A publisher's success story

A representative from Taschen Books talks with a client at the London Book Fair in London in 2008. China's publishing houses are seeking new business opportunities overseas. For example, more than 28 Chinese publishing enterprises were welcomed at Book Expo America 2009 in May. Bloomberg News

Volumes Publishing House is enjoying triple-digit sales revenue increases as the high-octane profit engine of Northern United Publishing & Media (Group) Co Ltd.

Volumes reported year-on-year growth rates in sales revenues and in net profits of 697.02 percent and 642.15 percent, respectively, during the first quarter of this year.

The variety of books published by Volumes expanded three times during the period.

Volumes is an aggregate of private publishers that operates under the umbrella of State-owned Northern United Publishing.

Volumes now commands 18 percent of China's youth market in publishing, according to the company.

"It's the result of market-oriented reform carried out since 2007, when we expanded our financial channels and started turning from a government-supported unit to an enterprise operated under for-profit market principles," said Ren Huiying, chairman of Shanghai-listed Northern United Publishing.

Going public

Northern United Publishing was created with the merger of Liaoning Publishing House and Liaoning Broadcasting and TV Co Ltd.

The new company was first named Liaoning Publishing & Media (Group) Co Ltd.

The name changed to Northern United Publishing as it restructured its five subsidiaries before being listed on Dec 21, 2007.

Share prices of the Liaoning-based company surged as much as 329.53 percent on its Shanghai trading debut day, raising its market value to more than 10 billion yuan.

After restructuring, the group became one of China's largest publishing and media conglomerates.

Its publications business ranges from traditional and new media to circulation, distribution, copyright trading, advertising, retailing and imports and exports.

The large portfolio of businesses and uneven development of various sectors translated into operating revenues rising just 15.16 percent year-over-year to 1.18 billion yuan in 2008.

The media group's operating profits and net profits grew 28.92 percent and 10.31 percent, respectively. Earnings per share reached 0.21 yuan.

Northern United Publishing signed strategic cooperation contracts with Tianjin Publishing House and Inner Mongolia Books Stores Group, which helped expand its foothold to North China.

The Chinese government has been encouraging State-owned publishing houses to move from State-supported to market-oriented operations to enhance their competitiveness and promote development of China's publishing industry.

Ren of Northern United Publishing said the change allowed his company to allocate resources in line with market demands versus government mandates.

This has allowed Northern United Publishing to respond more quickly and efficiently to readers, he said.

"The participation of private publishers injects more market-oriented elements," Ren said.

Private participation

The government's reform allowed the introduction of private investments into the State-owned sector, which supporters said has sharpened the competitive edge of State-owned publishers.

Lu Jinbo, an author and former private book publisher, joined Volumes in June 2008. He had been one of China's more successful Internet novelists in the late 1990s, and after 2000 he also became an agent for other online authors.

"Although I had the ability to design best-sellers and promote famous writers, specifically for young readers, I had to buy serial codes from State-owned publishing houses. The procedure was really complicated, and the process increased the costs of the books," Lu said.

Now he can devote more time to exploring new titles and marketing strategies, he said, while Volumes administrators handle the serial codes and writers' contracts.

"It greatly shortens the time from developing a title to getting a new book on store shelves," Lu said.

Volumes is the arm of Northern United Publishing that focuses on popular culture and so-called "instant books".

Lu is one of several private book publishers and also publication design studios now working for Volumes.

This and other restructuring moves have led to consolidations and mergers.

"Its mix of the right businesses has helped Northern United Publishing create a comprehensive pipeline of enterprises that reduces the business risks of individual enterprises," said Zhang Xiaoga, an analyst with Orient Securities.

Preferential government policies, such as tax cuts during the first three years of transition from State-supported to market-based, have helped, too, Zhang said.

The analyst added that he believed Northern United Publishing will prove a strong, long-term investment.

Zhang predicted that earnings per share for Northern United Publishing will grow to 0.23 yuan, 0.26 yuan and 0.30 yuan in 2009, 2010 and 2011, respectively.

Overseas expansion

Northern United Publishing also is eyeing new overseas markets.

During last year's massive Beijing International Books Fair, Northern United Publishing promoted a series of books catering to foreign readers.

In addition to promoting titles such as Chinese Modern Architecture and Chinese Families, the publishing group conducted copyrights trading transactions with more than 30 foreign publishing houses.

At the 60th Frankfurt International Book Fair held in Germany in October 2008, Northern United Publishing signed contracts valued at 14 million yuan and signed letters of intent worth 21 million yuan.

The publishing group so far has set up publishing arms in five countries, including the United States and Germany, Ren said.

"Going abroad will be one of our key strategies during the next few years," Ren said.

(China Daily 07/27/2009 page2)