Chinese Publishing’s Young Mogul

By Wen Huang

While Western publishers are losing sleep over sluggish sales and counting on a few bestselling writers such as Dan Brown to generate a much-needed boost for their business, the 34-year-old Lu Jinbo, considered China’s most profitable publisher, will arrive in Frankfurt refreshed and relaxed from his week-long vacation cruise in the Caribbean.

He should be able to sleep better than most publishers. In July 2008, Lu became the first individual in China to register a joint venture with a state company, one year before the Chinese government officially issued policies to officially recognize the legal status of private publishers. While his state partner invested 20 million RMB (about US$3 million), holding 51 percent of the shares, Lu invested 10 million RMB, controlling 49 percent of the shares. His new company, Wanrong Books Co Ltd, specializes in publishing fiction.

In the past year, WanRong, with only 40 some employees, published 200 new titles, selling more than 10 million copies. The sales revenue for 2008 reached 200 million RMB (US$29 million).

Unlike most publishers, Lu has himself become a popular household name. Lu was credited with creating a group of young literary idols such as Han Han, Annie Baby and Guo Ni, popular authors whose books sell millions of copies each year.

I met Lu at a Western-style bar along Shanghai’s Hongmei Entertainment District. He was laid back and personable, looking more like a graduate student than a publishing guru and entrepreneur.

Like a shrewd venture capitalist, Lu has an eye for spotting the “new, new thing.” He’s always at the forefront of new cultural and business trends.

In 1997, after graduating from Northwestern University in the central city of Xian, Lu obtained funding to start an internet company that designed websites for regional companies. “As a young graduate, I found the internet a very hip thing with great potential on the horizon,” he recalled.

When his first business was not as successful as he had hoped, he turned to online writing, mostly love stories under an alias, “Li Xunhuan” (Pleasure Seeker Li). “The internet allows me to publish without the restraint of a traditional publishing framework,” he said. His fiction became an online sensation and subsequently, a publishing house put together three books from his online postings, all of which became national bestsellers.

Encouraged by his success, Lu started a literary website, rongshuxia.com (under the fig tree), in 2000. The website featured literary works by a large number of China’s young internet writers and soon garnered a rabid online following. Two years later in 2003, he and his partners sold the website to Bertelsmann AG, which had expanded its operations in China since the mid 1990s. He formed a new company under Bertelsmann, Rongshu Culture Company.

As general manager of Rongshu Culture Company, Lu turned to book publishing full time, which took off in 2005. He discovered young writing talents online and transformed them into bestselling authors. He has also signed on big name Chinese writers such as Wang Shuo, and Yu Hua, and has released a series of bestsellers which specifically target teenagers and young adults, a market which he says constitutes 65 percent or more of readers in China.

In 2008, when Bertelsmann exited the Chinese market, Lu formed a joint venture with the Liaoning Publishing & Media, Ltd., the first state-run publishing house to become listed on the Shanghai Stock Exchange. “As my business became bigger, I needed to partner with a state company to seek legal status for my company,” he said.

At WanRong, Lu continued with what he considers “new” approaches to publishing, some of which have raised eyebrows among literary purists, who accused him of turning literary works into commodities. He has been dubbed by some Chinese media as a “trouble maker” of the book industry.

Lu has turned away from the traditional industry practice of paying authors after the books are published. Instead, he pays hefty advance sums (on the average of three to four US dollars per word for his top writers).

“We pay for their market potential,” said Lu. In 2006, he paid two of his top writers, Han Han and Annie Baby, two million RMB each in advances for their books A City and Lotus respectively. They didn’t disappoint. By year’s end, Han Han’s book sold 610,000 copies, while Annie Baby’s had sold 570,000. On the average, writers such as Han Han, Annie Baby, Rao Xueman, Guo Ni and Shi Kang can sell about one million copies of their works a year. In fact, 11 of the 24 wealthiest writers listed by China Business Post in 2008 were writers signed by Lu, including the 24-year-old writer Guo Jingming, who topped the list with RMB 11 million (USD 1.48 million) earned from royalties last year.

Lu said the difference between WanRong Books and other Chinese publishing houses lies in the fact that “They are selling books, but we sell people.”

Lu focuses on a writer’s potential and signs them up for the long-term, purchasing the rights of their future works as well as ones previously published by other companies. In addition to editing and distribution, WanRong also helps its writers create their public image and cultivate their fan base. “We treat them as if they were our employees,” he explained. “We coordinate media interviews, handle their foreign and revision rights, organize special events, book tickets, and build various chat groups and blogs. In a way, our editors are also their assistants.”

For some of their top writers, WanRong sets up a database containing information on 10,000 of their readers. “We can thereby do some targeted marketing before a new book comes out,” he added.

At present, WanRong has 50 writers, who produce an average of 200 new titles a year. Some of his top writers create five to ten books a year.

Lu explained in an interview he had with reporter Na La posted on cbbr.com.cn, “We have a think tank to help writers come up with plots and characters, based on marketing research” he said. The writer will then expand the outline into a full-fleshed novel.

Lu typecasts readers into various categories based on the age of the reader: “Age 16 is ‘the pink dream of love’ and age 17 is ‘the phase of rebellion.’” For each category, he creates a branded author. “Basically we look at each writer’s style, their image, and think about what their potential readership is,” he explained in the same interview. “We encourage writers to adopt an identity and style, and then stick to it. The readers know what they’re getting in that case, and the writer establishes a brand.”

Not all of Lu’s publishing ventures have ended successfully. Back in 2003, Lu published a book entitled The Book of Lost Feelings, by Mu Zimei, an alias for a young female journalist and blogger. The book, based on her online journal, described her various sexual encounters with men in explicit language. It was banned three days after its publication.

Lu’s future plan is to strengthen his hold on the digital publishing arena. “Unlike the western market, digital publishing will explode exponentially in China,” said Lu. “This includes publishing on cell phones and on the internet.

It has huge potential,” Lu continued. “Young people and students are much ‘crazier’ about cell phones and internet and there’s been a strong trend of writing novels online. We have to tap into this trend.”