The 'Malignant Tumor' in Chinese Book Publishing
The following item appeared in Xinhua:
Beijing citizens are reading more books than they have for years. The Beijing Publishing Authority says book sales in 2004 brought in over 13 billion Yuan. That means that each of the capital's 13.5 million permanent residents spends an average of 958 Yuan or about 115 U.S. Dollars on books every year.
They also enjoy a more diverse range of reading matter than previously, with a boost to social sciences, the economy and children's books. Literature still tops people's shopping lists, with "Wolf Totem" and "Da Vinci Code" being the bestsellers in 2004.
This got me into looking at the competitiveness in this huge market. This is what I found in the book titled Report On International Competitiveness Of China's Cultural Industry:
In year 2002, there were 568 book publishers in all of China employing 49,204 workers. Of these, 219 are national publishers and 349 are local publishers. In year 2002, they published a total of 170,962 different titles, of which 100,693 were new titles and 70,269 were reprints. A total of 6.87 billion copies were printed with list prices that have a total value of 53.5 billion RMB.
Compared to the preceding the year, the number of titles grew by 10.6%, the number of copies by 12.4% and the total number of copies by 14.6%.
In year 2002, the actual realized book sales was 43.493 billion RMB and the actual profit for the publishers was 3.396 billion RMB.
The above were the industrial statistics. But what about the competitive situation? The same book describes the history of book publishing in China.
During the era of the planned economy, the publishing unit was a department that belongs under an administrative unit, a business entity or an academic institution. It was not an independent legal entity, and it was not an independently operating unit with its own management and interests. Since the various owners belong to different administrative spheres and have different sources of financial support and publishing objectives, competition did not exist as such because there was no need for that.
Following the economic reforms, the publishing units were transformed into business units that operate under market conditions. Thus, competition began to appear among the various publishers but with some unusual features. First of all, this was not a totally free competitive market in that there are still signs of monopolization. These monopolistic conditions did not arrive as a result of elimination of competitors under fair competition, but they were inherited from historical monopolies. Secondly, the competition is still at the early stage, and many publishers can still count on steady sources of income from textbook sales. Thirdly, there is no competitive national market as yet, because local protectionism is still rampant as a result of the practices during the era of the planned economy. Thus, competition within the book publishing industry is still haphazard right now.
So far so good, but there is a really interesting article in the February issue of Ming Pao Monthly by Hu Hua. This is interesting because it shows how competitiveness had inexorably come into existence through an entire unapproved side industry that has overtaken the existing structure. This represents an alternate path to reform by direct confrontation -- the system was simply bypassed de facto until the process is irreversible.
Recently, a certain deputy department head of the Chinese News Publishing Central Bureau proclaimed in a speech: The 30,000 or so workshops are 'tumors'! In order to purify the publishing industry, these 'tumors' must be excised.
What workshops? Since when did 30,000 workshops emerge in mainland China? Here, we will have to begin with a description of the publishing system in China.
The Chinese Constitution guarantees that the citizens have the right to publish, but in practice the common citizens are unable to exercise this right. The publishing industry is one hundred percent monopolized by the state. There are more than 500 publishing houses in mainland China today, and all of them are owned by the government. It does not matter how much capital civilian organizations or individuals have, they will not be permitted to legally register as a publisher.
Yet, mainland China has entered an era of the market economy. While the current administrative policies does not permit publishing by civilians, private businesses can sell books. But the private booksellers were not content with retail sales downstream, so they have also moved upstream into planning, editing, designing and other aspects of publishing. There are now many so-called workshops or cultural corporations. They cannot publish themselves, but they can cooperate with the officially approved publishers by publishing under the products under the imprimaturs.
From the viewpoint of officialdom, if these workshops are allowed to proliferate, the national monopoly of the publishing industry will be effectively broken. That was why the workshops are referred to as malignant tumors that must be excised.
There are more than 500 publishing houses in mainland China. Except for a few that are managed and operated by professional publishers, the majority of them are under the control of obedient but incompetent officials who have no capability of dealing with the mass readers in the publishing market. Some of them have relied on their monopoly in elementary and secondary school textbooks to sustain their businesses. Others rely on government subsidies to survive. In these publishing houses, from the editor-in-chief down to the low-level editors, none of them know how to solicit or evaluate manuscripts and they do not have any networks of distribution channels. If they cannot rely on the textbooks and subsidies, they will have to rely on selling the imprimatur.
Based upon the going rate, an imprimatur can be sold for 15,000 RMB. If an editor can sell five imprimaturs a year, he/she would have met the annual quota. If a small publishing house can sell one or two hundred imprimaturs per year, it would be able to cover operating expenses.
By contrast, the workshops are subject to the test of the marketplace from the moment that they came into existence. They have to pay some money to the publishing house for the imprimatur and their profits come from what money is left. This forces them to develop a keen sense of the marketplace. Their educational level and their intelligence are better than the people in the publishing houses. They are geniuses in design, promotion and selling and far superior to the people in the publishing houses. Typically, for the identical book, the workshops can sell four times as many copies as the official publishing houses. For example, Liang Sicheng's The History of Chinese Architecture was languishing in the warehouse of an official publishing house until a cultural company re-packaged it into a bestseller.
At the moment, more than 80% of the best-selling books on the market have the participation of the workshops or cultural companies. Each year, before the annual national book publishing fair, there is a fair on the week before for secondary channel book orders in which the products of the workshops are bought and sold.
Over the past few years, national monopoly has been broken in many industries. The entry of private enterprises made those markets more lively and dynamic. Even the strategically important area of motion pictures has admitted private enterprises. People were thinking that the publishing industry would follow inevitably. Instead, there is now talk of excising the 'malignant tumor' of the workshops.
In my opinion, the 'malignant tumors' that are so detested by the officials can no longer be excised. If a person weighs 50 kilograms and has a tumor, even if it is as large as 25 kilograms, excision may help the person live longer. But when the tumor weighs 250 kilograms and outweigh the person by far, can he afford to remove it?