The digital publishing industry in China is, like the rest of the world still in its infancy.Whilst the Chinese government official statistics claim that for the first time, more digitally published products were sold than physical (by value), it's very difficult to see how these statistics have been reached, especially when Xinhua, the state run bookstore chain with over 20,000 stores throughout China tells us that 9.7 billion physical books were sold in China last year.

The digital publishing world can be divided up by the ereader market, the educational market, the mobile reading market and what I would call Digital Experimental projects.

The iPad is due to be launched within the next year and there are mixed views as to its potential success in China. Those welcoming its launch see it as a luxury, sought after aspirational product that will do very well in the gift market. In addition, it is one of few multimedia products available on the market especially with a screen of that size. Apple is also a popular brand amongst the Chinese. Those who are more pessimistic about the future of the iPad view the device as expensive, clunky, not suitable for either reading (due to heaviness compared to the ereaders in the market) or for business (due to the lack of ability to type quickly on it). The market is already flooded with cheaper, lighter ereaders and the younger population is already hooked on to entertainment via their mobile phones. Many iPads are already in circulation having been bought in Hong Kong or other destinations by travelers keen to get their hands on one early. The big advantage the iPad will offer is ‘Content’.

The ereader market is already flooded with over 40 hardware manufacturers operating in China, and the devices themselves have little variation in their functionality. A wide variety of such technology companies are working hard to get their ereaders taken up by content providers to brand as their own, or are trying to launch on the market by themselves. The problem so far is that there is still a big understanding gap between the tech companies and the content providers. The result being a myriad of devices with no content, and publishers with digital content (though very little) and still wary of where and how to sell it. To date there are no clear aggregators of ebooks for the ereader market, although with Amazon in the market and the recent launch of the Xinhua ebookstore this may quickly change. Shanghai Century Publishing Group (SCPG), the biggest state owned group in Shanghai, has taken the decision not to wait and see what the market will do and has already launched its own ereader device containing its own content. The devices come preloaded with some content with an option to purchase more. The state publishers are reluctant to co-operate with each other in this space and it looks unlikely that the SCPG will have any other content on its device or platform other than its own. The market for the ereader, like many others has a market only as gifts, which are generally bought by the government.

Electronic content certainly has a consumer audience though in a different way to the traditional consumption of ebooks. There is a massive market for econtent, be it consumed by ereader or mobile phone. The company Shanda Literature has taken full advantage of this. With a "fan base" of 10 million readers the site operates by allowing bloggers to upload their content on a daily basis. Readers interact by having access to the content firstly for free, be it the first few chapters of a book, and once they are hooked on the story, in order to read more they must pay. Charges are miniscule at 30 cents per 1,000 words. The revenue generated is then split 50/50 with the writer. There are now approximately 110,000 writer of which over 1000 earn over $10,000 per year and 20 elite writers who now earn over 2 million rmb per year. The owners of Shanda have then taken this model and gone back to traditional publishing. Those books which have been completed and proven most popular have been published by Shanda (together with a state owned publisher as Shanda is a private publisher and not legally allowed to publish) and sold a large number of copies, with the online version actually helping sales of the physical version rather than damaging them. Shanda, with its origins as a multimedia company does not stop there and also has licensing arrangements for its content with movie and computer game producers. Shanda does however operate a very strict policy that in order to start earning revenue from posting online content you must sign an agreement with them keeping you exclusive to them. If a writer then goes off to another publishing house Shanda will no longer deal with them. The profile of their audience has highly surprised Shanda. They had thought the majority would be young students but their fan base covers all professions. They have surmised that entertainment literature can be acceptable to all societies.

What has proven to be more than a successful business model and has rapidly developed over the past 2 years has encouraged Shanda to expand its business. Firstly into the ereader market (of course!). The "Bambook" is now on the market at a price of 999 rmb (just over £100) and is the cheapest on the market to date. It has a black and white screen and a voice over function which you can select to be a male or female voice. Their content is stored on their own platform known as the "Cloudary Bookstore". It is an open platform where anyone can upload and sell their ebooks. They say they will also be compatible with the iPad once here.

Next steps are launching in the Singapore and US market and they are on the search for JV partners elsewhere in the world. 

Another company with high hopes in this field is the state run bookstore chain Xinhua who 2 months ago launched their own ebookstore. Xinhua has 20,000 bookstores around China with a 70% market share of the physical book market. Now they want to dominate the ebook market. They have developed their own ebook platform, own ereader (called Yeahmore) with a well known technology company called EDO and together with their market penetration, government standing and access to marketing, on paper it looks like the ideal combination. Launched 2 months ago, they have signed contracts with 120 state publishing houses and are looking to rapidly expand this both working with the state publisher inside China as well as foreign publishers. The Yeahmore device had multi-lingual functionality, is lightweight, easy to use and mid-range priced. The business model for foreign publishers appears to be much less onerous than for physical books with no Official state run channels for importation. It seems that you can sign a contract with any ebook platform to have your econtent sold in China. My understanding is that the platform owners need permission from the government to have the platform but the restrictions foreign publishers currently face for importing physical books seem far more relaxed for econtent. Many are reserving judgement on the potential success of Xinhua's ebook store but as with all digital projects, and not only in China, time will tell.

Emma House was attending the Shanghai Exclusive Publishers Trip organized by the Frankfurt Book Fair/German Book Office Beijing and Creative Publishing Consulting.