Zhang Wenlong, a 26-year-old project manager at a Beijing-based IT company, told Beijing Review that he became a member of Bertelsmann's book club in 1998 when he was a high school student, because he "rarely found books other than school reference books in the small county." But he cancelled his membership when he was a college student and could access the rich reserves in the university's library.

"Bertelsmann couldn't satisfy my desire for more quality books," Zhang said. "Besides, I can buy books online or go to bookstores near the university. It's convenient. "

At the same time, many members were annoyed that the company required that they buy at least one book every three months.

Wei Yao, a photographer who lives in Beijing, became one of the first people to join Bertelsmann's book club in 1995 when he was 13 years old. He quit the book club in 1998 when Bertelsmann demanded that its members buy a book every 90 days "even if you did not want any of the books in the catalogue," he said. Wei refused to pay for two books Bertelsmann automatically sent him, and as a result, it cancelled his membership, he said.

After it started receiving many complaints about this policy, Bertelsmann ended the practice in an attempt to keep members in 2006. But by that time some former book club members such as Wei had switched to the company's major online rivals, Dangdang and Joyo.

"Buying online is quick, convenient and cheap," Wei said. "To thumb through a catalogue is after all less convenient than using a search engine to find the right book. Besides, a thin catalogue never conjures up the peaceful and academic atmosphere of a real bookstore."

Online onslaught

Bertelsmann went online to sell books in 1999 but returned to its traditional business mode in 2002 when the then CEO Thomas Middelhoff, a champion of e-commerce, resigned. The new CEO Gunter Thielen sold the company's e-commerce business by the end of 2002. As a result, the China subsidiary merged its online club into its online shop, www.bol.com.cn in 2003, to sell books, video products and online gaming products.

Bertelsmann's online business accounted for about 20 percent of the Direct Group's revenue from China in 2002, with the rest from the traditional book club business, according to Huang. Yet, the prices the online business offered were not competitive, and website maintenance expenses were a drain on revenue.

Some members selected books from the Bertelsmann catalogue, but bought them from Dangdang and Joyo, which was later acquired by Amazon.com Inc., because of the high delivery fees Bertelsmann charged.

"Bertelsmann was no longer our rival eight years ago," Dangdang's President Li Guoqing told China Business Weekly.

"It's a gamble to rely on sales through catalogue delivery," Li said. "With climbing printing and delivery costs, you will lose all chances if the selection of books in the catalogue is unsatisfying."

"There are limited choices in a catalogue while online bookstores are not limited by shelf space," Li was quoted as saying in China Business Weekly. "That's why we can achieve the business scale while Bertelsmann cannot."

But Bertelsmann placed its faith in real bookshelves in China when it acquired a 40-percent stake in Beijing's 21st Century Book Chain and turned it into a joint venture in December 2003. It hoped to make a foray into the book retailing business with the latter's 20-odd outlets.

While its book club members demanding more quality books, Bertelsmann also had to focus on offering customers in its bricks-and-mortar outlets a complete selection of books. But the company threw its efforts into its retail outlets at the expense of the book club, and as a result ended up offering its book club members fewer selections.

Gradually, Bertelsmann faded out of sight with the Chinese. According to the China Business Weekly report, Bertelsmann is considering transforming its call center and CRM database into an education service website and merging the distribution system into its Arvato Group to provide logistic support to large companies in China.