China's publishing houses under the central and local governments in the past two years have been exploring a new mode in which they would reorganize into syndicates, in an effort to forge first-class large publishing enterprises.

So far two large publishing groups under the Central Government have completed the reshuffling.

In March 2008, China Peace Publishing House Co. Ltd. (hereinafter Peace House Co.) was formally established by the China Soong Ching Ling Foundation together with Jiangxi Publishing Group Co., one of the top 10 publishing groups in China.

On April 17, Jilin Publishing Group and China Industrial & Commercial United Press jointly set up China Industrial & Commercial United Press Co. Ltd. (hereinafter United Press Co.). The former holds 51 percent of shares in a form of cash investment, while the latter holds the rest of the shares making up its original brand and net assets, according to United Press Co.

This is the first joint venture between local publishing houses and publishing houses under the Central Government since the General Administration of Press and Publication (GAPP) released a document in April encouraging publishing houses to merge and reorganize into interregional publishing group companies.

Peace House Co. is the first venture to transform a publishing house under the Central Government into a shareholding company, the first interregional reshuffled publishing firm, and the first publishing company jointly run by two publishing enterprises -- Jiangxi Publishing Group and Peace Publishing House.

But insiders at the new company argued that the merger did not integrate their business resources apart from getting financial support from Jiangxi Publishing Group. According to its website, Jiangxi Publishing Group recently signed a strategic framework agreement with Founder Technology Group Corp. in Beijing to support its transformation from paper mode to digital publication. The move is a new sign of cooperation between real businesses and publishing enterprises.

The newly set up United Press Co. has enjoyed steady development compared with Peace House Co.

"Although the new company was formally set up in April, it began operation early in November 2007 when China Industrial & Commercial United Press and Jilin Publishing Group signed a cooperative framework agreement," Liu Congxing, Chairman of United Press Co., said at the company's inaugural meeting on April 17.

"During the past 18 months, the new company made good preparations for the joint venture, including setting outlines for 2009-2010; completing an employment scheme, and making efforts to develop new products and promote book publication," Liu said. More than 80 varieties of books had been marketed before April, he said.

Liu disclosed that the new company is slated to launch 150 to 200 varieties of new books this year, with its sales volume targeted at 50 million yuan ($7.32 million) this year and more than 100 million yuan ($14.64 million) by the end of 2010. The aim of the company is to become a complex shareholding company in two or three years.

Advantages

Reorganization between publishers has three advantages, Gu Hanchong, Editor in Chief of China Industrial & Commercial United Press, told Publication Reference magazine.

First, reorganized companies have complementary resources. For instance, Jilin Publishing Group has a fairly good relationship with large companies abroad, such as the U.S. publishers HarperCollins and Penguin.

Thanks to the reshuffle, the company has introduced best-selling books including Think Big and Kick Ass in Business and Life, Planet Google and China's Megatrends. The company will also publish The Currency War 2, a best-selling book series in China for which it would have not won the publishing rights if it had not cooperated with Jilin Publishing Group, an insider told China Business News.

Before the merger, China Industrial & Commercial United Press, a public institution under the All-China Federation of Industry and Commerce, published mainly books on the economy and career guidebooks . Restricted from traditional management systems and mechanisms, it had weak influence in the publishing field.

"As a publishing house affiliated with the federation, the press was hard to develop and expand due to lack of funds and distribution channels," a company manager told China Business News. "But now we have strong financial support from Jilin Publishing Group, which promised to give the newly set up company further financial help as long as the company needs it for its development," he added.