior position in the Chinese market.

According to the new agreement, Kodak will contribute US$45 million in cash and provide an emulsion-making line for colour products to buy 20 a per cent stake in Lucky Film Co Ltd, the listing arm of China Lucky Film Corp.

Meanwhile, Kodak will be providing a total of US$54.5 million in funding and technical support to assist Lucky to upgrade its technology and production facilities.

Henri Petit, president of Kodak's Asia Pacific region, said Kodak can benefit from the deal "in many aspects."

The stake investment in the listed firm can bring about dividends. Meanwhile, Lucky will pay Kodak for the use of selected technologies.

What's more important is that the two sides can team up to develop the market and help both grow together in the coming 20 years.

"The return will surely exceed our invested assets and capital," said Daniel Carp, chairman and CEO of Eastman Kodak.

"The signature of the agreement symbolizes a good start of our co-operation with Lucky.

"We have reached a consensus to look for more co-operation opportunities in other fields."

Lucky's Du revealed that the next agreement will be in the digital imaging area, but didn't elaborate.

Analysts say this will be in line with Eastman Kodak's ongoing global strategy readjustment, under which the company will shift more investment into the digital area.

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