Shopping for books in China, where a survey of publishing executives indicates that many feel they must reduce discounts passively in order to remain competitive in distribution channels. Image – Getty: Creative Family
By Zhang Aining and Huang Huang, China Publishers Magazine
Planning To Expand: 51 Percent of Executives
In 2023, China’s publishing industry began to resume normal operations, as the effects of the coronavirus COVID-19 pandemic receded.
Today, data from the Chinese book retail market is positive. However, the recovery has been relatively slow. By the end of 2023, the overall Chinese book retail market hadn’t yet reached the levels anticipated at the year’s start, and many publishing companies were working hard to maintain operational stability.
To gauge industry sentiment, China Publishers Magazine has conducted a survey of 100 senior executives from Chinese publishing companies. The survey is designed to capture their perspectives on the industry’s development, their companies, and their expectations for the future.
More Confidence in Their Companies Than in the Market
The survey results reveal that the 100 publishing executives—taking into account industry potential, company growth, product quality, talent development, market conditions, and profit margins—assigned an average confidence score of 6.17 out of 10.
“Some 15 percent of executives in children’s publishing and 14 percent in textbooks and supplementary teaching materials say they anticipate declines in their respective sectors.”
Among the surveyed senior executives, 56 percent say they believe their companies will see continued growth in overall business performance in 2024. Meanwhile, 24 percent say they expect performance to remain stable, 11 percent say they anticipate a decline, and 9 percent say they’re uncertain about the future.
Looking at different publishing sectors, nearly 70 percent of executives in comprehensive publishing and 68 percent in literature and art respond that they’re optimistic about growth in 2024. On the other hand, the children’s publishing and the textbook sector is voicing more pessimistic projections. Approximately 15 percent of executives in children’s publishing and 14 percent in textbooks and supplementary teaching materials say they anticipate declines in their respective sectors.
These findings align with market trends observed in various publishing sectors over recent years.
According to Beijing OpenBook data, both general books and literary works have shown positive growth over the past two years, while challenges persist in children’s books, textbooks, and supplementary materials. The declining birthrate in China, which directly affects student enrollment, suggests potential contraction in this sector going forward. Additionally, increasingly stringent regulatory policies may lead to major reshuffling in the educational publishing market.
Highest Confidence in Book Product Quality
The survey’s confidence index is divided into eight key indicators: industry potential; company development; cost control; revenue-generating capability; book product quality; talent cultivation; market environment; and profit margins.
“Low profit margins and the increasingly fierce, unresolved price competition within China’s publishing market pose substantial challenges.”
The survey results reveal that publishing executives express the highest confidence in the quality of book products, scoring an impressive 8.21 out of 10.
Following closely is their confidence in talent cultivation at 7.08.
Confidence in company development (6.63); revenue-generating capability (6.48); and cost control (6.4) receive moderate ratings. However, confidence in the industry’s potential is notably lower at 5.74, while profit margins and the market environment are rated even lower, at 4.45 and 4.4, respectively.
So while publishing executives maintain that they have strong confidence in their products and moderate confidence in internal factors, their confidence in the market environment is not as strong. The low profit margins and the increasingly fierce, unresolved price competition within China’s publishing market pose substantial challenges.
Economic Factors as Key Influencers
Among the external factors impacting the development of publishing companies, a striking 91 percent of executives identify “changes in the economic environment” as the most significant influence. This is followed by “tax policy adjustments” (63 percent), and both “population changes” and “market competition from non-traditional publishing companies,” which are cited by 55 percent of respondents.
Two executives point to piracy and “weak copyright protection policies” as significant concerns for their businesses. Furthermore, a senior executive from a leading private company emphasizes that, “The structure of China’s publishing industry has undergone drastic changes, and traditional approaches are no longer effective. Both our concepts and business models require reform.”
Internal Factors: Discounts, Innovation, Technology
Among the internal challenges anticipated to impact business development in the future, 87 percent of publishing executives identify “low discounts on books.” While discounts are within the decision-making purview of these companies, many executives say they find themselves constrained by powerful external market forces. This situation often requires them to reduce discounts passively in order to remain competitive in distribution channels.
Additionally, 62 percent of executives cite “a lack of internal innovation and growth potential” as another internal barrier to business development. Several factors contribute to this issue:
- The rise of digitization and the Internet has significantly altered readers’ habits and purchasing behaviors. However, some publishing companies remain tied to outdated business models, making it difficult for them to adapt.
- Many publishing firms struggle to adopt new technology because of wage cap restrictions, which hinder their ability to attract technical talent and implement new solutions.
- The absence of effective innovation incentive mechanisms in some companies diminishes employees’ motivation and willingness to innovate, resulting in significant product homogenization and a lack of distinction and competitive capability in their offerings. Consequently, launching books with substantial market impact becomes increasingly challenging.
Plans for Growth
Among the surveyed executives, 51 percent say they plan to expand their businesses. Of those, 90 percent say they believe that “developing new channels and exploring new business areas” will be the most crucial strategy for growth in 2024. Since 2020, short-video e-commerce—spearheaded by platforms like Douyin—has emerged as a key sales channel for the book industry. By 2023, this channel had become the second largest in the industry, accounting for 26.67 percent of book sales.
Related article: China Bestsellers in August: Charting Summer’s End. Image – Getty: TK Kurikawa
Additionally in 2024, 68.63 percent of executives say they plan to “develop new product lines”; 64.71 percent say they intend to “enter the integrated publishing sector and explore new growth opportunities”; 54.9 percent say they will “bring in new talent”; and 43.14 percent say they will “increase competition for top-tier copyrights.”
Notably, despite the growing prominence of artificial intelligence across various sectors, only 35.29 percent of executives say they plan to “increase the application of AI technology” in their businesses in 2024. Among the 6 percent of executives planning to downsize slightly, all say they have opted to do so by “reducing operating costs and cutting fixed expenses.”
In the survey, most publishing executives indicate that they do not plan to increase their workforces in the coming year. Only 39 percent say they feel that their total number of employees may grow, while 61 percent select options indicating that they believe those numbers will “remain unchanged,” “decrease,” or are “unsure.”
Given that the publishing industry is talent-driven, diminished confidence will likely lead to more cautious investments in human resources.
This article is appearing here as part of the ongoing cooperation between China Publishers Magazine and Publishing Perspectives. Learn more about the Chinese book market in China Publishers Magazine’s “Special Report for the 2024 Frankfurt Book Fair.” Or pick up a print copy at Frankfurter Buchmesse.
More from Publishing Perspectives on the Chinese book publishing market is here. Our monthly China Bestsellers update, presented in association with Beijing OpenBook, is here.
