AIMEE K. WILES BEIJING * Fan Rujun, a photographer with China's No. 1 news organization, Xinhua News Agency, and his colleagues are increasingly using digital equipment. Xinhua is the largest consumer of Eastman Kodak Co.'s professional digital cameras in China.

By Ben Rand
Democrat and Chronicle

(June 25, 2000) -- China's largest news organization made a daring business decision on June 30, 1997, the day China began reclaiming its sovereignty over Hong Kong.

To record Chinese President Jiang Zemin's arrival in the former British colony, the Xinhua News Agency used Eastman Kodak Co. professional digital cameras -- its first time ever at a live news event.

Quite a gamble, since it was the first time a Chinese leader had set foot in Hong Kong in 156 years.

But just 15 minutes after Jiang stepped off his airplane, Xinhua's 220 subscribers worldwide had their first picture. The turnaround was so fast that some newspapers in Hong Kong used the Xinhua photo rather than wait for their own photographers to process their film.

Since that famous debut, Xinhua (pronounced shin-WHAH) has become Kodak's largest Chinese consumer of professional digital equipment. The news agency owns 22 Kodak cameras and related accessories and just bought six new models to outfit photographers at the Summer Olympics in Sydney.

Photojournalists worldwide have been among the first to embrace digital photography. The technology allows pictures to be edited and transmitted more quickly by eliminating film developing. Xinhua's Hong Kong experiment came at about the same time the Democrat and Chronicle was among the first U.S. newspapers to convert to digital photojournalism.

Digital will be important to Xinhua because of its size. The news agency, which is operated by the Chinese government, has bureaus in 100 countries, including the United States, and employs about 7,000 people. The agency also produces 40 newspapers and other publications, including books. Xinhua's transition to digital is far from complete. The agency still uses film for 90 percent of its pictures but wants to convert to all-digital photojournalism.

That's both good news and bad news for Kodak. It means the company has the chance to sell more than 100 new digital cameras to Xinhua, but it will lose far more in reduced sales of film.

There's also no guarantee Xinhua will buy only Kodak digital products. The agency recently purchased less expensive cameras from Canon Corp. and Nikon Inc.

Photographers at Xinhua don't see themselves going all-digital anytime soon. Kodak and competitor models, saddled with import duties, retail in China at about twice the price they do in the United States.

That could change if China joins the World Trade Organization, but Xinhua's purchase would still require hundreds of thousands of dollars.

''It's hard to predict when we'll go all digital,'' says Kong Lumin, deputy manager of Xinhua's photo division. ''It depends on our financial condition.''