Asian Update: Emerging Giants
With its entry into the World Trade Organization (WTO) in December 2001, China appears poised at last to begin to deliver on the market potential of its 1.3 billion population, with major ramifications for the publishing industry. At the same time, there are promising developments in the almost equally populous state of India. “They are the two most important engines of Wiley’s growth in Asia,” says Steve Miron, Vice President, Wiley Asia. In the following interview, Steve, who is based in Singapore, gives an overview.
China
[TOA] We understand that there have been several improvements in market conditions in China, some of which coincided, perhaps not surprisingly, with the final stages of its campaign to join the WTO. Could you give us a few highlights?
[SM]has taken a leadership role in combating this, joining forces with the Traditionally, 90% of the print journals in Chinese libraries were unauthorized reprints. Over the past year and a half, Wiley Publishers’ Association in the U.K., the Association of American Publishers, the International Publishers Association, and other publishing companies to lobby the Chinese government to put a stop to it.
We thought our campaign would take a couple of years. Then in the fall of 2001, in an unexpected breakthrough, we got the majority of what we wanted; the government shut down the largest reprinter of unauthorized journals and issued a decree to universities requiring use of licensed content only. China is becoming a very important market, with subscription revenue nearly tripling in 2002, making China Wiley’s second largest subscription market in Asia, after Japan.
[TOA] What’s happening in the book market?
[SM] There’s demand, but there are still market access issues. The market in China is primarily a Chinese language one, but foreign companies do not have the right to publish in China, and joint venture publishing companies are still not legal either. You can get books distributed in China, but you have to have a local partner. We are doing a lot of translation licensing, and translation co-publishing, which we can do on a project basis. We have concluded several hundred licenses this year. The Chinese translation market has now surpassed the Spanish language market to become number two for Wiley, behind Japan.
[TOA] What kind of titles are we releasing?
[SM] Trade and computing books have been big for a couple of years, and Higher Education is just starting to happen. About a year ago, the government began to allow professors to use foreign textbooks in the classroom. It’s part of their process of opening up to compete in the global economy; they want to have first-class universities. The Ministry of Education is also encouraging a five- to ten-percent use of English language textbooks.
[TOA] Have there been significant changes within the Chinese publishing industry?
[SM] Yes. For one thing, Chinese publishing companies now have to turn a profit. China has about 600 state publishers, and in the past, each had a mandate to publish in certain areas – chemistry, children’s literature, and so forth – with a virtual monopoly. Their job was not to generate profit, but to fit into a planned industry structure that supposedly served the needs of the country. Publishers had few reasons to find foreign partners. That’s all changed now. Any of them can now publish in any subject area, so there’s competition.
[TOA] We’ve all heard about the practice of censorship, or “official editorial control” in China. What effect does this have on our activities there?
[SM] There is indeed censorship, but it is limited mainly to works dealing with political or social issues deemed sensitive to the Chinese government. Most of Wiley’s content is of no concern to government censors. However, there are the occasional exceptions. We were not sure that China and the WTO [January 2002, by Supachai Panitchpakdi and Mark Clifford] could be imported. In the end it was, but for the Chinese translation, our local publishing partner did have to cut some parts.
[TOA] What sorts of opportunities are there for electronic publishing?
[SM] We have ambitious plans for Wiley InterScience in China, but there are technical issues to deal with first. China has created a “digital island,” a sort of national Intranet that enables them to screen content, with a surcharge for access to anything outside of it. Universities are not willing to pay this fee for their professors, so we have installed a lease connecting to our Wiley InterScience server.
[TOA] I recall that Wiley established an office in Beijing two years ago. What role has Wiley’s Beijing office played in the development of our business there?
[SM] The office plays a central role, and our five staff there collectively handle a very challenging and diverse portfolio of businesses. Wendy Ding, as Country Manager for China, oversees all of our businesses, but spends a significant portion of her time on the subscription market, deeply involved in both our print and online journal activities there. Helen Sun, Marketing Executive, has responsibility for the import book business. She handles the library book market and serves as an important bridge between lecturers and book importers, ensuring that newly won adoptions are serviced. Clare Sun Suqing, our new Publishing Development Executive, works closely with our local Chinese publishing partners and our Foreign Rights team in Singapore in the development of our Chinese translation publishing business. We recently hired a dedicated journals promotions representative, Jordan Zheng Jingchun, who works closely with Wendy Ding in the development of our subscription business. We also recently hired a Marketing Assistant, Nicole Cheng Nan, to provide administrative support to our customers and our busy local staff.
India
[TOA] As an emerging economic force with a huge population, India in some ways resembles China, but with important differences – for one thing, it’s a democracy. How would you characterize the Indian market?
[SM] India does have tremendous market potential, but historically the market there has been fraught with volatility. You could have a great year, and it could all fall apart the following year. There’s been one crisis after another; the nuclear scare, the tensions with Pakistan, the inability to form a stable government. That having been said, over the last five years we’ve had strong and steady growth in both books and journals. A lot of the credit for this should go to A.K. Bharti, our General Manager for India, who has just celebrated his 25th year with Wiley. He has been very successful in building strong and lasting relationships there, business partnerships that have served us well during both good and difficult times alike.
[TOA] What sort of ventures are we involved in?
[SM] We are publishing a number of Indian editions of Wiley textbooks, printed locally and priced to market. They have to be inexpensive, around seven or eight dollars a unit, but we sell them in very high numbers. We are able to achieve this competitive pricing by using Indian printers located in India’s “Export Processing Zones.” These printers give Wiley access to acceptable production quality at relatively low costs locally and still allow us to have books officially imported into India by our traditional importers. Wiley also benefits from India’s competitive mix of low-cost technical skills in other ways. For example, a significant portion of Wiley’s journal typesetting is also done in India.
[TOA] We understand that there is a promising new development in India involving Hungry Minds.
[SM] Yes. Through the acquisition of Hungry Minds we became majority owner in a local joint venture, now called Wiley Dreamtech. The company reprints 100 computer books a year, primarily from Hungry Minds. In recent months we have expanded the company’s scope of business to include the reprinting of other Wiley technology titles. Our Indian partner is Vikas Gupta. In addition to managing Wiley Dreamtech, Vikas is also a very talented software developer and has authored six titles for Hungry Minds.
[TOA] What past dealings has Wiley had in India?
[SM] Our activities in India date back to 1966, when Bradford Wiley Sr. started a venture in New Delhi known as Wiley Eastern, Ltd. A great deal of effort was put into it, but it ultimately did not fulfill expectations, and it was finally closed down in 1993.
[TOA] Would you say there is a parallel between our businesses in India and China?
[SM] What we can say today is that both India and China, after providing us with decades of frustration, have in just a few years become extremely important to Wiley’s future in Asia.