Companies

Dangdang bides time before e-book plunge

By Shen Jingting (China Daily)
Updated: 2010-12-09 10:41
Large Medium Small

BEIJING - Dangdang.com, China's biggest online book retailer, is still waiting for a better time to launch e-book services, a branch that may help it catch up with its US counterpart Amazon.com and defend itself in the ever fiercer competition of online bookselling in China.

Roger Huang, chief operating officer of Dangdang, said the company has been following the development of digital books for years, but it is still too early to say when it will enter that market in full swing.

"The time is not ripe," Huang said. Huang has three concerns - the high price of electronic readers, rampant copyright infringement and not enough e-book buyers.

"Electronic readers cost on average about 1,000 yuan ($150) in China, but people can buy up to 50 Chinese books for that," he said.

In the United States, a standard e-book reader is the cost equivalent of about 12 books. That relatively small cost attracts Americans to e-readers, which can store hundreds of books.

Copyright infringement, the biggest concern US-based Amazon.com has about introducing its electronic reader, Kindle, to the Chinese mainland, also concerns Dangdang.

"Government regulations on copyright protection for books are looser than those for music copyright," Huang said. Several years ago, music could be downloaded for free from websites such as Baidu.com, but the regulations have now tightened. Pirated books, however, are still widespread, he said.

In addition, Dangdang is waiting more Chinese people to get in the habit of reading online or with electronic devices, Huang said.

Since the e-reading market is still warming up, Dangdang is biding its time. A premature move could be detrimental, Huang said.

Dangdang has long been called "China's Amazon", with many analysts saying it follows in the footsteps of its American counterpart. Like Amazon, the 11-year-old Chinese company first came to the public's attention as an online bookseller. Similarly, in 2008 it partially shifted its focus to general merchandise. Now it shows aspirations of tapping into e-book services.

In early November, Dangdang set up a "Digital Publications Department" to research strategies for future e-book services. Li Guoqing, the company's co-president, personally took charge of the department, indicating its strategic importance.

Related readings:
Dangdang bides time before e-book plunge Dangdang soars in IPO debut
Dangdang bides time before e-book plunge Dangdang IPO prices above range
Dangdang bides time before e-book plunge China's Dangdang files for $200m US IPO
Dangdang bides time before e-book plunge China online retailer Dangdang readies IPO

Hugo Shong, founding general partner of IDG Capital Partners, an investor in many Chinese Internet companies, said Dangdang's expansion into e-books is inevitable.

"Dangdang has led Chinese online book sales since 1999, and it owns resources to win in that new market," Shong said.

Huang said the company intends to launch e-books for computers, cell phones and electronic readers, rather than marketing its e-reading device. Its longtime good relationship with Chinese publishing houses and large client pool will help, he said.

Since Nov 1, 360buy.com, China's biggest business to customer (B2C) company, has been expanding its online business from electronics to books, said Shi Tao, vice-president for book purchasing and sales at 360buy. The company has the goal of becoming China's No 1 online bookseller, according to Chinese media reports.

"360buy.com doesn't pose a great a threat to us. Dangdang has the upper hand in book variety and customer loyalty," Huang said.

Dangdang.com holds more than 50 percent of China's online book retailing market and has a 10 percent market share of the overall book market, a report by the Chinese consulting firm Analysys International has found.

But 360buy had a 34.5 percent market share of the overall Chinese B2C market, at the end of June, followed by Dangdang with 9 percent and Joyo.com with 8.8 percent, according to the China e-Business Research Center. Amazon bought Joyo.com in 2004 for $75 million.