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The Writing is on the Wall

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The old Chinese song Wild Lily Also Has Its Spring perfectly describes the current situation of China's private publishers.

As the lyrics state, it's not only things that are carefully nurtured that can bloom.

It was common parlance among publishers 10 years ago to describe the private publishing industry system as not having much of a future.

However, now, according to data from the Chinese Academy of Social Sciences, more than 90 percent of best-sellers are produced by private publishers. In 2009, China's book market, excluding text books, provided some 300,000 works, with one-third coming from private publishers, People's Daily reported.

Some private booksellers have become millionaires over the years.

Shen Haobo, president of China's biggest private publisher, Beijing Motie Book Ltd, which sold 10 million copies of Stories of the Ming Dynasty over the past two years, was a pioneer poet 10 years ago. His company generated sales revenues of some 500 million yuan (US$75.76 million) in 2009.

Another legendary figure, Liaoning Wanrong Book Ltd's manager Lu Jinbo, was once a top writer, penning works under the pseudonym Li Xunhuan in 2000.

Lu's company created the Chinese writers' Real Madrid Club, signing top writers such as Han Han, Wang Shuo, Murong Xuecun, Shi Kang and Annie Baby, all of whom guarantee good sales.

Turning point

The past two years have witnessed a turning point for private publishers.

According to two official guidelines issued by the General Administration of Press and Publication (GAPP), China's publishing industry regulatory body, in January 2010 and April 2009, China encouraged private enterprises to play a bigger role in the publishing business.

Private enterprises are allowed to publish books on science, economics, arts and children's books in cooperation with, or as a unit of, State-run publishers.

The country wants six or seven press and publishing giants with annual revenues of more than 10 billion yuan in three to five years, according to GAPP's guidelines.

"This is the right direction for China's publishing industry. The participation of private publishers will be a strong driver for the industry's revolution," said Zhou Xuelin, president of private-owned China Europe International Business School Publishing Group in Shanghai.

Before these changes, private publishers had to practice under "gray areas" and faced lots of limitations on what they could and could not bring to the market. Laws governing book publishing were unclear.

More than 10 years ago, private publishers were referred to as "bookmongers" because they earned their profits from selling books wholesale. As they became bigger, they began to encroach on territory previously occupied by State-owned publishing houses.

Every book published is given what is called a serial code. State-owned publishers receive this free of charge but private publishers were obliged to pay State-owned publishers 20,000 yuan for each one a decade ago, although the practice was not strictly speaking legal. The price now is reported to be 50,000 yuan.

Private publishers now provide content, book cover designs and promotional activity, gradually taking on the role of book contractors.

"Now, under the new system, private publishers are fully legitimate and can play a more active role. At the same time, their operations are under government regulation and management, which is good for the entire publishing industry," said Zhou.

China promised the World Trade Organization it would open its publishing market further when it joined the industrial grouping in 2001.

The first joint venture between a State-owned and a private publisher took place between Hubei Changjiang Press Group and Jinli Partnership in 2003. Venture capital then moved into the industry.

In 2008, Motie received 50 million yuan in venture capital from a source it did not disclose. In August 2010, a new round of 100 million yuan from CDH Investment was injected into the company, indicating confidence in private publishing, analysts said.

However, the private publishing industry is still small relative to the State-owned sector. According to an article in the Financial Times written by Motie's President Shen, the company's annual sales revenue is 500 million yuan, representing just 1.03 percent of the country's total book sales.

Nonetheless, private publishers outperform State-owned publishers in producing best-selling titles, although they have a smaller share in the educational market.

"Compared with State-owned publishers, private companies are not competitive in terms of branding and asset structure. But we can see they have been growing at a very fast pace over recent years," said Zhou Zhonghua, general manager of Huazhang Publishing Company, which is a joint venture between China Machine Press and US-based Multi-Lingua Publishing International Inc.

"Because of their flexibility, private publishers can always spot business opportunities in the market quickly and precisely, a skill that easily catches the eyes of capital investors," said Zhou.

The modern trend is toward cooperation between private publishers and State-owned publishers over writing projects, authors and capital, he added.

Dai Zhiyong, a commentator at Southern Weekend, a Guangzhou-based weekly newspaper, said there are three routes for the regulatory body and all private publishers to consider during their development.

The first route is to experiment. Select several private publishing houses according to subcategory or groups and give the State-owned publishers equal treatment. This route can be supervised and it can be used to gradually accumulate managerial experience.

The second route is for GAPP to encourage local creativity, incorporating private publishers into specially designated creative industry parks.

The third route has already been stated in the official industry guidelines. Support should be given to the equal and cooperative operation of private resources and State industry. The government should not micromanage the way they cooperate, what they cooperate on or the ownership structure. If there are too many constraints, it is destined to be an "odd looking dance".

"No matter by what route, the ceiling for the kind of content that can be produced should be greatly raised in this age of the Internet. The system is already being innovated and a larger dance floor is in order," said Dai.

There are some who believe all books in the future will in fact be computers with hypertext links, video and complex graphic interfaces.

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