Country Report: Thailand
Sally Taylor -- 6/15/98
Surviving bust times
This time a year ago, Thailand had recorded 10% growth in the last quarter of 1996, a GNP of nearly US$3000 among the 60 million citizens, 95% of whom are Buddhist, even a US$200 million Tussaud's theme park announced by the Pearson Group near Bangkok that would have been the biggest in Asia.
Books commonly had 1500-5000 print runs, selling in roughly 500 bookstores, almost half of them in Bangkok, usually with only a limited selection in English, many of those on Thai history, culture and travel...favorite topics among the growing expatriate community as well as among English reading Thais.
Today in Bangkok, the expatriate community is shrinking and the imploding economy has brought an ecconomic experience unique in the lifetimes of most Thais, 66% of whom are between the ages of 15 and 66. It is called recession. The Asian Crisis began in Thailand in July when the Government was forced to float the currency, the Thai baht, and it began to fall in value.
So far it has fallen and stayed at half its value and so has the stock market.
Imported goods are thus dearer by over 50% and book stores, with a few bright exceptions, are facing rapidly diminishing sales. Booksellers can't pay their bills, so distributors can't pay their publishers. The cost of paper is up nearly 50%, as the pulp must be imported, so publishers are sharply reducing the number of books they publish in 1998 and laying off staff.
One still-bright area of book sales is English language teaching materials. The Government recently allowed English language teaching in all schools at all levels, which expands the market to elementary schools, where private publishers supply workbooks to supplement the government's textbook monopoly. Older Thai students are also returning from studying abroad, where it is now too expensive for their families to support them. They are looking for ELT programs at home, and many individuals laid off work are studying English in their now-copious spare time.
"We are reasonably content in our future," says Nigel Oakins, Managing Director of Post Publishing, Plc, the publisher of the country's largest English language daily. "All our books are in English or helping Thais learn English, and many laid-off Thais are now spending time improving their English. So we are bullish in these two sectors."
A massive international tourist campaign called "Amazing Thailand" began January 1 and will run through 1998, accidentally coincident with the baht's drastic decline and making this beautiful country a fabulous bargain has well...at least for Europeans and Americans, if not for other Asians, most of whom are experiencing economic recessions of their own.
Consequently books for tourists sitting on Thailand's stunning beaches or discovering the country's long rich history should still do OK in the coming months, even at the higher baht prices the exchange rate will demand.
Evidence of a continuing strong English language book demand comes from Chiangmai, Thailand's "second" city in the cooler northwest of the country, where a local retailer, Suriwong Book Centre, expanded in March 97 into a 1800 square meter "super" store, facing the ancient moat and walls of the old city proper. Run by Joy Jittidejarak, daughter of the owner and sister of international publisher Trasvin Jittidejarak who founded Silkworm Books, the new store with its wide range of titles is attracting good business, even in the recession.
"Fifteen percent of sales are in foreign titles," Joy reports (because last names are so long, Thais usually refer to each other by first names, using "Khun" instead of Mr, Mrs, Ms or Miss). "While Bangkok expatriates are being sent home, here the community is mostly retirees and tourists. There are estimated to be 100,000 expatriates in and around this city.
"We order titles from Bertram in the UK, which consolidates orders for us, and we are looking for a similar service in the USA, as we wants new publishing houses and new titles currently unavailable in Thailand, especially on Asian subjects."
With a second smaller shop at the Chiangmai Airport, Suriwong is unique in Thailand as a retailer nearly exclusively. They do distribute some maps, and Trasvin's Silkworm Books, otherwise they work with distributors, and they find it frustrating.
"People in Thailand like to control every part of the business," Joy observes. "But it d sn't work in the book business. If you are an importer and a distributor and you also run retail stores, you are bound to give preference to your own stores rather than distributing the good books you import as broadly as possible.
"So I advise publishers against giving exclusive distribution deals to Thai importers. We often find it difficult to get the books we want from the Thai distributor of a title, if they are selling well in his stores."
Importers are critically important, of course. The major ones are Asia Books, D.K. Books and DistriThai. As Joy described, they all have import, distribution and retail aspects. They are all suffering from the current economy, and the high cost of borrowing money.
"We are not getting as much cooperation from foreign publishers as we would hope," one importer told us. "They need to be more flexible, given our difficult situation. We need to do more copublishing, for example, and do business in baht."
While D.K. is the biggest, in some respects, that company is split into a number of separately run entities.
Thares Keeree, Managing Director of D.K. Today, imports mostly ELT, secondary and academic titles, says "We are working at a low margin as our customers cannot afford to buy too expensive books. Some publishers have offered to help by giving more of a discount, but this cannot compensate for today's exchange rate. The best way to help is for publishers to wait until the situations has been resolved and the exchange rate becomes more stable. The booksellers lost so much from the devaluation, yet it is impossible for them push up the retail price to the exchange rate."
"We are still buying books, but this is now a remainder market," says Richard Murray, President of DistriThai. "Apart from mass market paperbacks, which we never stopped buying during the devaluation, we are not buying very much in the mid-range and nothing at all in the expensive coffee table book category unless it is very specific to our region.
The situation is grim for publishers, too, and worse is expected, as Boonchai Panjaranttanakorn, International Division Manager of Se-Educational Public Company Ltd, a major juvenile, textbook and translation publisher, describes.
"Of course our regular customers significantly cut down their orders and we have seen more returns coming in," he said. But this month (June) Thanong Chotisorayuth, Managing Director of SE-ED began receiving funds from a cash issue of six million new shares of stock.
"This will give us working capital for expansion of production and distribution of books, mainly in the field of vocational training and reference. It will also help finance the construction of Phase II Book Distribution Center and the opening new of SE-ED Book Centers, the company's fast-growing retail outlets, with no less than 10 more branches added this year to the current 24."
Thanong added that despite the economic slump his company still hoped to see an early sign of recovery from the beginning of1999. But others are not so expansive.
"We have to be very careful about our publishing plans now," says Mrs Priyarat Ma-in, Manager of Post Books, the book publishing unit of Post Publishing Plc. "And we are hoping for more sales of our books overseas, but it is more difficult now for us to go outside and find partners."
The Post has a website, which includes an order form that can be printed out and faxed back. So far, though, the Government is prohibiting sales of books in Thailand on the internet (and America Online has lost their local access number in that country).
Chad Sripanich, Senior Editor and Director of Rights & Communications at Amarin, a major printer and publisher in the country, also encourages the idea of co-publishing locally to keep costs down.
"A lot of publishing material has to be imported and that is a problem because of the devaluation," he admits. "The only thing that would help the publishing here is to do more printing here in Thailand."
But another Thai retailer is experiencing untypical success and some bullish surprises in the English language book market. This one is the Japanese group, Kinokuniya. Their first all-English language book store, with 7000 square feet, opened in the new Emporium shopping mall in Bangkok (Sukumvit Soi 24) last August (1997), just as the recession began. Its layout flows like a zen garden, with the bookshelves especially designed to look like Japanese screens and it is in the heart of the expat area of town.
"Our main targets are expatriates and upper middle class Thais who have studied abroad," says Kenji Ito, Manager of the English Book Import Department for both of Kinokuniya's outlets in Bangkok. "This new store is everyone's baby. It is our only all-English language outlet in the world and it has our biggest English language selection, with 80,000 books and magazines on the shelves."
All the stock is ordered by the English Book Import Department. Stock is air-freighted in direct from the major Kinokuniya suppliers, Baker & Taylor in the USA and Gardners in the UK. The split is about 70/30, USA to UK and Ito claims he can beat online direct mail order prices plus shipping, though he tries to keep prices as close to the rest of the market as he can.
After five months, Ito says the store is starting to break even, though the other store is suffering sales declines similar to most other retailers in town. The Emporium store clearly has the right mix for its customers. The biggest volume of business is in mass market paperbacks, and the split of the two buyer groups is 50/50.
Ito also personalized the store with his own category names. The mystery section is called "Whodunnits", romance is "Passions & Dreams", westerns are in "Wagons & Horses", gay subjects are "Pink Pages" and erotic novellas are under "The Age of Consent". In gift books, graphic design and architecture, more buyers are Thais, and this store also has the largest selection of calendars in town.
"About 70% of our stock is must-have titles for any English language store, the rest reflect the unique demand of this market," says Ito. The titles for the young, hip generation, for example, need illustrations, but generally are the same titles popular everywhere in the world these days. Movie tie-ins like the Titanic books were featured in the front of the store in January.
Having such a wide range of stock has brought some surprising successes, including the children's section, p try and classic literature.
"We have discovered some areas of interest not addressed before," says Ito. "There are still opportunities here for retailers, especially in the long term. We just have to hold on through this recession."
Opportunity for international publishers also exists in the rights market, though the results will be long term. Thai publishers are strapped for cash and cannot make large advances or pay high royalties in escalating UK pounds or US dollars. But they are looking for good material to translate, in lieu of more expensive original publishing plans they might have had before the economy took a dive.
While they admit co-publishing is a means of survival during tough times, their main hesitation is the gamble of a fluctuating local currency and both publishers and rights agents are asking for more flexible agreements from the international community.
Boonchai at Se-ed thinks more bookshops and publishers will "fade out from the scene" this year but he has one glimmer of hope in translated works.
"What we translation publishers wish to see most from licensing foreign publishers is that they become more flexible and allow us to pay the usual royalty advance on publication date, rather than on signature. Ideally, only royalty on copies sold should remain, without having to pay any royalty advance on signature. It this were feasible, the possibility of seeing more new titles translated and published here in Thailand would increase, even under this adverse business climate."
Jane Vejajiva, whose Silkroad Agency was Thailand's first professional rights agency, and remains the strongest, encourages foreign publishers make contracts in Thai baht, at least for the time being.
"With the unstable currency, local publishers are abandoning publication projects and refraining from licensing foreign works," she says. "If we can state in the contracts that the licensing fees will be paid in baht, that would help a lot. We can provide that sums be paid in the appropriate international currency computed at the official exchange rate on the date of bank transfer," she suggests, protecting the proprietor with some pre-arranged rate as a bottom figure, for example, the rate of the date stated in the contract.
She suggests that proprietors focus on the best possible royalty rates instead of advances paid on signature because when things improve and the books sell on, then the sum paid by licensees will be based on the number of copies sold.
Ms. Pimolporn Yutisri, General Manager at Tuttle Mori Big Apple Thailand, the other major rights agency, concurs. "We simply cannot ask local publishers to assume all the currency risk," she told PW. "Plus we are still fighting piracy here, and that means we need foreign publishers' help. They must stick with us through this difficult time."
A major Japanese juvenile publisher, Gakken, has given a two year allowance on debts of their Thai partners, according to Tak Kubodera, GM for Business Development in the International Division at Gakken. "It isn't that much money, anyway," he argues. "And we want to see our partners survive this crisis and flourish."
Other international publishers would be wise to follow this lead.
See a list of publishing resources in Thailand.
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