Wang Wen-ching, executive editor of Business Weekly, which was acquired last year by Hong Kong's Tom.com Group, makes no bones about publishers' interest in the China market: "Of course we are getting involved. Everyone wants a piece of that pie. In fact, many of our readers and the people we interview are already there themselves."

Wang reveals that before Business Weekly was acquired by Tom.com, the publication's upper management, including its publisher and its director, had made several trips to China looking for a "powerful, non-state-owned partner." Around the middle of last year, Business Weekly's publisher led a five-person team to the Guangdong offices of the Shenzhen Special Zone Daily to discuss the possibility of cooperation. Now that Tom.com has acquired Business Weekly, the negotiations have been dropped. Nonetheless, Business Weekly has not changed its "go west" strategy, and in March formally assigned staff to Shanghai on a long-term basis. Wang stresses: "By going west into China, Business Weekly has returned to the intentions with which it was established ten years ago. The magazine is assigning upper-level managers to China."

Business Weekly's executive editor Wang Wen-ching says that in moving into the China market, her magazine is fired by the same kind of ambition that drove it when it was established.

A changing Chinese market

According to Chen Hsin-yuan, an associate professor in the college of humanities and social sciences at Fokuang University, "There are no two ways about it: the mainland is now the world's largest market for Chinese-language books." Chen, who is very familiar with the publishing environment on both sides of the Taiwan Strait, says that ten years ago when he began surveying the publishing markets in the mainland and Taiwan, the mainland market was worth only about RMB10 billion. But by the end of 2000, this market exceeded RMB37 billion. This kind of growth makes publishers' mouths water, especially when contrasted with the stagnation of the Taiwanese and Japanese publishing markets over the last few years.

Figures from the PRC's General Administration of Press and Publishing show that in 2000 the mainland published some 140,000 titles and consumed 7.024 billion books, or an average of 5.55 books per person. "In addition to the publishing centers of Beijing and Shanghai, publishers in Jiangsu, Shandong, Liaoning, Hubei, Hunan, and even Yunnan and Guangxi are becoming forces to be reckoned with." As Chen puts it, mainland China's publishing industry has entered its own "Warring States Period."

Another change in the market concerns the new varieties of books that are becoming popular. As a consequence of China's rapid economic development, books on business administration and wealth management now fill bestseller lists once ruled by the scientific and sociological works the mainland long stressed.

Chen Hsin-yuan, a scholar who stays on top of the publishing markets on both sides of the Taiwan Strait, says that the growing power and quality of mainland publishers cannot be ignored. If Taiwanese publishers are to meet this challenge, they must pool their resources.

Invading China

The Taiwanese publishers who have been sending wave after wave of "troops" into the mainland market excel at uniting the publishing resources of both sides of the Taiwan Strait. One of these is Chin Show Publishing, which in 1987 was the first local publishing house to go into China.

Based on his 14 years of experience in the China market, Chin Show's chairman Hsu Chung-jung identifies several major types of cooperation: The first involves oversized volumes that Taiwanese publishers have difficulty manufacturing such as the Arts of China collection jointly produced by People's Publishing, Culture Relics Publishing, the China Architecture and Building Press and the Shanghai People's Art Publishing House. The second involves utilizing the mainland's abundant writing and translating talent to complete projects developed in Taiwan. For example, when Chin Show purchased a work on the great masters of Western art from Italy, the company relied on mainland-based translators to produce a Chinese translation. Once complete, Chin Show negotiated the European and American rights for the 100-million-plus-word Chinese-language edition. Hsu, who is adept at exploiting the respective strengths of Taiwan and the mainland, then turned around and sold the rights to the book to a mainland publisher, demonstrating yet another variety of cross-strait cooperation.

Responding to the growing numbers of mainland Chinese consumers and their increasing ability to afford expensive book sets, Chin Show has been exporting sets published in Taiwan to China as "foreign books" for the last few years. The company is also planning new books for the China market, where previous offerings such as its "Art and Life" series and its selection of masterpieces by Chinese and non-Chinese painters have made it a trendsetter.

Hsu Chung-jung has managed the risks of the mainland market by taking a slow-and-steady approach to dealing with the many barriers faced by foreign pubishers.

Shell game

In addition to utilizing China's abundant creative talent, Taiwanese publishers are also seeking out joint ventures or establishing their own wholly owned "brick-and-mortar" publishing ventures in China in their efforts to secure a portion of China's domestic market. For its part, mainland Chinese officialdom is very leery of works with an ideological bent and has put numerous protections in place. For many years, Taiwanese publishing houses have had their mainland operations restricted to buying and selling rights, and to publishing works in cooperation with a mainland partner.

In the mainland's government-controlled publishing industry, the right to publish is essentially rationed. A publisher must have a "book number" in order to publish a book, and a "periodicals number" to publish a magazine. Although trading in these book and magazine numbers is technically illegal, foreign firms (including Taiwanese) have been able to utilize private back channels (that is, channels not affiliated with the official Xinhua Bookstore) to acquire book numbers.

Periodicals numbers, on the other hand, are acquired through a kind of "shell game," wherein a would-be publisher "rents" the number of a mainland periodical that has halted publication or whose circulation is weak. The going rate for a number is reportedly RMB200,000-300,000 per year.

According to Chen Hsin-yuan, "China's publishers have traditionally viewed books with more respect than periodicals." A survey taken by the China Periodicals Association in early 2001 revealed that there were only 23 periodicals in China with a circulation of over one million. The top ten included Duzhe ("Reader"), a twice-monthly publication which gathers together outstanding articles from other sources, Qingnian Wenzhai ("Youth Digest"), Jiating ("Family") and the twice-monthly Jiating Yisheng ("Family Doctor").

While Chinese publishers may look down on periodicals, foreign investors from Korea, Japan, Taiwan, Hong Kong, the US, England, France and Germany have recognized the huge advertising and distribution potential represented by China's magazine market. These investors are therefore looking for partners whose names they can use to bring to market the technology, fashion, leisure, language and children's magazines that China most needs.

For example, Taiwan's PCHome and Studio Classroom are simply publishing in China under different names. Other magazines, such as Contemporary Design and Artists Magazine apply separately to receive permission to publish each issue individually in the mainland.

But there are risks in publishing content under another magazine's name. As Chen Hsin-yuan puts it, "The mainland needs your content, but it doesn't want your brand." Foreign magazines that rent "magazine numbers" then provide the lessor with content run the risk of coming away empty-handed, for when their mainland partner has learned their editorial approach and methodology, there is nothing to stop the lessor from discontinuing the relationship while holding on to the brand that the foreign partner has helped build. "Consequently, finding a partner you can trust is critical," says a Studio Classroom consultant assigned to China.

Shanghai's Confucius Temple, once a place to trade second-hand books, is now a market for pirated works. China still has much catching up to do before its publishing environment will be in step with international standards.

Cultural chameleons

According to Thomas Huang, president of Taiwan MAC Educational (TME) and a self-proclaimed cultural chameleon, "You've got to be in China now, unless you want to miss out on the liberalization of the Chinese publishing industry." Hsu Chung-jung adds: "You can still do a great deal, even though China hasn't yet loosened up its laws." Although investing in China may not be strictly legal and profits are uncertain, every international publisher is skirting the fringes of the law to enter the China market. These publishers take the view that their efforts are providing them with experience in the China market and are preparing them for the liberalized market to come.

These foreign investors' most common tactic is to buy a subsidiary of a mainland publisher or media outlet, such as an advertising agency, a printer or a stationery store. They then proceed to acquire a controlling stake in the parent company. Many editors and managers from Taiwan, Hong Kong, Europe and the US are now in China, but maintain a low profile, not even appearing on their parent companies' staff rolls.

Taiwan MAC Educational, which represents Taiwan writers Lin Ching-hsuen and Chien Chen, has taken a different approach to cooperation, and in recent years has won frequent acclaim as a successful example of investing in China's publishing market.

TME's Huang qualifies that, stating, "Actually, our first attempt to crack the China market failed." That first try was in 1991, when Taiwan MAC sent three managers to China. Unfortunately, China's consumer market was still relatively undeveloped, and each trip to the mainland ended up costing more than the company was generating from the sale of rights. Worse, the mainland government's tight controls on "group activities" left the company unable to use direct marketing to distribute its book sets. After two years, TME decided to take its losses and pull out.

TME returned to China in 1997, but this time it took a more considered approach. The company marketed itself as a publisher of Taiwanese writers, and gradually built a reputation and a network of people.

The explosive growth in China's publishing market has international publishers jockeying for a piece of the pie. (photo by Jimmy Lin)

China ascendant

Both sides of the Taiwan Strait have long hoped to establish themselves as the center for Chinese-language publishing. The mainland government also recognizes that with globalization, foreign publishers will want to establish themselves in the China market. Mainland officials are now attempting to prepare Chinese publishers for foreign competition, first, by delaying the opening of the domestic market, and, second, by training local talent.

According to Chen Hsin-yuan, China has been rapidly establishing massively capitalized publishing houses since 1996. These include almost 50 groups like the Century Publishing Group of Shanghai with paid-in capital of more than RMB500 million, and the truly huge Guangzhou Daily Group, capitalized at more than RMB1 billion.

These new publishing groups have eroded Taiwan's one-time advantage in capital and its ability to acquire publication rights. "We can't do anything about it. We have no control over the timing [of liberalization]," says a worried Chen Wei-ping, head of the outstanding teen press Hsiao Lu Publishing.

Chen Hsin-yuan notes that in the past, Chinese publishers acquired rights to international bestsellers secondhand through Taiwanese companies. Now that mainland publishers are able and willing to put up US$50,000 in prepublication royalties, many non-Chinese publishers are electing to sell the international rights to the Chinese-language editions of their books directly to mainland firms.

Figures published by the mainland's General Administration of Press and Publishing demonstrate this trend. In 2000, mainland publishers acquired the rights to 7,343 works, compared to only 1,664 works in 1995. In 2000, these publishers also resold the rights on 450 works to their Taiwanese counterparts, compared to only 201 such transactions in 1999. Taiwan has become the principal export market for mainland publishers dealing in book rights.

Thomas Huang says, "This represents a serious challenge. China is in a better position to negotiate rights and now has its own international contacts. It no longer needs to go through Taiwan." TME has been addressing this trend by continuously opening its own outlets in the difficult China market, thus strengthening its bargaining position when negotiating international rights.

Coining experience

So just what advantages do Taiwanese publishers have over their mainland counterparts?

According to Business Weekly's Wang Wen-ching, "We know depth reporting and understand the market. The mainland has no idea about these things."

Tseng Farn-chyan, executive director of the Chinese Publishers Development Foundation, agrees. He notes that every year at the Frankfurt Book Fair, Taiwanese publishers find themselves trailed by five or six of their mainland counterparts watching to see what they buy. Tseng says there's a real trick to selecting books, and choosing from among the many beautifully illustrated children's books is particularly difficult.

"Taiwanese publishers acquired their experience over many years and at the expense of a great deal of sweat and tears. It's not something that money can buy." But Tseng believes that there is still a lot of room for cross-strait cooperation on rights acquisition, translation and printing. He sees the potential for both sides to benefit.

Looking at the whole of the Chinese-language market, Hsiao Lu Publishing's Chen Wei-ping says that Taiwanese publishers have strengths in many areas, including their capital structure, management structure, content management and market experience. Moreover, "Taiwan's editors have a better developed sense of creativity and modernity, and possess far more market experience." China's publishers may have more capital, but their management has yet to gel.

"The ideas at the heart of the culture industry are unique, and not duplicable," states Chin Show's Hsu Chung-jung with conviction. The Taiwan-based Hsu's eyes are on the mainland, and while he is steering his company on an aggressive course, he will not act precipitously. This year, in an effort to establish his own distribution network, he has sent more than 10,000 salespeople across Taiwan to promote NT$19,999 lifetime memberships to the Chin Show book club. Hsu says confidently, "Chin Show knows how to make readers love us."

Given that this kind of spirit is widespread among Taiwan's publishers, you'd better believe that China is soon going to experience the "Taiwan Experience."