Song Jia, a sophomore at Beijing Jiaotong University, joined the Bertelsmann book club five years ago. Now many of her classmates have also signed up for membership to the book club, from which they regularly receive brochures recommending the latest best sellers. In addition, as members they can select books to suit their own taste and enjoy a wide range of services.

It is reported that the book club, part of the Germany-based Bertelsmann Group, rated as the largest publishing organization in the world and the fourth largest press group, now boasts more than 1.5 million members from all age groups in China. Having operated in China for nine years, the book club is waiting patiently in the wings for the doors to China’s book market to be fully flung open. It’s a sign of the times as China enters a new era of publishing and related reading services and products.

According to its World Trade Organization (WTO) commitments with regard to foreign book and periodical distribution, China had already lifted restrictions in areas such as location, quantity, stock ownership structure and venture form by the end of December 2004. Now foreign companies can invest in book, newspaper and periodical wholesale businesses, fueling fierce competition among state-owned enterprises, private companies and foreign companies.

Measured Expansion

The distribution of newspapers and periodicals is the most profitable part of the Chinese media industry. Currently, in the Chinese market, there are some periodicals jointly published by Chinese and foreign companies, such as Trends, Bride, Health, Elle China and Figaro Girl. It is reported that in China’s top 10 most profitable periodicals in terms of advertisement revenue, nearly half of them are Chinese editions jointly published by Chinese and foreign publishing groups. The periodicals with a foreign background are so profitable that many more overseas publishing companies are eager to enter the Chinese market.

The most profitable business in China is to invest in books and periodicals, said Patrick J. McGovern, Founder and Chairman of International Data Group (IDG), who launched the flagship publication Computerworld in China in 1980 and now has more than 30 publications in the country. His statement is true to some extent as in recent years book and periodical publications are considered as an industry with colossal profits. Business insiders estimated that its gross profit margin can reach as high as 40 percent, which certainly is a huge attraction to foreign investors.

“If foreign companies want to enter the Chinese book and periodical market, they should take a step by step approach,” stated media analyst Zhao Xiaobing, also Chief Executive Officer (CEO) of Global China (Beijing) Media Consulting Co. Ltd. When first entering the Chinese market, foreign investors generally focus their business on one major city, like Beijing, Shanghai or Guangzhou. Then they will investigate the business situations in other cities and prepare to expand their operation and establish chain stores. The Hong Kong Global China Group (GCG) is the first foreign (in Chinese business terms foreign companies, in a broad sense, refers to Hong Kong, Macao, Taiwan companies as well as those of other countries) book and periodical company authorized to set up joint ventures with Chinese mainland enterprises. The first book and periodical distribution joint venture, Global China Media Service (GCMS), was established in 2002 by GCG and Dadi Distribution Center affiliated with People’s Daily. GCMS said it would further develop its business in Beijing and gradually set up distribution stores in other major cities on the mainland, possibly by way of acquisition. The ultimate target of GCMS is to cover northeast China, north China, east China, northwest China, middle south China and southwest China.