A Survey of China's Book Publishing Industry: 2005–2006

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Chapter 6
A Survey of China's Book Publishing Industry: 2005–2006

In recent years, the reform of China's publishing and distribution system has made important achievements, one of which is the cultivation of some large and famous presses through group formation and intensive development. These outstanding publishing organizations have become the mainstay of China's publishing industry. Consequently, the market concentration of the industry has become higher than ever before. In addition, the industry structure has become more rational and profit has grown together with the increase and diversification of new titles. The competitiveness of China's publishing industry is becoming apparent as the industry expands. In order to obtain a more objective view of China's publishing groups and well-known presses and better understand the development trends of the publishing industry, in early 2007 the GAPP Administrative Department of Book Publication undertook a survey of the major economic indicators of 25 publishing groups and 14 Beijing-based publishing organizations with annual sales of over RMB 200 million. The research group has made an elaborate analysis of the data collected in this chapter.

OVERALL SITUATION

In 2006, the 39 surveyed publishing organizations maintained a good development momentum with marked increases registered in each economic indicator, despite the bidding system for textbooks and the price-cap regulation on textbooks for primary and high schools.1

In 2006, these publishers published a total of 132,345 titles, accounting for 54% of the national total, among which 58,542 were new titles, accounting for 44% of the total. In the same year, their total assets amounted to RMB 93.353 billion, net assets were

1 According to data released by these publishing organizations, the two factors resulted in a revenue reduction of nearly RMB 1.01 billion.

RMB 51.807 billion, sales revenue reached RMB 73.761 billion, and the publication value based on list price was RMB 40.983 billion. Delivery value was RMB 40.432 billion and total pre-tax profit was RMB 5.260 billion. Stock value by list price was RMB 18.811 billion and returned books were valued at RMB 2.233 billion.2

Compared with 2005, the total assets of 25 of the publishing groups grew by 8.43%, net assets 7.45%, sales revenue 5.22%, and the total pre-tax profit 0.68%. From 2004 to 2006, total assets of 14 large well-known presses expanded by an average annual growth of 9.84%. Net assets, sales revenue, and pre-tax profit grew by 15.38%, 13.87%, and 12.56% respectively.

ANALYSIS OF MAJOR ECONOMIC INDICATORS IN 2006

SCALE ANALYSIS

Analysis of Total Assets In this survey, the 39 publishing organizations were each shown to have very different proportions in terms of total assets. The aggregated total assets of the top 15 accounted for 75% while the other 24 accounted for only 25%.

Jiangsu Phoenix Publishing and Media Group ranked first with total assets valued at RMB 8.894 billion. The total assets of Zhejiang Publishing United Group, Shandong Publishing Group, Hunan Publishing Group, Henan Publishing Group, and China Publishing Group exceeded RMB 5 billion. In general, the aggregated total assets of publishing groups were greater than those of large well-known presses, with the exception of two large presses—Higher Education Press and the People's Education Press. The total assets of 14 presses were RMB 10.605 billion, with an per press average of RMB 760 million. Publishing groups also differed greatly in total assets: three had total assets of less than RMB 1 billion; China's Reader Publishing Group had total assets of RMB 626 million, only 7% of that of Jiangsu Phoenix Publishing and Media Group. Nearly half of the large well-known presses had total assets of less than RMB 500 million (see Table 6.1).

Analysis of Net Assets As with total assets, the net assets of each press or group also differed significantly. The net assets of nine publishing organizations exceeded RMB 2 billion, while those of the leading Jiangsu Phoenix Publishing and Media Group was 20 times those of the smallest Publishing House of the Electronics Industry. Except for Higher Education Press and the People's Education Press, 18 out of the top 20 by total assets and net assets were all publishing groups.

Analysis of Sales Revenue Ranking the 39 presses or groups by sales revenue, we will see that the top six were regional publishing groups in Jiangsu, Zhejiang, Shandong, Hunan, Henan, and Hebei. China Publishing Group ranked seventh. Although the sales

2 Seven publishing organizations did not report their total value of returned books and so the number is incomplete.

RankingGroup/pressTotal assets (RMB 100 mil.)Net assets (RMB 100 mil.)Sales revenue (RMB 100 mil.)
1Jiangsu Phoenix Publishing and Media Group88.9448.5584.04
2Zhejiang Publishing United Group75.1244.5275.09
3Shandong Publishing Group75.0032.0066.00
4Hunan Publishing Group68.0032.0061.00
5Henan Publishing Group63.8229.4858.84
6China Publishing Group52.6918.1735.31
7Hebei Publishing Group47.2425.6237.72
8Jiangxi Publishing Group42.7128.4934.26
9Guangdong Publishing Group39.0625.3128.17
10Anhui Publishing Group31.4618.9210.14
11Hubei Changjiang Publishing Group26.7017.5417.75
12Liaoning Publishing Group23.868.5516.18
13Yunnan Publishing Group23.4810.3323.53
14Higher Education Press22.7618.7511.81
15Shanxi Publishing Group22.669.7630.75
16Jilin Publishing Group21.807.2311.11
17Sichuan Publishing Group17.8014.357.82
18The People's Education Press17.6216.157.97
19Shanghai Century Publishing Group17.4810.879.52
20Guizhou Publishing Group14.508.6815.50
21Guangxi Publishing Group14.359.497.35
22Heilongjiang Publishing Group13.307.1013.80
23Chongqing Publishing Group12.413.483.33
24Shanghai Literature and Art Publishing Group11.356.764.05
25Beijing Publishing House Group9.405.003.20
26SinoMaps Press9.297.924.03
27The People's Medical Publishing House8.277.384.21
28China Science Publishing Group8.084.967.03
29Foreign Language Teaching and Research Press7.905.348.90
30China's Reader Publishing Group6.265.583.74
31Posts and Telecommunications Press5.723.523.49
32China Machine Press5.703.305.20
33Tsinghua University Press4.963.913.92
34China Light Industry Press4.553.894.54
35Beijing Normal University Press4.313.775.25
36Central Radio & TV University Press4.113.073.00
37Publishing House of the Electronics Industry4.092.403.09
38China Renmin University Press3.933.402.64
39Educational Science Publishing House2.842.534.33

revenue of most publishing groups was higher than that of large well-known presses, China's Reader Publishing Group, Chongqing Publishing Group, Beijing Publishing House Group, and Shanghai Literature and Art Publishing Group were exceptions.

Analysis of Pre-tax Profit Higher Education Press, the People's Education Press, the People's Medical Publishing House, and Foreign Language Teaching and Research Press ranked among the top ten according to total assets, net assets, and sales revenue, showing the strong profitability of large well-known presses even though the top rankings went to publishing groups, such as Jiangsu Phoenix Publishing and Media Group, Zhejiang Publishing United Group, and Hunan Publishing Group

Although Liaoning, Jilin, and Shanxi publishing groups each exceeded RMB 2 billion in terms of total assets, their pre-tax profit stayed below RMB 100 million. In addition, Heilongjiang, Beijing, and Chongqing publishing groups ranked last in terms of pre-tax profit despite their high total assets. None of the 38 publishing organizations which provided data made a loss (see Table 6.2). 3

Analysis of Publication Value Based on List Price The book publication value based on list price represents the publishing or production capability of a press or publishing group. Since many publishing groups are also distributors, publishing capability refers only to the production capacity of a press inside the publishing group. Table 6.3 shows that Higher Education Press and China Publishing Group ranked second and third respectively, although they fell behind in the rankings by total and net assets. This means that their main business was very robust, as was Jiangsu Phoenix Publishing and Media Group which ranked first. By comparison, other business divisions of Shandong, Hebei, Jilin, and Guizhou publishing groups made up a higher percentage. Among the top 20, four were large well-known presses: Higher Education Press, Foreign Language Teaching and Research Press, the People's Education Press, and Beijing Normal University Press.

Analysis of Total Delivery Value The ranking by total delivery value is slightly different from the above rankings. Here Jiangsu Phoenix Publishing and Media Group, which ranked first in the above rankings, ranked second in this ranking. It should be noted that of the top 20, six were large well-known presses, showing their relatively strong sales performance.

PERFORMANCE ANALYSIS

Analysis of Profitability The average profit margin of total assets of the 39 publishing organizations in 2006 was 5.63%, the average profit margin of net assets was 10.15%, and the average ratio of profit to sales was 7.13%, showing that they maintained a high profit level.

3 China Machine Press did not provide any data.

RankingGroup/pressPre-tax profit (RMB 100 mil.)
1Jiangsu Phoenix Publishing and Media Group6.41
2Zhejiang Publishing United Group3.61
3Hunan Publishing Group3.13
4Higher Education Press3.07
5The People's Education Press2.15
6Jiangxi Publishing Group2.07
7The People's Medical Publishing House1.85
8Hebei Publishing Group1.83
9Shandong Publishing Group1.80
10Foreign Language Teaching and Research Press1.74
11Anhui Publishing Group1.63
12Guangdong Publishing Group1.56
13Sichuan Publishing Group1.54
14Henan Publishing Group1.50
15China Publishing Group1.43
16Yunnan Publishing Group1.41
17Hubei Changjiang Publishing Group1.13
18Educational Science Publishing House1.09
19Shanghai Literature and Art Publishing Group1.05
20Shanghai Century Publishing Group1.02
21Liaoning Publishing Group0.99
22Tsinghua University Press0.96
22China Science Publishing Group0.96
24SinoMaps Press0.91
25Jilin Publishing Group0.90
26Guangxi Publishing Group0.83
27China's Reader Publishing Group0.80
28Guizhou Publishing Group0.78
29China Renmin University Press0.59
30Shanxi Publishing Group0.58
31Beijing Normal University Press0.57
32Central Radio and TV University Press0.54
33Posts and Telecommunications Press0.50
34China Light Industry Press0.46
35Heilongjiang Publishing Group0.38
36Publishing House of the Electronics Industry0.35
37Beijing Publishing House Group0.30
38Chongqing Publishing Group0.18
39China Machine Press-
RankingGroup/pressPublication value based on list price(RMB 100 mil.)
1Jiangsu Phoenix Publishing and Media Group32.29
2Higher Education Press24.01
3China Publishing Group22.10
4Hunan Publishing Group18.45
5Zhejiang Publishing United Group17.14
6Anhui Publishing Group16.92
7Henan Publishing Group15.72
8Shanghai Century Publishing Group15.36
9Shandong Publishing Group15.00
9Foreign Language Teaching and Research Press15.00
11Guangdong Publishing Group14.94
12The People's Education Press13.64
13Hubei Changjiang Publishing Group12.24
14Liaoning Publishing Group11.38
15China Science Publishing Group11.18
16Hebei Publishing Group10.51
17Guangxi Publishing Group10.19
18Shanxi Publishing Group9.28
19Beijing Normal University Press9.06
20Yunnan Publishing Group8.72
21Tsinghua University Press8.39
22Educational Science Publishing House8.34
23The People's Medical Publishing House8.24
24China's Reader Publishing Group7.65
25China Machine Press6.97
26Beijing Publishing House Group6.80
27Sichuan Publishing Group6.75
28Heilongjiang Publishing Group6.16
29Publishing House of the Electronics Industry5.70
30SinoMaps Press5.60
31Chongqing Publishing Group5.59
32China Renmin University Press5.12
33Guizhou Publishing Group5.01
34Shanghai Literature and Art Publishing Group4.82
35Posts and Telecommunications Press4.67
36Jilin Publishing Group4.59
37Central Radio and TV University Press3.25
38China Light Industry Press3.05
39Jiangxi Publishing Group-
RankingGroup/pressTotal delivery value (RMB 100 mil.)
1Zhejiang Publishing United Group34.20
2Jiangsu Phoenix Publishing and Media Group31.91
3Hunan Publishing Group26.00
4Higher Education Press25.39
5Liaoning Publishing Group18.21
6China Publishing Group17.22
7Anhui Publishing Group15.39
8Henan Publishing Group15.38
9Shanghai Century Publishing Group15.08
10The People's Education Press14.75
11Foreign Language Teaching and Research Press14.00
12Hubei Changjiang Publishing Group13.56
13Guangdong Publishing Group12.09
14Guangxi Publishing Group10.59
15Beijing Normal University Press10.30
16China Science Publishing Group10.04
17Hebei Publishing Group9.88
18Tsinghua University Press8.47
19Educational Science Publishing House8.40
20Yunnan Publishing Group7.95
21The People's Medical Publishing House7.05
22China's Reader Publishing Group7.04
23China Machine Press7.00
24Shanxi Publishing Group6.26
25SinoMaps Press5.93
26Sichuan Publishing Group5.66
27Publishing House of the Electronics Industry5.40
28Shanghai Literature and Art Publishing Group4.99
29Beijing Publishing House Group4.97
30Chongqing Publishing Group4.96
31China Renmin University Press4.68
32Guizhou Publishing Group4.56
33Posts and Telecommunications Press4.45
34Jilin Publishing Group4.03
35Central Radio & TV University Press3.73
36China Light Industry Press2.98
37Heilongjiang Publishing Group1.82
38Shandong Publishing Group-
39Jiangxi Publishing Group-

Tables 6.5, 6.6, and 6.7 rank the 39 publishing organizations by profit margin of total assets, profit margin of net assets, and ratio of profit to sales. An obvious phenomenon is that large well-known presses generally ranked higher than publishing groups. The average profit margin of total assets of the 25 publishing groups was 4.37%, the average profit margin of net assets 8.36%, and the average ratio of profit to sales 5.52%. For the 14 large well-known presses the average profit margin of total assets was 13.94%, average profit margin of net assets 17.32%, and average ratio of profit to sales 20.42%, which were 9.57%, 8.96%, and 14.9% higher than those of publishing groups respectively. The majority of top ten publishers by profit margin of total assets were large well-known presses, while the last 20 were all publishing groups. Ranking by the ratio of profit to sales is similar, showing that large presses had superior assets and strong profitability.

Stock Analysis In 2006, the total stock value of the 39 publishing organizations was RMB 18.811 billion. Their stock turnover rate was 46% in 2006, much lower than that of the industry which was 98% in 2005. The same rate of large well-known presses was 43%, lower than the average of the 39 publishing organizations. We should not generalize the stock situation. For publishing organizations mainly engaged in college

RankingGroup/pressProfit margin of total assets (%)
1Educational Science Publishing House38.30
2The People's Medical Publishing House22.37
3Foreign Language Teaching and Research Press22.03
4Tsinghua University Press19.38
5China Renmin University Press15.01
6Higher Education Press13.49
7Beijing Normal University Press13.23
8Central Radio and TV University Press13.14
9China's Reader Publishing Group12.78
10The People's Education Press12.20
11China Science Publishing Group11.88
12China Light Industry Press10.11
13SinoMaps Press9.80
14Shanghai Literature and Art Publishing Group9.25
15Posts and Telecommunications Press8.74
16Sichuan Publishing Group8.65
17Publishing House of the Electronics Industry8.56
18Jiangsu Phoenix Publishing and Media Group7.21
19Yunnan Publishing Group5.99
20Shanghai Century Publishing Group5.84
21Guangxi Publishing Group5.78
22Guizhou Publishing Group5.38
23Anhui Publishing Group5.19
24Jiangxi Publishing Group4.85
25Zhejiang Publishing United Group4.81
26Hunan Publishing Group4.60
27Hubei Changjiang Publishing Group4.23
28Liaoning Publishing Group4.15
29Jilin Publishing Group4.13
30Guangdong Publishing Group3.99
31Hebei Publishing Group3.87
32Beijing Publishing House Group3.19
33Heilongjiang Publishing Group2.87
34China Publishing Group2.71
35Shanxi Publishing Group2.56
36Shandong Publishing Group2.40
37Henan Publishing Group2.35
38Chongqing Publishing Group1.45
39China Machine Press-
RankingGroup/pressProfit margin of net assets (%)
1Educational Science Publishing House43.08
2Foreign Language Teaching and Research Press32.58
3The People's Medical Publishing House25.07
4Tsinghua University Press24.58
5China Science Publishing Group19.35
6Central Radio and TV University Press17.59
7China Renmin University Press17.35
8Higher Education Press16.37
9Shanghai Literature and Art Publishing Group15.53
10Beijing Normal University Press15.12
11Publishing House of the Electronics Industry14.58
12China's Reader Publishing Group14.34
13Posts and Telecommunications Press14.20
14Yunnan Publishing Group13.61
15The People's Education Press13.31
16Jiangsu Phoenix Publishing & Media Group13.20
17Jilin Publishing Group12.45
18China Light Industry Press11.83
19Liaoning Publishing Group11.58
20SinoMaps Press11.49
21Sichuan Publishing Group10.73
22Hunan Publishing Group9.78
23Shanghai Century Publishing Group9.38
24Guizhou Publishing Group8.99
25Guangxi Publishing Group8.75
26Anhui Publishing Group8.63
27Zhejiang Publishing United Group8.11
28China Publishing Group7.87
29Jiangxi Publishing Group7.27
30Hebei Publishing Group7.14
31Hubei Changjiang Publishing Group6.44
32Guangdong Publishing Group6.16
33Beijing Publishing House Group6.00
34Shanxi Publishing Group5.94
35Shandong Publishing Group5.63
36Heilongjiang Publishing Group5.38
37Chongqing Publishing Group5.17
38Henan Publishing Group5.09
39China Machine Press-
RankingGroup/pressRatio of profit to sales(%)
1The People's Medical Publishing House43.94
2The People's Education Press26.98
3Higher Education Press25.99
4Shanghai Literature and Art Publishing Group25.93
5Educational Science Publishing House25.17
6Tsinghua University Press24.57
7SinoMaps Press22.58
8China Renmin University Press22.35
9China's Reader Publishing Group21.39
10Sichuan Publishing Group19.69
11Foreign Language Teaching and Research Press19.55
12Central Radio and TV University Press18.00
13Anhui Publishing Group16.10
14Posts and Telecommunications Press14.33
15China Science Publishing Group13.66
16Publishing House of the Electronics Industry11.33
17Guangxi Publishing Group11.29
18Beijing Normal University Press10.86
19Shanghai Century Publishing Group10.71
20China Light Industry Press10.13
21Beijing Publishing House Group9.38
22Jilin Publishing Group8.10
23Jiangsu Phoenix Publishing and Media Group7.63
24Hubei Changjiang Publishing Group6.37
25Liaoning Publishing Group6.12
26Jiangxi Publishing Group6.04
27Yunnan Publishing Group5.98
28Guangdong Publishing Group5.54
29Chongqing Publishing Group5.41
30Hunan Publishing Group5.13
31Guizhou Publishing Group5.03
32Hebei Publishing Group4.85
33Zhejiang Publishing United Group4.81
34China Publishing Group4.05
35Heilongjiang Publishing Group2.77
36Shandong Publishing Group2.73
37Henan Publishing Group2.55
38Shanxi Publishing Group1.89
39China Machine Press-

and university textbooks, a certain level of stock is required to guarantee books are in the shops before a new term starts in view of the uncertainty of enrollment. The stock turnover rate of some publishing organizations, such as Zhejiang Publishing United Group, Higher Education Press, Hunan Publishing Group, China Publishing Group, Liaoning Publishing Group, Jilin Publishing Group, and Shanghai Literature and Art Publishing Group, was more than 70%, with that of Zhejiang Publishing United Group, Shanghai Literature and Art Publishing Group, and Jilin Publishing Group ranging between 100% and 200%.

Analysis of Book Returns Since seven publishing organizations did not provide data on book returns, we can only analyze 32 publishers. The total value of returned books of these organizations was RMB 2.283 billion. The ratio of returns to sales was 6.57%, which is acceptable. Since the majority of the 32 organizations are engaged in the large-scale textbook publishing, their overall ratio of book returns to sales should be lower than the average industry ratio. However, China Publishing Group, Tsinghua University Press, Publishing House of the Electronics Industry, and China Renmin University Press had returns of more than 10%, China Machine Press and China Science Publishing Group more than 20%, and China Science Publishing Group 23%.

ECONOMIC INDICATORS: 2006 vs. 2006

Large well-known Presses Compared with 2005, the 14 large well-known presses grew remarkably with their total assets growing by 10.52%, net assets by 18.61%, sales revenue by 11.14%, and pre-tax profit by 29.84%. From 2004 to 2006, total assets grew by 9.84% period on period, net assets 15.38%, sales revenue 13.87%, and pre-tax profit 12.56%. The growth of these indexes was much higher than the industry averages.

Table 6.8 shows the rankings of 14 large well-known presses by the growth of total assets in 2006 against 2005. Overall their total assets and net assets grew. However, the pre-tax profit of Beijing Normal University Press, Higher Education Press, and SinoMaps Press decreased.

Publishing Groups Many publishing groups were established in or after 2004. They reorganized assets and incorporated presses, resulting in enlarged scale. For this reason we chose to compare data from 2006 with data from 2005 to better reflect

RankingNameGrowth of total assets (%)Growth of net assets(%)Growth of sales revenue (%)Proportion of pre-tax profit (%)
1Tsinghua University Press26.2823.9511.6331.42
2Foreign Language Teaching and Research Press22.6327.597.5059.97
3The People's Medical Publishing House20.0220.0037.5852.89
4Posts and Telecommunications Press16.9720.965.39150.00
5China Machine Press14.0010.0018.00-
6Beijing Normal University Press13.128.334.58-6.56
7China Renmin University Press12.6113.718.205.15
8Higher Education Press11.8715.9610.20-5.67
9Central Radio and TV University Press11.0021.0016.0023.00
10The People's Education Press4.504.209.303.00
11Publishing House of the Electronics Industry1.496.6715.2927.78
12China Light Industry Press1.0022.0011.0070.00
13Educational Science Publishing House0.9134.8815.8130.00
14SinoMaps Press0.548.79-4.50-27.78

the development of publishing groups. Compared with 2005, the total assets of the 25 publishing groups grew by 8.43%. Their net assets grew by 7.45%, sales revenue by 5.22%, and pre-tax profit by only 0.68%.

Table 6.9 ranks the 25 publishing groups by the growth of total assets in 2006 over 2005. Compared with 2005, only two publishing groups experienced decline in terms of total assets and net assets. Out of the 24 publishing groups that provided data, four found their sales revenue dropping, with that of Sichuan Publishing Group decreasing by nearly 13%.

RankingNameGrowth of total assets (%)Growth of net assets(%)Growth of sales revenue (%)Growth ofpre-tax profit (%)
1Beijing Publishing House Group25.009.0039.00-25.00
2Guizhou Publishing Group20.738.372.6027.13
3Anhui Publishing Group17.265.58--
4China's Reader Publishing Group14.0214.114.488.11
5Hubei Changjiang Publishing Group13.6013.60-5.00-14.00
6Hunan Publishing Group13.336.702.3615.80
7Jiangsu Phoenix Publishing and Media Group12.292.456.7427.30
8Shandong Publishing Group10.304.901.50-40.00
9Jiangxi Publishing Group8.7014.509.70-16.90
10Henan Publishing Group8.45-1.542.85-33.63
11Liaoning Publishing Group8.366.3425.008.79
12Sichuan Publishing Group8.345.36-12.92-12.00
13Zhejiang Publishing United Group7.9726.2611.5811.67
14Chongqing Publishing Group7.959.6112.12-24.78
15Shanghai Literature and Art Publishing Group7.8417.405.17134.62
16Yunnan Publishing Group7.0010.007.0013.00
17Jilin Publishing Group6.4014.220.4025.00
18Heilongjiang Publishing Group5.569.234.16-25.23
19China Publishing Group5.426.383.1149.52
20Hebei Publishing Group4.722.60-2.91-17.94
21Shanghai Century Publishing Group4.629.049.446.88
22Guangdong Publishing Group2.251.9312.5016.10
23China Science Publishing Group1.0016.982.339.09
24Shanxi Publishing Group-1.08-11.003.82-40.05
25Guangxi Publishing Group-12.874.75-2.00-17.00

It is worth noting that the pre-tax profit growth of the 24 publishing groups providing data is not optimistic. Compared with 2005, the profits of 11 publishing groups declined by more than 10% and six by over 20%. Shanxi Publishing Group's profits decreased by 40% and Shandong Publishing Group even more.

The profit decline was caused by the bidding system for textbooks and the price-cap regulation. The 25 publishing groups suffered a total income reduction of RMB 1.01 billion. In 2006, the pre-tax profits of these groups totaled RMB 3.619 billion. Those deeply affected by the two factors include Hunan, Shandong Henan, Guangdong, and Sichuan publishing groups.

GROWTH CHARACTERISTICS AND REASONS

CHARACTERISTICS

The major economic indicators of most publishing organizations grew, although a few experienced a decline. Publishing groups have the advantage of scale while large well-known presses rank better. The imbalance between publishing organizations increased the polarization in the industry. Textbooks for primary and high schools played a significant role in raising economic indicators, showing that the industry needs to be guided more by the market. The deepening of institutional reform had an apparent impact on the profit increase of the publishing industry.

REASONS

The overall situation shows that the growth rate of large well-known presses was higher than that of publishing groups. This demonstrates that large well-known presses have good profitability and are sustainable in development.

The publishing groups ranking top by growth rate include Beijing Publishing House Group (25%), Heilongjiang Publishing Group (21%), Jilin Publishing Group (19%), and Shanghai Literature and Art Publishing Group (19.1%). On the one hand, these publishing groups were revitalized through reform. On the other hand, they are smaller in scale than other publishing groups and therefore have a smaller base figure.

It is a different picture for large well-known presses in top rankings. Higher Education Press grew at the highest rate. Its total assets reached RMB 2.276 billion in 2006, up 66.15% from 2004. Its net assets reached RMB 1.875 billion, up 45.05%, sales revenue RMB 1.181 billion (37.49%), pre-tax profit RMB 307 million (42.93%), and the profit margin of total assets 13.49%. Higher Education Press ranked above all other large well-known presses by total assets, net assets, and profitability. Foreign Language Teaching and Research Press and China Science Publishing Group also had high growth rates. These large presses owed their rapid growth to their expansion of publishing resources and opening-up of new growth areas. For instance, apart from traditional scientific and technological textbooks, Higher Education Press has also engaged itself in publishing textbooks for arts and social sciences, vocational education, and various examinations in recent years. Other presses also explored such fields as textbooks for primary and high schools as well as business and economics.

At the same time, these presses also made great effort to integrate their distribution channels for higher profit. For example, Landraco Book Publication and Distribution Corporation under Higher Education Press is a major player in the field of book selling that has contributed significantly to the sales increase of the press. In addition, these presses improved their internal structures, employment mechanisms, income distribution, and performance evaluations, which has inspired employees' initiative and creativity and enhanced the corporate competitiveness.

PROBLEMS

DECREASE IN MAJOR INDICES

Some publishing groups experienced a decrease in the major indices. For instance, Hubei Changjiang Publishing Group, Hebei Publishing Group, Guangxi Publishing Groups, and Henan Publishing Group experienced decreases in publication value based on list price, total delivery value, sales revenue, and pre-tax profit. The pre-tax profit of Henan Publishing Groups decreased 33.63%. The sales revenue of some publishing groups had grown but they still experienced profit drop. For example, the total delivery value of Heilongjiang Publishing Group grew 21%, but its profit decreased 25.23%. Guangxi and Hebei publishing groups also saw a profit decrease between 17% and 18%.

POOR OVERALL PROFIT

From reported data, we can see that the total profit of publishing groups only increased by 0.68% over 2005. This has something to do with the bidding for textbooks for primary and high schools and price reduction. Moreover, these groups were newly established and they needed time to integrate resources and reduce costs for internal transactions. At the same time, these publishing groups must also expand the scale elect and increase economic returns.

POLICY SUGGESTIONS

BUILD BIGGER AND STRONGER PUBLISHING GROUPS

In terms of performance, the aggregated profit margin of total assets of the 14 large well-known presses was 13.98%, profit margin of net assets 17.48%, and ratio of profit to sales 20.68%. For the 25 publishing groups, the profit margin of total assets, profit margin of net assets, and ratio of profit to sales were 7.67%, 11.06%, and 13.73% respectively, way below those of the large well-known presses. In terms of scale expansion, in the two years from 2004 to 2006, the total assets, net assets, sales revenue, and pre tax profit of the 14 large well-known presses grew by 20.65%, 33.13%, 29.66%, and 31.05% respectively. The four indices grew annually 9.84%, 15.38%, 13.87%, and 12.56%. Whereas for the 25 publishing groups, the four indices only grew 8.43%, 7.45%, 5.22%, and 0.68%. Beijing Publishing House Group, which ranked first of the publishing groups by growth rate of total assets, also saw a remarkable drop in pre-tax profit. This is a reminder to publishing groups that while expanding their scale, they should attach importance to core competitiveness and try to increase profitability.

SUPPORT PUBLISHING GROUPS SEEKING INTENSIVE DEVELOPMENT

It should be the focus of institutional reform in the publishing industry to extend vigorous support to large well-known presses seeking intensive development and turn them into professional publishing groups. The government should help them with preferential policies, encourage them to seek both intensive development and extensive expansion, and make themselves bigger and stronger through merger.

END THE MONOPOLY OF REGIONAL PUBLISHING GROUPS

In the rankings of the 39 publishing organizations by total assets, net assets, sales revenue, those ranked top were the regional publishing groups in Jiangsu, Zhejiang, Shandong, Hunan, Henan, and Hebei with the exception of China Publishing Group. These regional publishing groups have incorporated almost all local presses (except university presses) and most of them are engaged in both publication and distribution, making it easier for them to monopolize the local market and keep other publishers away from their territories. This goes against China's goal of creating a competitive national market of publications. It should be noted that the scale expansion of publishing groups within a province has not necessarily enhanced the performance and profit of the presses they took into their group. Instead, they have actually fallen behind those large well-known presses seeking intensive development.

BALANCE DIVERSIFICATION AND SPECIALIZATION

The relationship between diversification and specialization needs to be handled correctly.An important trend of the international publishing industry is that publishers are becoming more specialized of order to strengthen their core competitiveness. For diversification, publishers should consider both the upstream and downstream of the industrial chain in order to avoid the "snare of diversification." Some publishing groups in China own a huge amount of assets but are weak in profit generation, lagging far behind the professional large well-known presses. This further highlights the importance of specialization in development.

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