Company Restructure

Interregional Cooperation Becoming Major Trend

Since 2008 China’s publishing industry has seen great changes in combination with mergers and acquisitions. These events have not only involved interregional mergers between state-owned publishing organizations but also between state-owned and private publishing companies across multiple regions. Resource integration and business expansion are becoming the most popular strategies for Chinese publishers. Restructuring has been the most efficient and effective manner to development, whether for state-owned or private enterprises.

 

   Compared with those of other countries, China’s publishing industry has primarily featured highly regional concentration. Previously, although some branches of the Xinhua Chain Bookstore at the provincial level had opened interprovincial stores to expand business outside their own respective regions but it is far from actual interregional partnerships. Starting in 2008, however, state-owned publishers and distributors’ cross-regional operations have begun advancing rapidly.

 

   ■ In March 2008, the China Peace Publishing House became China's first publisher at the central government level to implement joint-stock restructuring, namely with the Jiangxi Publishing Group. It achieved sales growth of 70% over the previous year (over 60 million yuan (US$ 8.8 million) in sales in 2008, the year of the restructuring).

   ■ In May 2008, Jiangsu Xinhua Distributing Group and Hainan Xinhua Distributing Group collectively established the Hainan Phoenix Xinhua Publishing Co., Ltd. in Haikou. This set a strong precedent for interprovincial restructuring in China's book distributing area. In 2008, Hainan Phoenix Xinhua's 18 subsidiary companies' saw net profits grow by 136 over the previous year as sales revenue increased by more than 10 as Hainan Phoenix Xinhua enjoyed 36% higher sales volume from January to June than the same period in previous year.

   ■ In December 2008, Guizhou Xinhua Winshare LLC (based in Si Chuan province) officially debuted on the market with the construction and opening of the flagship bookstore, the Guizhou Book City in Guiyang. This symbolized the substantive and close cooperatiion between the distributing business in the provinces of Guizhou and Sichuan. Guizhou Xinhua Winshare's founding drew upon investments from Guizhou Publisihing Group's Guizhou provincial-level branch of the Xinhua Bookstore chain as well as Sichuan Xinhua Winshare Chainstore Co., Ltd which boasted total registered capital of roughly 60 million yuan (US$8.8 million).

   ■ In April 2009, the Jilin Publishing Group and China Industrial & Commercial United Press pooled their resources to establish the China Industrial & Commercial United Publishing LLC in Beijing, the first interprovincial publishing company resulting from strategic restructuring across central government bureau lines.

   ■ On June 26th, Tianjin Press and Publications Bureau, Inner Mongolia Xinhua Publishing Group, and Northern United Publishing & Media (Group) Co., Ltd. signed their Strategic Cooperative Framework Agreement in Beijing, thereby attesting further to the popularity of resource integration in China's publishing industry's capital operations and exploring the more dynamic pace of "flagship" corporation formation.

   Reportedly, publishing groups in Shaanxi, Hebei, Anhui and Guangxi are also actively planning strategic interregional restructuring.

 

Private Sector Seeks Backers

   Starting from 1980, private-owned publishing companies in Mainland China have existed in a sort of gray area. These private publishers have more flexibile operational   abilities and have accumulated full experience in content innovation. In 2008, an intense wave of mergers came between state-owned publishing houses and privite publishers .

    Generally, there are several differences models in the cooperation between private-owned publishing companys  and  state-owned publishing group and other asset holders. State-owned publishers or  capital holders can directly form new companies.  Alternatively, state-owned publishing houses can form joint ventures via private publishing houses.

 

   ■ In July 2008, the Liaoning Publishing and Media Co., Ltd.'s subsidiary, Volumes Publishing Company, joined with private publisher Lu Jinbo to establish the joint venture Liaoning Wanrong Publishing Development LLC. Lu Jinbo was appointed as Vice Chairman of Volumes Publishing Company. Li Ke, another top private publisher in Chin has taken the helm at Zhipin Book Company and this company, focusing on literary history books was also bought by a state-owned publishing house.

   ■ In early 2009, the Hubei Changjiang Publishing Group appointed noted 26-year-old author Guo Jingming the Vice General Editor at the Group's Beijing Book Center.

   ■ In April 2009, Shandong Province in eastern China, many private publishing companys established closer relations with major state-run publishing houses.

   ■ On April 21st, Hubei Changjiang Publishing Group's subsidiary, Hubei Education Press joined with private publishier Wang Maimai in investing Hubei Shangwen Publishing and Media Co., Ltd. in the southern city of Wuhan, marking the first official strategic cooperation between a state-owned publishing organization and non-corporate publishing entity .

   ■ On April 25th, the day of the opening ceremony of the National Book Expo, the Phoenix Publishing and Media Group announced its subsidiary Jiangsu People's Press would join with Beijing Republic Book Co., Ltd. in a strategic partnership; the two corporations collectively invested 100 million yuan (US$ 14.6 million) in the establishment of the Fonghong (Beijing) Media Co., Ltd., in which Jiangsu People's Press maintains a 51% share.

   ■ At the National Book Expo, Shandong Publishing Group and King & Key Education Group Chairman Ren Zhihong signed a strategic cooperative agreement, announcing  the two parties will cooperate in investment, cotent production, and  design, especially in educational and textbook publishing.

   ■ The Time Publishing & Media Co., Ltd.which has already gone public, and Shandong Sparke International Education Group signed a strategic cooperative agreement. Yuelu Publishing House, a  subsidiary of the newly established Zhongnan Publishing and Media (Group) Co., Ltd.,  joined Beijing Normal University Professor Xiao Chuan in investing in and establishing the Changsha Xiaoyue Culture and Media LLC.

   ■ In May, Beijing Huawen Tianxia Publishing Co., Ltd. and Shanda Interactive Entertainment., Ltd. finished another stage of capital integration, establishing a new company to expand online literature to paper book publishing. Meanwhile, Motie Wenhua (Motie Culture and Development Co., Ltd.) and Beijing Booky Publishing, Inc., companies of roughly equivalent size as Huawen Tianxia, are rumored along with other companies to have entered investment negotiations with Shanda Entertainment, all vying for the "next big joint venture partner" spot.

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