Industry Focus: Winning back the Chinese readers

This article first appeared in Unlisted & Unlimited, The Edge Malaysia Weekly, on February 13, 2017 - February 19, 2017.

Books will not disappear, but some people are seeing it as a sunset industry as there isn’t much money to be made. > Chiew

Lim and his team have adopted various strategies to promote their bookshop, including a ‘blind date with books’ concept

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The once-thriving publishers and retailers of Chinese books are struggling to survive. The market has seen stagnant growth in the last few years due to several factors.

The main reason is that the number of readers has not grown in tandem with the country’s Chinese population as fewer students are receiving their education at Chinese schools.

According to a report by the United Chinese School Teachers’ Association of Malaysia, the number of students at Chinese primary schools fell almost 12% between 2007 and 2014, from 648,252 to 571,315.

However, according to the United Chinese School Committees’ Association of Malaysia, the number of students entering Chinese independent high schools grew 34.02% to 84,604 from 58,212 during this period. Despite the increase, the student base of Chinese independent high schools is much lower than that of the primary schools.

“There have been no studies or surveys to tell us whether the Chinese book market is shrinking or expanding. I do not believe it is shrinking as the Chinese education system, which is the cornerstone of the book market, is doing fine. But the market has certainly not grown over the years,” says Chiew Ruoh Peng.

Chiew, who is president and publisher of Mentor Publishing Sdn Bhd, says most of the small and medium enterprises in the Chinese book industry are either losing money or barely breaking even. “Books will not disappear, but some people are seeing it as a sunset industry as there isn’t much money to be made.”

The industry is facing challenges from other areas as well. The use of social media has also changed reading habits. Chinese readers now spend more time on such networks reading stories that have gone viral.

“I have done some simple research and to my surprise, I found that among Malaysia’s top 20 websites, two of them are Chinese viral websites. And I am sorry to say that the clicks on these websites far exceeded those on news portals,” says Chiew.

He based these findings on a study conducted by Alexa, an analytical services provider. These Chinese viral websites include Moretify.com (ranked 11) and Teepr.com (ranked 17). The three most visited websites are Google, YouTube and Yahoo.

“It is not easy for us to attract these readers back to books. However, this particular issue affects the entire book market, including English and Malay books. We are just a part of it,” says Chiew.

The smaller independent Chinese bookshops are taking an even bigger hit on their earnings. For instance, Moontree House, which also runs a café, almost folded last year. It sells books that focus mostly on gender -related issues.

Fortunately, the disease (the internet) is also the cure. Moontree House organised an online movement, urging the public to chip in RM100 each in exchange for three books to show their support. The campaign was successful enough for it to survive and fight another day.

More recently, the industry took yet another hit because of the weakening ringgit as many of the books are imported from countries such as Taiwan, Hong Kong and China. “This has certainly eaten into our margins,” says Lim Wooi Tee, director of Grassroots Book Room.

 

Creativity is key

Lim, who runs one of the few surviving independent Chinese bookstores in Singapore, says it is an issue of survival. Most of these businesses are not even thinking about expansion.

Lim, who is a Malaysian and a keen observer of the Chinese book market in this country, says creativity is the key to driving sales and pushing the Chinese book market forward. “We are facing the same challenges as our peers in Malaysia. Maybe it is even worse for us because the Chinese readers in Singapore are mostly of the older generation. The younger generation mainly reads in English.”

So, this is where they have to get creative. For instance, Grassroots has adopted the “blind date with books” concept to attract customers.

How does this work? It is simple, says Lim. He and his team pick three books and put them in a nice bag and hang it in a corner of the shop. They stick a card, which explains the concept and provides a recommendation, on the bag.

“We write the recommendation as creatively as possible to tell potential readers what knowledge they can obtain from this particular bag,” says Lim, adding that he has been using this idea for months and it has helped boost sales, albeit by a small margin.

Lim is also trying to engage readers and the public through social media, mainly Facebook, by utilising the live streaming function and recommending interesting books every month. “Sometimes, we will make it more interesting by having a sketch of the author on a card and writing our recommendations beside it before taking a photo and posting it on Facebook,” he says.

On top of all these promotional activities, Lim organises events, such as talks by book authors, to attract people to the shop. “However, this strategy is quite common and every other bookshop has been doing it. We have to find other ways,” he says.

Another way to diversify the business and boost revenue is to adopt the concept of combining a bookshop with a café. The bookshop can also sell handmade items such as notebooks and bookmarks.

This is what Lim has been doing. “However, the profit and revenue generated by the food and beverage sales have not been impressive,” he says.

From the perspective of a publisher, books have become something of a collector’s item rather than just reading material, says Chiew. This means that people buy books not only for their content but also for their creative design.

However, this does not mean the quality of the content should be sacrificed. A book that his company published recently sold so well that it surprised him. More than 3,000 copies of The Fall of Malaysia: Discussing the Country’s Systemic Corruption via the 1MDB Scandal were sold, giving the company’s earnings a significant boost.

“I thought it would be a failure and we would lose money on it because we had to pay the writers a high contribution fee. Also, it was a serious book, written in an academic tone based on facts and studies, rather than something sensational reprimanding the key players,” says Chiew.

“We thought Chinese readers would find it too dry and boring. But sales were surprisingly good.”

On the other hand, some books featuring artistes or celebrities were projected to sell well, but ended up doing poorly. “A few books banked on the fame of the author, but failed. This shows that good content is important, given the right timing and marketing,” he says.

 

A change of mindset

These methods, however, are not good enough to turn the industry around. Chiew says businesses should think out of the box in order to be profitable and there are several companies that have done that.

One of them is Odonata Publishing Sdn Bhd, which focuses on books for teenagers. The brand is well known among Chinese primary and secondary school students.

Odonata’s content has been sold to multimedia companies, such as Astro, to be made into TV shows or movies, which is a good way to further monetise it. The company has also been able to sell its books in China, the largest Chinese book market in the world, instead of depending solely on Malaysia.

According to information obtained from the Companies Commission of Malaysia, Odonata’s revenue runs into the millions. “It is doing very well and can be a model for other SMEs — find a niche and monetise the content in different ways to generate more profit,” says Chiew.

To achieve this, SMEs in the Chinese book market have to change their mindset and be more aggressive to reach out to different parties, he says. They also have to be constantly on the lookout for extra revenue streams.

The ecosystem of the Chinese art industry tends to be more conservative and less open-minded, says Chiew. “Based on my observation, I rarely see people in the publication side reach out to people from related industries. This is unlike the English and Malay book companies, which have more collaborations and partnerships between publishers, bookstores and people from other industries, such as production or music.”

Chiew says he is looking at other ways to monetise his content. He wants to go beyond physical books to ebooks and audio books.

The demand for these products have been brought on by the shift in reading behaviours. The younger generation is used to reading books on their iPad, Kindle or other ebook readers, rather than on paper. There are also people who prefer to listen to a story instead of reading it.

“Physical books are not the only choice for younger readers. They may prefer to buy physical books written by their favourite authors for their collections. At the same time, they may also buy ebooks when it comes to information on tools and applications. Audio books are something the Taiwan and China publishers have been doing. We are also looking into this,” says Chiew.

 

How far can the industry go?

Some companies are using outdated business models that do not have much growth potential, while others treat their business as a passion project and are hardly profitable.

For instance, Got One Publisher Sdn Bhd, which is known for its Malaysian Chinese literature book series, is run by a group of people who work in the media industry. It is well known that profitability is not the company’s main goal.

While it is not bringing in the big bucks, it has been around for more than a decade and has made a name for itself through participation in international book fairs held in Hong Kong and Taiwan.

Empress Culture Sdn Bhd, meanwhile, recently joined the Chinese book industry. The company has published a few inspirational books and a literature magazine, which are sponsored.

Chiew says the Chinese book market is sustained and supported by the passion of people who love books. “We know we are not making a lot of money in this line. It is more an emotional thing, especially for newcomers, which are mainly small and independent companies. For some, it is a matter of responsibility. We know that if we do not do it, no one else will.”

For instance, Chiew, who is an award-winning poet and the owner of a software company, has become a minority shareholder and director of Mentor Publishing because one of the company’s founders asked him to. “He knows me so he asked if I would become a shareholder and run the company. I took over the business partly because I like books. But mostly because if I do not, then nobody will,” he says.

It is the same for Lim, a practising doctor and a minority shareholder of Grassroots. He was approached by the bookshop owner, who had decided to quit the business and retire. After several months, he and two other Singaporeans decided to buy the company.

“We are doing our best to make it profitable. For now, we sometimes break even and sometimes lose money,” says Lim.

The situation is slightly better in the case of Mentor Publishing, says Chiew. “We still manage to make a profit. But the future of our business and the industry remains to be seen.”

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