Fang Zhonghua

Digital publishing solutions provider Founder Group is planning to build the largest digital library in China and expects digital publishing to account for 20 to 30 percent of its IT business in the near future, said a senior company executive.

Fang Zhonghua, senior vice president of the group, said digital publishing business could generate revenue of 2 billion yuan for the group over the next three years. The group reported a total revenue of 45 billion yuan in 2008, about half of which came from its IT business.

Founder is now stepping up efforts to make its digital book portal Fanshu.com the largest digital library in China and increasing its stock of copyrighted digital books from 500,000 to 1.8 million.

The group is also in talks with several investors and hinted that the digital publishing business may get venture capital investment by the end of the year.

Starting as an IT solutions provider for publishing houses, newspapers, and magazines, Founder moved into digital publishing in 2000. Currently 500 publishing houses and 700 newspapers use Founder's digital publishing system to deliver electronic copies. About 4,500 schools, institutions, and public libraries are equipped with Founder's digital library.

Earlier this month, Internet giant Google came under fire after it scanned more than 20,000 books by 570 Chinese authors without paying them or getting consent. The company said it was difficult to contact each and every author due to the huge number of books scanned.

"Internet is likely to have a major impact on traditional publishing. It's only a matter of time," said Fang. "What we have to do, besides criticizing Google, is to do the work better."

Founder launched Fanshu.com with Zhongsou.com, a search service provider, this July, aiming to build China's Google Books, a platform integrating searching, reading, and purchasing books.

According to research by China Book Business Report and the domestic e-paper technology firm Sursen, China had 79 million e-book readers at the end of last year propping up a 226.3 million yuan market.

Readers can purchase e-books on Fanshu.com or go to online bookstores to buy paper ones by following links on the website. Founder makes money through e-book selling and part of the paper book sales.

"The success of these kind of websites lies in a good profit-making model which can benefit different players in the industry, and rich copyrighted content that satisfies the different needs of customers," said Zhang Yanan, an analyst with Analysys International.

With Fanshu.com in its early stage, Founder's e-readers, launched in October, will be a main revenue-generator for the group's IT business next year.

"Hopefully we can sell 1 million e-readers in 2010," said Fang.

According to research firm DisplaySearch, China's e-reader sales are expected to grow about 800,000 this year to 3 million in 2010, accounting for nearly 20 percent of the world total. Jennifer Colegrove, an analyst from DisplaySearch, expects China's e-book reader market to surpass that of the United States before 2015, according to Forbes.com.

Besides Founder, other players have also increased their efforts in the e-book market. China Mobile, the world's largest telecom carrier by subscribers, has cooperated with 10 publishing houses to build an online book platform. China Unicom also said it plans to launch an e-book service. Some e-reader makers, such as Datang Telecom and Hanwang, have launched their 3G e-readers. Hi-tech company Aigo also entered the market this month.