Updates of Reform Progress of Chinese Press and Publishing Industry

From the year 2008, policies from Chinese Central Government and Ministry of Propaganda said that within the next 5 years, all Chinese press and publishing units should finish regime reforms, which is called entrepreneurialization.

This reform started from book publishing houses, in which field there are just 560 units nationwide in China. As we may have known that publishing houses in China have been much dependent on textbook publishing, which is an authority approval that can be acquired from Ministry of Education through certain forms of competitions. Since there are over 200 million students in need of textbooks in China, we can imagine how intense this competition could be and how big the cake is for publishing houses. The reform requires publishing houses to transform themselves into enterprises and later to merge into giant groups. Therefore, in the past 5 years, they formed about 50 giant central and provincial publishing groups, each of which owns 5 to 30 publishing houses. Meanwhile, several publishing groups got the priority to get enlisted in the stock exchange market, and of course, became giants in terms of capital and publishing licenses.

In fact, newspaper industry started similar reforms 15 years ago without being required by the government but by themselves. The result of the reform lead to the existence of 8 central and about 200 provincial newspaper groups, which are called Party Newspaper Groups. (Party here means Chinese Communist Party) The reform encouraged these Party Newspaper Groups to launch city daily newspapers with total commercial orientation, which enormously increased the newspaper market share in the whole publishing industry.

Magazine industry is the last field but with the most complicated situations. There are over 9000 magazine title licenses scattered in over 3000 different units, most of which are industrial associations and academic organizations. For decades till 1990s, 90% of magazines have been dependent on governmental subsidies, and the several profitable magazines are successful for distribution instead of advertising. International magazine publishers like IDG, Conde Nast, Hachette opened the gate for consumer magazines, and brought remarkable growth of advertising to Chinese magazine industry. The government realized that if we hope to have giant magazine publishers in China, the old regime no longer works for the industry any more. Therefore, the reform requires magazine publishers to be entrepreneurialized. However, over 7000 magazine publishers have never been corporations or registered as company at government. From September 2011, all of them have to be merged by those newspaper groups, publishing groups or magazine groups already existed. The process has to be finished by the end of 2012 as the governmental documents require. It is obviously that only the 50 publishing groups, about 210 newspaper groups and 30 or so magazine groups are qualified to merge all these magazines. In this way, survival of most magazines is critical if they have been dependent on governmental subsidies.  Many of these magazine directors are looking for proper mergers for their survival’s sake. 

There are two major possible models of the merges.

1. The government issues a document, designating certain magazines to be merged by certain qualified groups without any cost. This applies for those magazines without corporation registration. The staffs of the magazines have no guaranteed benefits.
2. The magazines already registered as corporation have the right to choose their merger. They will be able to introduce investing partners (mergers) to its corporation and transform it into share holding limited company. But so far, no private capital is allowed to be introduced. Most probably the existing groups are the first choice for them. The difference is that they will still have power in the corporation and their benefits can be fairly guaranteed.

This reform will result in most of the publishing resources including licenses to be owned by about 300 giant groups, and subsequently the groups merged each other to about 100 groups, which will largely narrow down the co-operation partner list for foreign publishers.  Although it is yet to see the gate open for foreign investment in the magazine or newspaper itself, a partner list of just 100 choices (20 central and others regional) with reliable background and stronger capital ability will be presumably welcomed by most foreign publishers. As the Party and government issues the further mission for these groups to have more international influence and brand reputation, they may show stronger willingness to co-operate with foreign publishers in the near future.