Stroll through Shanghai’s “Book City,” a four-story goliath crammed with titles on a surprising breadth of subjects, and you’ll notice something big is happening in the land of Mao’s little red book. As the Chinese government makes unprecedented moves to loosen its grip on book retailing and distribution — working to satisfy obligations under China’s 2002 entry into the ranks of the World Trade Organization — opportunities for foreign investment are being flung open in the world’s most populous nation with a brazenness free-marketeers could barely have imagined two years ago.
The great Chinese bookstore grab got its official green light, anyway, at last month’s Summit of Book Publishing in Beijing, where Niu Bingjie, Deputy General Director of China National Press and Publications Administration (NPPA), announced that China will open the book retail market in over 30 cities to foreign investment beginning this year, with detailed regulations on the matter expected shortly. As a consequence, says Wei Zhao, Random House Sales Manager for China, “Barnes & Noble can open up a bookstore in China if it chooses to do so. Both non-publishing industries in China and foreign investors will be allowed to invest in privately-held book retailers.” With bankers and co-venturers lining up at the gates, the Chinese book market — already subject to constant turmoil for the last three years — is quite likely headed for even more sweeping contortions. “As China enters into a second year of WTO,” Zhao predicts, “2003 could be pivotal for book distribution.”
To date, however, the Chinese bookselling terrain is virtually terra incognita to foreign investors. Though ownership of bookstores has been allowed on a trial basis since last June, the sale of foreign books, including those published in Taiwan and Hong Kong, is “still restricted to the [state-owned] Foreign Language Press bookstore,” according to Luc Kwanten, Executive Director at the Shanghai office of Big Apple-Tuttle Mori. And so far, no foreign bookstores have set up shop in China — though rumor has it that Shanghai and Beijing may soon be the latest outposts of leading French book and music retailer FNAC, which has already planted its flag in Taipei.
What is known about Chinese book retailing amounts to this: In major cities with a population of more than 10 million, there are two primary forms of state-owned retail outlets: the “book city” (a building of three to five stories, portions of which are rented out by individuals as well as publishers), and the “book center” (owned by either a state-run or private corporation which offers large retail spaces for goods such as books, music, and art supplies). Add to that 57,000 privately owned bookstores, which amounts to about four times as many as the state-owned bookstores. This process of liberalization has helped to gradually erode the state-owned Xinhua Bookstore Chain monopoly, which itself has drawn the ire of publishers, who have been forced to negotiate distribution deals with individual Xinhua bookstores in major cities. The Xishu Book House, in particular, has seized enough turf to become the largest privately held national bookstore chain, and is said to be the “first-choice bookstore” for many readers in some smaller cities.
Cracks have opened in the nationwide distribution system as well. The state-owned Xinhua network has been challenged by so-called Second Channel distributors, who emerged with the government’s efforts to liberalize book distribution in the 1980s. Consisting of independent booksellers and distributors operating under a market economy, the Second Channel allows for returns of unsold copies of books to publishers. These wholesalers and retailers account for about 30% of annual total book sales in China, but the limited regional scope of Second Channel distributors — coupled with the fact that they have no access to China’s real cash cow: textbooks — has put many of them out of business. Even so, such competition has spurred the sluggish Xinhua to beef up its operations, as most publishers prefer to deal with Second Channel firms due to their more agile maneuvering among the nation’s topsy-turvy market conditions.
Harry Potter Does Beijing
As it slowly grinds its way toward privately operated book distribution, China is clearly looking to the US for guidance. Credit Robert Baensch, Director of the Center for Publishing at NYU, for providing at least a crash course in modern publishing. Under Baensch’s tutelage, NYU has offered six seminars for groups of 30 Chinese booksellers and publishers, ranging widely over the nuts and bolts of bookselling and distribution, and including visits to both Ingram’s and publishers’ distribution centers. Baensch (who is also editor of the forthcoming book The Publishing Industry in China) cites Chinese news reports indicating that 20 new measures are expected over the coming year “to create an amiable legal environment for the growth of the nation’s media and publishing sector.” The 60 or so overseas companies that have set up offices on the Chinese mainland with the intention of investing in the distribution business, reveals Bingjie in a Xinhua News Agency article, “are likely to be the first to have their applications approved.” Those who have cooperated closely with their Chinese counterparts obviously stand the best chance of getting a foot in the market. Of course, the most exciting news from last month’s semi-annual Beijing National Book Fair, says Baensch, was word that Harry Potter V would be available in June (igniting much euphoria, as last year 1.3 million copies were sold of a special four-volume boxed set of the Chinese Potter edition). Other bestsellers in translation included the ubiquitous Who Moved My Cheese? and the globally appealing aphorisms of Jack: Straight from the Gut.
Indeed, the case might be made that the West has already colonized the hearts and minds of the Chinese bookselling trade, with foreign behemoths like the Shanghai Bertelsmann Book Club trumpeting a membership of more than one million, and high-profile magazine launches from Hearst and Primedia bringing Cosmo to the post-Mao masses. But industry rumors have it that the Bertelsmann club’s days may be numbered, and Chinese news reports say that Bertelsmann is shifting focus to radio and TV broadcasting in the region. And Chinese officials say that regardless of foreign bookselling deals, “there will be no opening up of the editorial or publication side of the industry.”
Then again, the headlines tell us China is the world’s “fastest growing major economy,” the government has opened the sluice gates to 92 new printing companies with $55 million in foreign investment, and 91,000 new titles were published there last year. Set your controls for the 10th Beijing International Book Fair, on May 19–23, and see the bookselling revolution for yourself.