China Publishing Group Launches Digital Subsidiary, Preps for the Future

In Feature Articles by Guest Contributor

• In 2009, China ran up $1bn in sales of digital content, and the market is growing at an estimated 40% annually. In response China Publishing Group -– China’s largest state-sponsored publishing conglomerate — has launched Digital Media Co. Ltd., a new digital media and technology subsidiary.

• From August 24-27, the German Book Office Beijing is hosting a trip for international publishers to Shanghai to visit some of the biggest players in this burgeoning market, including Shanda Literature, Byread, Shanghai EDO Technologies, Dookbook, and others.

• Here, in the first of a two-part interview, Liu Chengyong discusses how this new company aims to make the most of China’s booming digital marketplace.

Interview by Lei Ren, German Book Office, Beijing

Publishing Perspectives: Digital Media Co. Ltd. is a subsidiary of the China Publishing Group. Why did CPG launch a separate digital company?

Liu Chengyong: The transition from traditional publishing to digital publishing is spreading like wildfire all over the world. In mainland China, the central government CPCC, the Chinese Department of propaganda and the ministry of foreign affairs, and even heads of many enterprises know about the current trend of digital publishing.

We know from experience that merely setting up a sub-department to work on digital publishing is not sufficient.

The company is being supported through a project of the Chinese Development and Reform Commission and the Department of Propaganda of the Chinese Committee aimed at building an overall digital publishing network that will serve the entire Chinese publishing industry.

The project requires an investment of RMB 269 million ($39.67 million). This year we received RMB 20 million ($2.95 million) from the government. Our company is investing, too. We are also creating a shareholding system and trying to pull all publishing groups in the entire country together to invest.

Big enterprises, such as China Mobile, China Unicom and China Telecom, as well as Hanvon and Founder and several foreign businesses, have agreed to contribute. At present, nothing comparable exists in China.

PP: What is the current relationship between publishers and technology providers in China? China Mobile wants to create a dedicated “literature network.” What is their influence on the Chinese publishing industry?

Chengyong: At present, the situation is not very good. When electronic books first appeared on the market in ’97 or ’98, the relationship between publishers and technology providers was fine. At that time, publishers didn’t know anything about this new medium and were easily hoodwinked by technology providers. The technology providers set the terms and the publishers just handed over the copyrights. Publishers had no role and merely waited for their annual share. The ones who did well would make up to 20,000 RMB a year, and the ones who did better earned more than that, but not by much.

The publishing industry has already recognized the future potential of digital publishing, but is unsure of how to establish itself in this domain.

This has lead to two kinds of situations. On one side are the publishers who are determined to implement digital publishing and are working with the technology companies, such as Hanvon or China Mobile.

On the other side, there are publishers who see the importance of digital publishing, but lack the knowledge and are too scared of losing their copyrights. In an act of self-preservation they wind up doing nothing and don’t implement digital publishing at all.

At present, the relationship between content providers and technology providers is therefore only friendly on the surface. Everyone knows about the importance of cooperation and negotiations take place everyday. And there has been progress.

On May 5th, 2009, China Mobile organized the release ceremony of their Mobile Reader CmRead. China Publishing Group attended as one out of four important strategic partners of China Mobile. The four parties, China Publishing Group, Chinese Writers Association, the National Library and the Chinese Editors Association, all appeared on stage to sign contract with the head of China Mobile and subsequently discussed all crucial points of their further cooperation. In this collaboration we see ourselves in a leading position and we are not willing to simply let the technology providers take charge. We are determined to take management into our own hands.

PP: How committed is China Publishing Group to getting more involved in digital publishing?

Chengyong: China Publishing Group is willing to invest the money and is to establish Digital Media Co Ltd. as a major force. We already employ more than one hundred people, incorporating more employees in the area of digital publishing than all the publishing groups in China combined. It takes a lot of courage to realize a project like ours and even to ask the state for funding.

I assume that many Chinese publishing groups are in a similar situation as ours. Just recently Anhui Province invested 200 Million RMB into digital publishing. In a few years from now, content providing publishing groups could finally establish themselves in the area of digital publishing. In the mean time, the technology providers and operators will surely not stay put in their current market and are definitely going to expand as well, most likely into the direction of content. This would surely create a conflict, causing the relationship between content and technology providers to alter between cooperation and competition.

It is very important to us not to be tied to the technology providers, telecommunication operators or hardware providers. But we don’t want to be permanently reduced to the position of simple content providers. We should be able to integrate different resources. That means acquisition of the necessary technology and hardware, putting them together, and printing our own label on it. We will resolutely move forward and create our own brand. Only in doing so will we get to know what digital publishing is really all about.

Tomorrow, Liu Chengyong talks about China Publishing Group’s new e-reader and the outlook for e-books in the world’s most populous market.

DISCUSS: Will Chinese publishers ever become a force on the global stage?

FIND OUT MORE: Read about the Exclusive Shanghai publishers trip organized by the German Book Office Beijing

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Guest Contributor

Guest contributors to Publishing Perspectives have diverse backgrounds in publishing, media and technology. They live across the globe and bring unique, first-hand experience to their writing.