Ever since China began opening to the world more than a quarter-century ago, trade publishers, with visions of a huge consumer market, have come calling, talking about long-range partnerships and copublishing deals.
But although rights to thousands of titles have been successfully licensed on an individual basis, trade houses have discovered that China visions and bottom-line reality are still two very different things. Many initiatives have come and gone or been substantially rethought. Nevertheless, there are always other companies willing to try again.
Reader's Digest is the latest to knock on the door. At the November 4 press conference in New York announcing RD's China plans, PW talked with RD's publishing partner Sun Yong about recent developments in Chinese publishing. Sun is director of the Shanghai Press & Publishing Administration (PPA). He also heads the local Publishing Copyrights Bureau and is vice-chairman of the Shanghai Writer's Guild.
The RD-Shanghai deal is three-pronged. First, in the U.S. and Canada, RD will publish books originated by a whole range of Shanghai publishers, beginning with two coffee-table titles, Beautiful Xiangxiand Wonderful Xinjiang, which each combine a famous author's text with photographs. The former, in its original Chinese version with text by Shen Congwen, managed to sell 10,000 copies in China. The latter, with text by Wang Meng, was originated for the U.S. and will later be published in Chinese. Second, RD will "co-produce." It published its own coffee-table tome, Treasures of China, in May 1989; the book has now been revised with Shanghai's help "to reflect the China of today."
Most intriguing is a third initiative, in which a "development company" arm of the Shanghai PPA, "assisted" by RD, will "establish a publishing resource" to help Chinese authors and publishers get distribution in the U.S. According to Sun, the development company "will open up a pipeline for Chinese publishers, with a goal of putting through about 20 books a year."
Sun noted that "in the past 10 years, only 1,300 Chinese titles were licensed overseas, representing a mere 4% of the foreign titles acquired by the Chinese mainland." The country's publishers are struggling to find ways to transition away from state subsidies to a market economy. As China has, economically speaking, become so very much less "red," its tolerance has gone way down for balance sheets full of red ink. But how an already overpublished U.S. market will accommodate trade titles from China remains to be seen.
Meanwhile, as in the U.S., title production in China has been booming, Sun said. In 1978, annual output was less than 15,000 titles, while per-capita GDP was about $130. By 2002, output had increased to 170,000 titles and per-capita GDP reached $963. That year, book revenue on the mainland was about $5.24 billion, with 7.024 billion units sold. But at 568 companies, the number of publishers in China has not changed much in the last 25 years. There are 292 audio-video and 102 electronic publishers as well.
The single largest market, Sun said, is for textbooks. In 2002, almost 25,817 texts were published, but only 8,163 were new titles. He estimates that this sector accounts for 70% to 80% of total sales. But "growth in the trade market is increasing, although there is faster expansion in terms of diversity of titles rather than in total numbers of sales."
The Chinese market is bifurcated into the sophisticated urban sector and the far less well-off interior provinces. The transformation in urban life is such that "the market for pop psychology and self-help titles has been growing rapidly. Books on interior design and decorating, corporate management and business are all doing well. A book on how to beautify yourself or different ways of making coffee and foreign drinks—these can sell hundreds of thousands of copies," Sun noted.
On the other hand, the interior looks to very pragmatic, educationally oriented titles, such as how to get a better job and how to start a small business. Interest also remains high in kung fu and in historical romance sagas.
What has been losing out in the overall Chinese popularity stakes is novels. "People don't have the patience to read a full novel," Sun, himself a novelist, laments. Those that sell come out with a movie or TV tie-in. But sales of short stories and essays are on the upswing.
Sun said that despite the huge impact the computer has had on his country, book sales via the Internet still have a long way to go. The Chinese are used to, and most comfortable with, dealing in cash. As far as Sun knows, "Internet sales are still small. The key issue that must be resolved is online payment."
There are perhaps 5,000 bookstores in Shanghai, but no more than 1,000 have any government investment. With the closing of many money-losing state-run factories, many people are out of work, and one of the more popular things to do is to start a mom-and-pop bookselling operation, often as a street vendor. These are a far cry from the several dozen large stores. The sales volume of Shanghai's biggest, Book City, on the city's busiest commercial thoroughfare, is equal to hundreds of small stores.
With China's entrance into the WTO, the central government has made certain pledges, and indicated time frames for restrictions to be lifted on foreign investment in bookstores. But Sun preferred not to comment on whether foreign companies would be allowed to open bookstores in Shanghai. Only time will tell how those visions of profitable copublishing deals—and foreign-owned stores—will finally pan out.
Pesce's Perspective
Chinese publishing opportunities were a hot topic during John Wiley's second-quarter conference call with Wall Street analysts. Fresh from leading a Wiley delegation to China, Wiley CEO Will Pesce said he is as "encouraged as ever" about the Chinese market. He added, however, that he still maintains a "realistic perspective" about how quickly the market will develop. "People have to be careful about just reading headlines and assuming that you could set up an outpost and suddenly start driving revenue through the roof because you have a presence in China," Pesce said. "That's not the way it is going to work in our industry, and that's not the way Wiley is going to approach it."
Pesce observed that much has changed in the China market since former Wiley chairman Brad Wiley visited the country nearly 25 years ago. Improvement in technology means that Wiley can distribute its content to more people than in the past, and Pesce noted that more than 100 Chinese universities and research institutes now have access to Wiley material through Wiley Interscience. In addition, efforts by the Chinese government to crack down on piracy have helped to spur sales of copyrighted materials, Pesce said, noting that Wiley's STM sales have grown "significantly" in the past two to three years.
Another favorable trend is that the Chinese government seems "genuinely interested" in improving the country's higher education system, Pesce said, and now has the wherewithal to get it done. The government's deep interest in publishing is important to grow the market, but it also means officials monitor "how information flows through the system," Pesce said.
Pesce told analysts that they should expect to hear a more positive story about Wiley's Chinese initiatives, but he warned that the company can't "flip a switch" and immediately generate huge sales.
