Over the course of the last three years, China’s publishing industry has undergone a significant transformation thanks to the huge popularity of mobile phones and an ever-increasing amount of internet usage among its population. Today we delve into China’s digital transformation to better understand the opportunities it presents for Canadian publishers.
China’s Internet usage is huge, with 659.1 million people or 46% of the population having Internet access at the end of 2014. By the end of 2016, it is estimated that the majority of China’s population will be Internet users. In contrast, China has the largest mobile phone audience in the world, with an installed base of 675.6 million mobile phones, which represents penetration nearing 49 % of the population. Mobile phones and smartphones have been quick to establish themselves in the Chinese market and are the primary source of Internet connectivity. Personal computers or tablets are much less common.
According to the McKinsey report “China’s Rising Internet Wave: Wired Companies,” there are five major factors driving the rapid development of digital media: a new expansion of digitally driven productivity; greater access to financing and lower risk; a growing base of consumer interaction; a lower barrier to innovation; and new competition as the Internet empowers entrepreneurs and small businesses.
Many publishers are pursuing new opportunities offered by digital publishing, although there is comparatively small market penetration by various e-readers. Unique to China, wireless service providers are involved in content development and distribution specifically designed for the mobile channel. China Telecom’s Tianyi Reading and China Unicom’s Leonvo’s Readto developed strategic distribution agreements with publishers in 2011. Of the total number of 255,890 new books published in China in 2014, only 2.7% were e-books. In April 2015, the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT) of the People’s Republic of China released a document that recommended and supported the book publishing industry’s development of digital publishing, including the formation of several digital publishing groups.
At the end of 2014, China had a social networking population of 659.1 million. This was expected to grow to more than 700 million by the end of 2015, although no new reports are currently available. If that is the case, then China would represent more than 48% of the world’s Internet users. According to WeAreSocial, the four social network leaders in China are TencentQZone, Tencent Weibo, Sina Weibo, and Renren. There are four major areas that demonstrate the growth of digital technology in China:
- Active Internet users: 668 million, accounting for 49% penetration
- Active social media users: 659 million, accounting for 48% penetration
- Active mobile social users: 574 million, accounting for 42% penetration
- Active unique mobile users: 675 million, accounting for 49% penetration
E-books as we know them in the North American market (based on the Kindle, Nook, iPad, and many other platforms) have not really made a major entry in China. A survey conducted in April 2011 by the Chinese Academy of Press and Publications reported that people between the ages of 18 and 60 have read 613 million books in 2010. Of this group, 33% read e-books via their mobile phones, 28% read books on the Internet, and only 3.9% read books on actual e-readers. The study also reported that the average “acceptable” price for an e-book downloaded from the Internet is 1.33 yuan (US$0.25). Nearly 54% of digital readers say they would pay up to 3.45 yuan to download books. Most of the digital content available is downloaded online in html format and paid for per chapter or by a monthly subscription fee. Content is purchased on phones or on tablet services from the e-bookstores of China’s three cellular service providers.
The combined revenues from e-books, online periodicals, and digital newspapers was US$1 billion in 2014. Between 2006 and 2013, revenues generated by digital publications increased an average of 78% annually. A survey conducted in the fall of 2015 reported that 50% of Chinese consumers prefer reading in a digital format on their phones. The survey also reported that 53% of Chinese readers born after 1990 are active online or read on their mobile phones. Interestingly, Chinese readers have not accepted the e-books or e-readers such as the Kindle or Nook of the Western world, but have gone directly to the mobile and smartphone as their primary digital reading device.
China also faces challenges in the realm of self-publishing, referred to in this market as “online literature.” The self-publishing sector is not yet controlled by the SAPPRFT and does not require ISBN registration. There were 1.76 million self-published titles available in 2013 and 2.1 million titles available online in 2014. It is likely that this form of self-publishing will become increasingly monitored by the SAPPRFT.
E-books and digital publishing were a major topic during the meeting of the Beijing Book Expo Committee in January 2015 and were also discussed at length during the IDPF@BIBF conference on August 28, 2015 in Beijing. The resulting conclusion was that digital publishing in the form of e-books and e-readers in China has not yet been established as an effective business model. With the popularity of mobiles and smartphones, the public does not feel the need to purchase a separate device to access and read books.
While mobile phones are the most popular device for e-books in China, the Internet provides access to such a huge amount of entertainment that publishers are still faced with the challenge of competing for consumers’ time. With so many people spending an increasing and disproportionate amount of time on their phones, the risk is that they are spending less time reading overall, whether print or digital editions. Internet companies have created unique business models for China that provide consumers with access to social platforms, games, video entertainment, music sites, and various e-commerce outlets. The three largest social media platforms are Weibo, WeChat, and Douban. These platforms provide instant messaging services, giving users access to free texting, voice messages, and video calls. In the last few years, their popularity has grown tremendously. In 2015, Weibo had 61.4 million daily active users, while 55.2% of WeChat users open the social media platform more than 10 times a day. Douban is a more culturally focused platform, providing its users with a targeted community for online discussions about films, music, and books.
This text has been excerpted from our market guide Selling Canadian Books and Translation Rights in China. Curious to know more? Download the full market guide!
11/22/2016 | Digital, Export, Market Guides