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Vivian Wu

With a potential readership of  1 billion people, China's book publishing industry is one of the last untapped frontiers  of business.
But a one-party state that still jealously guards the flow of information for fear of provoking social disunity has in the past been considered an insurmountable barrier to the expansion of literary ambitions.
For example, Prisoner of the State, the memoirs of  ousted  party chief Zhao Ziyang,  is selling like hot cakes in Hong Kong but is based on tapes that had to be smuggled out of the mainland.
 This tight control has also repeatedly quashed any ambitions  by international publication giants to crack the mainland market even after China entered the World Trade Organisation in 2001.
But there is  a  glimmer of hope as Beijing moves  from its previous hard focus on manufacturing to create a more creative force in the world's third-largest economy. As part of a broad reform on book publishing, top officials have signalled plans to ease funding restrictions on private sector publishers and give them official approval.
Liu Binjie, the head of the General Administration of Press and Publication (Gapp),  last month announced a long-awaited blueprint for a 'breakthrough reform and restructuring' of the sector.
Under the plan,  the country's fragmented publishing sector will be consolidated into six to seven dominant publishers.  And, for the first time,  private publishers would acquire legitimate status and be able to attract much-needed capital, Gapp said. Private publishers have survived in a grey area over the past 20 years, not officially recognised but delivering  most of the best-selling titles in the market, including the thriller Code of Tibet  and Tales from the Ming Dynasty, a historical account.
According to Gapp,  the mainland has 579 book publishing houses, of which 260 have been restructured into shareholding companies. The 49 per cent ownership cap by private shareholders in these houses is one law subject to deregulation.
The broad reform plan has been hailed by state media as part of China's ambition to enhance its 'soft power', an idea repeatedly mentioned by state leaders to create a dynamic and more creative economy to change the mainland's position as the world's largest  maker of labour-intensive products.
At a publication trading seminar late last month,  Mr Liu  admitted that progress in the publishing industry had not matched the country's cultural, economic and technological developments.
'We introduced this reform to speed up the development of the press and publishing industry and to allow the culture of the Chinese nation to be recognised worldwide and disseminated around the globe,'  he said.
'As the foundation of cultural soft power, the Chinese publishing industry hasn't progressed with the hard power of China's rapidly developing economy and its status as a giant [state] in the world.'
Ambitious and high-minded as it may sound,  the reform plan has left industry players  sceptical it will be real and radical.  The key problem remains the politically driven nature of the sector.
'This industry is dying ... and has been degraded to a very dangerous level with no space for creativity and reader-oriented production,' lamented Beijing-based private publisher Ye Kuangzheng.
'Reform, if there is really any, should start  with changing the basic administrative system of the industry, by granting private publishers full rights to every stage of the production process, from designing, printing to distribution.'
China's publishing industry has been under the most stringent government media controls since 1949, a recognition of the written word's power to persuade and influence society. This rigid and planned-economy model has not been dramatically modified even after the country embarked on the road to reform after 1978 that opened up other parts of the economy.
Publishing houses are officially government-funded  groups commonly referred to as shi ye dan wei or industrial units. According to regulations, only state-owned publishers are legally allowed to operate in the publishing and printing business, based on a licensing system.
The topic selected for publishing, content editing and the primary design of a book are controlled through a so-called serial code system, which also comes under a strict censorship mechanism supervised by Gapp, the chief industry regulator.
Every year, each state-owned publishing house is assigned a certain number of serial codes based  on performance assessment and overall strength. Only with a serial code can a book be designed and published legally.
The publishing chiefs, who hold ranks similar to heads of government departments or institutes, are usually selected by Gapp through a tedious assessment process that focuses on their political credibility and business ability.
Their foremost responsibility is to ensure the 'political correctness' of their products, making the content quality of the books a secondary priority. Inevitably, the system ends up creating bureaucratic officials who lack the innovativeness to create good books that sell.
Reformist officials or ambitious publishers of good books often become easy targets for the Communist Party to penalise, such as cutting their quotas for serial codes. To avoid trouble, state publishers sometimes turn to producing redundant textbooks or selling serial codes to survive.
Beyond the publishing industry, Gapp is the  watchdog that  screens all 'spiritual' products of the nation by subjecting publications on 'important historic, political, religious and ethnic themes' to   strict content censorship by the body and the Central Propaganda Department, the party's ideological overseer.
Manuscripts deemed  'offensive or sensitive' can be banned from the printing press while published books could be pulled off shelves at any time should the agencies disapprove.
The authorities not only control the industry's  operations through the serial code quota system and printing and distribution licences, but  also keep a tight rein on day-to-day management and performance.
But Beijing may be coming to a realisation that all this control is no longer feasible. The tide of economic change that has swept across the nation  since the 1990s, coupled with the central government's cutting of fiscal support for publishers, means the rigid management model cannot be sustained. Survival in an increasingly competitive market demands higher quality and creativity.
The publishing market has shrunk rapidly to a level so low that it is incompatible   with  the mainland's status as a populous nation. 
So much so that Gapp deputy chief Li Dongdong commented in an internal meeting that industry revenue in 2007 was 125.18 billion yuan (HK$142.14 billon),  less than that of German publication giant Bertelsmann's revenue of Euro18.8 billion  (HK$197.4 billion) for the same year.
While Gapp's strict allocation of serial codes gives the government a remaining control on the industry, private publishers have flourished and are swiftly exerting  their market presence.
But without legitimate status, private publishers have had to survive by co-operating with state-owned publishers through trading book serial codes and acquiring printing and distribution licences through illegal channels, a common practice within the industry.
Mr Zhang, a senior journalist who covers the publishing industry, said: 'Serial codes are clearly priced, with each code costing anything from 15,000 yuan to 50,000 yuan. Some of these giant state-owned publishers and many mediocre publishing houses don't produce good books and have to live on selling serial codes. Everybody knows this, including those officials at Gapp.'
By contrast, private publishers with an acute sense of readers' tastes and a strong grasp of market demand have an incentive to come up with creative ideas and have developed good contacts with authors.
Unofficial estimates put the number of private publishers  at more than 10,000, of which more than half are clustered in Beijing. Every year, more than 80 per cent of the best-sellers are actually designed or published by this group of entrepreneurs.
To achieve that, the China Youth Daily has reported that private publishers need to spend about 1 billion yuan buying serial codes.
 There are 110,000 private book wholesalers and distributors in China, and many private publishers  have their own distribution networks.
The rise and prosperity of private publishers have created the biggest threat to the state-owned publishing houses and the entire mechanism backing them.
Even Mr Liu  conceded that the rampant trading of serial codes and other underground practices were an embarrassing 'cancer' in the industry. Therefore, it was 'time to recognise the existence and constructive contribution to the cultural development by the private publishers and allow them to get involved'.
In a  China Central Television interview in late April, Mr Liu  said the central government planned to inject 50billion yuan into supporting small and medium-sized publishing enterprises, including private  companies, to solve their financial woes. But he did not provide details.
'It's a positive gesture that private firms have finally acquired their status in the industry. But there are still more details to be settled, and we are watching,' said well-known  private publisher Xue Ye.
Veteran publisher Dong Xiuyu was more reserved about the expected changes, saying that from his experience, the authorities  had been slow and hesitant in making changes 'with a rooted idea to  administratively reshape the publishing house'.
'The lower reaches of the industry have become totally market-oriented, but the industry's upper echelons are still controlled by officials with an administrative perspective,' Mr Dong said. 
'As long as officials are still appointed by the administrator, policies are drafted by officials whose major concern is to avoid making political mistakes rather than radical changes, we still cannot expect much.'



Reform might unearth  gem for publishers