Bertelsmann also uses this strategy. It first started its book retailing business in Shanghai in May 1996 and has over the years built up strong business ties with Chinese presses and book distributors. Therefore, Bertelsmann is very familiar with Chinese market conditions and is eager to establish its own stores. The company has signed agreements with 21st Century Book Chain and Jingwen Record Co. These two companies work as agents for Bertelsmann, responsible for the daily operation of two of Bertelsmann book clubs located in Saibo Square in Haidian District, west Beijing and the Oriental Plaza in central Beijing. The cooperation with two of Beijing’s renowned media product distributors marked the expansion of Bertelsmann’s business from Shanghai to the rest of China.

Yao Ting, senior officer of public relations of Bertelsmann China, said, “We are very confident about the future of the Chinese book market. Bertelsmann is maturing and has been involved with reform over a nine-year development period. Our business is developing very well in China and we enjoy good cooperation with relative companies. Meanwhile, the open policy of the government shows its sincerity to foreign companies. We will continue to participate actively in cultivating the promising Chinese book market.”

In addition, other foreign companies have entered the Chinese mainland market through establishing joint ventures or cooperation, such as the joint venture between TOM Group (Hong Kong) and China PC World on July 5, 2004.

Private Firms’ Big Market Share

On April 27, 2004, Bairong Bookstore (BB), the biggest bookstore of Asia in terms of area coverage (the operation area covers 15,000 square meters), was established and went into operation, after investment from privately-owned Bairong Globe (Beijing) Culture Development Co. (BGCD). The new bookstore will not only have an enormous impact on the present book distribution market, but will also encourage other interested private investors.

After the opening up of the Chinese book retailing market on May 1, 2003, China fully opened the book wholesaling market on December 1, 2004. Foreign companies have long coveted this area and under the guidance of the new policy, Chinese private capital is keen to invest in this field.

“Our objective is to become China’s biggest middleman in the field of publications,” said Wang Jinyan, Deputy General Manager of BGCD. She also noted that BB will establish its headquarters, and direct sales stores in accordance with market principles. Bairong is aiming at grabbing a slice of the 1 billion yuan ($120.8 million) teaching material market in three years and building up 1,095 franchise stores on the Chinese mainland.

“BGCD was co-invested and co-founded by Bairong Investment Group (BIG) and Global News Publishing Co. (GNP) in November 2003,” an insider divulged. BIG is a privately-owned company from Zhejiang Province in south China with its main business in real estate. Bairong Trade Center, where BB is located, is also one of the projects of BIG in Beijing. GNP is affiliated to the General Administration of Press and Publication of China (GAPP). Currently, BIG is the major source of capital of BGCD.