Irecently visited the Beijing International Book Fair, which this year is all about e-books vs. traditional books – the great talking point of the global publishing business. Are paper books finished? Not quite yet it seems, but e-books are a reality in the industry. One major Western publisher I spoke to was extremely jealous of the now well-established Chinese model of giving away the early chapters of a book in e-form, hooking the reader into the story and then charging to read the rest of it. Cruel, some might say, but apparently it works.
At the moment most of these e-books in China are being read on mobile phones. In one sense that’s OK, as Chinese characters are denser than the Latin alphabet and so more can be said on a screen. It’s the same theory that is propelling microblogs – you can say and express so much more in 140 Chinese characters than 140 Latin ones. But, in another sense, many in the publishing world believe that this very richness of Chinese is retarding the development and uptake of e-reader devices locally – why bother when you can read quite easily on the mobile phone you already own? The answer of course is that e-readers will have to offer more in terms of additional apps. But as one publisher joked, what will those extra apps will be? A web browser, a camera, a calculator, a notepad and, erm, a phone! Seems we’re back where we started.
Over-marketing is a common problem in China. It happens a lot in the food and beverage market: A product is introduced into every channel so that consumers see it everywhere they go, and eventually they just stop noticing it. This can happen with any product but I think it’s a nailed-on certainty with Moleskine stationery in China. Moleskine is an interesting revival brand, a product that has attracted truly discerning consumers as well as those just looking for the usual status. However, the Moleskine display carousels are now everywhere and often in inappropriate locations – you can almost see the exclusiveness and luster of the brand dying in front of your eyes due to an overactive marketing and sales department.
I’ve argued here before that many Chinese cities are now, or soon will be, over-malled. There’s just too much high-end mall space being built. I’ve also argued that that means there will be winners and losers in the business. But what if an uneasy equilibrium sets in – a balance that means everybody is a bit of a winner and a bit of a loser? Indeed this might be happening. In Beijing, China’s most over-malled city, malls that were failing are now finding a bit of an uptake. What we’ll all have to watch over the coming year is whether or not this is just existing shoppers spreading their wings and trying different places for variety or whether this is new shoppers migrating to new malls. If it’s the former then pickings could get a bit thinner for everyone.
But then maybe everyone just has more money and needs to find all available locations to spend it like there’s no tomorrow. According to a study that crossed my desk recently by economist Professor Wang Xiaolu of the China Reform Foundation, there is about US$1.4 trillion in gray money sloshing around the system. That equates to 30% of GDP. If he is even close to right, the potential of China’s consumer market is even bigger than we expected. But here’s the kicker – Wang believes more than 60% of that cash is in the hands of just the top 10% of urban households.