Taiwan Today

Major Taiwanese publishing houses are revamping their business models to address changing reading habits and market trends.

Cheng Ching-wen, one of Taiwan’s best-known contemporary writers and a leader of the nativist literary movement, has been writing novels, children’s tales and literary reviews for more than 50 years. Now 79, Cheng received the Kiriyama Pacific Rim Book Prize (now known as the Kiriyama Prize) in 1999 for his work Three-Legged Horse, a collection of 12 short stories. Cheng has thus far published some 30 books, won several other major literary awards and had a number of his works translated into English, Japanese, Korean, German and Spanish.

Before he retired in 1998, Cheng was a bank employee and wrote in his spare time. Since his retirement from the bank, however, he has been able to focus more on his writing career. His decades of experience as a writer have given Cheng a good perspective on how the publishing business has changed, and not always for the better, as he notes that the domestic book publishing industry has suffered declining sales and profits. Statistics from the Government Information Office (GIO) back his observation about the market, showing that revenue growth for the industry fell from 3.95 percent in 2005 to 1.38 percent in 2006, 0.68 percent in 2007 and –2.08 percent in 2008.

The odd thing about the declining revenue Cheng has observed is that the domestic book industry appears quite active in other respects. Taiwan’s book publishing industry has been releasing approximately 40,000 titles each year since 2001. The island’s per capita publication of books has also been reported by multiple sources, including Global Views Monthly, a local Chinese-language magazine, as second only to that of the United Kingdom worldwide. In 2009, moreover, the Ministry of Economic Affairs (MOEA) registered 10,953 book publishers in Taiwan, although fewer than 2,000 of them actively release publications.

Li Xi-dong, chairman of the Association of Taipei Publishers, attributes many of the financial challenges facing Taiwan’s book publishing industry to the relatively small domestic market and the diminutive size of most local publishers. More than half of Taiwan’s total number of publishers have a capitalization of less than NT$5 million (US$161,300), and only 200 to 300 domestic publishers manage to release new books every month. 

Another factor behind book publishers’ falling revenue is the increasing consumption of other forms of media such as television, movies, DVDs and the Internet. A recent survey conducted by Global Views Monthly, for example, showed that people above the age of 18 spent a daily average of just 26 minutes reading books, while they spent 1.3 hours online and 2.7 hours watching television.

Challenges for Writers

The shift away from print has inevitably reduced writers’ incomes and opportunities for publication. “Years ago, the payment that I received from the publisher for my work could equal three months of an average worker’s salary,” Cheng says. “But now my earnings are much lower. It’s not easy to be a full-time writer, or in other words, to make a living by writing in Taiwan. Moreover, domestic publishers tend to give more consideration than before to the production cost of publishing a book, as well as to its potential sales volume. That’s why a writer now needs to think more about what kind of content can attract a wider readership.”

Writers also need to pay more attention to publicity to succeed in the current market. “Given that there are now so many books published at the same time, writers need to cooperate more closely with publishing houses in promotional activities like book release press conferences, lectures and reading clubs to gain larger exposure for their new titles,” Cheng says.

Lee Chuan-li is general manager of Yuan-Liou Publishing Co., which was established in 1975. The company is one of the few publishers in Taiwan to not only survive in the competitive, shrinking market, but also grow stronger. Currently, Yuan-Liou publishes about 200 books each year. Books that have the widest appeal among Taiwanese readers include works of fiction; moral, inspirational stories; and releases on finance, business management, health and nutrition, he says. For example, translated editions of the Harry Potter series and Twilight vampire series, individual works such as Good to Great, a business management book, and The Secret, a self-help book, all have gained immense popularity in Taiwan, Lee adds.

Yuan-Liou’s presence in the cultural creative industry extends beyond publishing. Lee says people in Taiwan have a rising interest in art and cultural activities, thanks to the strong promotion of Taiwanese and international performing groups. In late 2007, Yuan-Liou bid on and acquired a 15-year operating license for the Huashan 1914 Creative Park (formerly the Taipei Distillery) in Taipei City in anticipation of using the site as a creative and cultural platform where artists could express their talents and nourish Taiwan’s aesthetic life.

“Some people may wonder what the link between creative and cultural activities and publishing is,” Lee says. “But we can use the activities for the subject matter of our content by turning out text- and image-based publications about them in both digital and print form. Also, writers can make use of these activities to showcase their work and interact with readers.” Lee firmly believes that the combination of traditional publishing with digitalization and cultural creativity will expand the definition of the industry and create new value for readers.

Although sales of e-books are increasing, going digital has brought its own set of challenges. Li says the book publishing industry the world over has been struggling to adapt as gadgets like smartphones, e-book readers, media tablets and PCs and laptops have changed the reading habits of the public, causing sales of printed books to decrease.

Double Payments

In Li’s opinion, digital publishing will put Taiwanese publishers that do not hold the original copyrights to the works they publish in an unfavorable position, as separate copyrights must be purchased to release bound books and e-books. That means publishers have to 
double their payments if they intend to release both e-book and printed versions.

The relatively slow adoption of e-books is another complicating factor. When a new title is released in both electronic and printed versions, 63 percent of those responding to the Global Views Monthly survey said they preferred to buy printed books, while just 23 percent favored e-books. Most added that they would not consider buying e-books until their price dropped to a half that of printed books.

“For the time being, no one can tell for sure if and when digital content creations will completely replace traditional paper-based publications,” Li says. “Still, digital content will occupy a significant share of the future book market. Publishers should recognize this trend and look at digitalization as another option in their publishing business.”

Li urges domestic publishers to learn about the processes and techniques of digital publishing and revamp their operations accordingly so that they are prepared when e-books dominate the market. “Taiwan has competitive advantages in developing the e-book industry,” he says. “It has strong capabilities for developing electronic paper and flat-panel displays. The area where we need to step up our effort, though, is in digital content creation.”

Yuan-Liou general manager Lee Chuan-li is working hard to address the challenges of going digital. “The Amazon Kindle’s success made the publishing industry around the world notice that e-books are an important development, and that digital publishing is developing fast. For publishers, the question is that if digital content is going to become the backbone of the industry in the future, what steps should we be taking now to ensure a successful transition?”

Lee says that in the past, publishers simply thought about what kinds of books readers would likely be interested in, but now they also have to consider how to tailor their books for devices including e-book readers, PCs and mobile phones. To do so, their entire work process—from content production and design to distribution—must be overhauled. “The publishing industry used to be print-oriented, but now it needs to focus on offering diverse reading services,” Lee says. “Companies that don’t make such changes may soon find it increasingly difficult to survive.”

In its shift toward digital publishing, Yuan-Liou has taken a number of initiatives including setting up book club website ebook.com.tw, which introduces quality publications in both printed and electronic form. The company is also teaming up with a Taiwanese high-tech company and ViewSonic Corp. of the United States to launch an e-book reader preloaded with 36 digital books by famous Chinese martial arts novelist Jin Yong. Other e-books can also be loaded onto the device, which is priced at NT$14,800 (US$485). The company has also started to research and develop applications for Apple Computer Inc.’s iPhone and iPad, as well as smartphones made by other manufacturers.

The shift to e-books is not the only trend changing the face of today’s book publishing industry. Lee says that overall, the rise of online booksellers like Books.com.tw has been conducive to the development of the book market. In 2009, for example, Books.com.tw sold about 8.9 million books, or an average of around 24,400 books per day, an increase of 23 percent over 2008. The company’s combined sales of the four books in the Twilight series alone reached 120,000 in 2009.

While online retailers offer publishers another sales channel to tap, they have also reduced sales prices for many books. Online bookstores often offer a discount ranging from 21 percent to 34 percent, which forces brick-and-mortar bookstores to discount their publications to remain competitive, Lee says. Consequently, bookstore operators ask publishing houses to reduce wholesale prices, which cuts into the publishers’ profit margins. Bookstores are also entitled to return unsold books to publishers, adding to the considerable financial pressure on publishing houses. Thus, only a few large publishers are capable of undertaking high-risk investments and growing their business in the competitive marketplace, Lee says.

Cité Publishing Ltd. is Taiwan’s largest publishing group, with five main subgroups controlling 35 publishing houses and releasing about 1,500 publications per year. The company’s titles target a broad market and include works of fiction, as well as books targeting women and parents, among other categories. Previously, Cité mostly purchased copyrights for existing publications, but general manager Alex Yeh says that his company is now making a greater effort to create its own content.

The firm underwent two phases of growth, Yeh says. The first phase began in 1996, when three domestic publishing houses merged under the Cité name. The obvious benefit was a much larger market presence, but the merger also combined the best attributes of each company—including functions such as distribution, marketing, procurement and inventory control—to create a more efficient whole.

Access to Resources

The second phase came in 2001, when Cité and several other Taiwanese publishers were bought by Hong Kong-based Tom Group. While Tom Group viewed the purchase as an investment, the main benefit for Cité was gaining access to more extensive corporate resources.

Yeh says that by drawing on the Tom Group’s abundant resources, his company has been able to establish a comprehensive, standardized system for administration, finance, personnel, legal affairs and distribution. Cité’s sales channels presently include four brick-and-mortar bookshops and one online bookstore.

Cité has also become a local leader in the publishing industry’s digital shift. “While retaining printed books, we aim to complete the transformation of our internal operating procedures for digital publishing by 2013,” Yeh says. “And we’ll share what we’ve learned about the various aspects of digital publishing in areas like organizational structure, working procedures, content collection, marketing and hardware and software systems. Hopefully, that will help other Taiwanese publishers go through a smooth digital transformation so we can jointly expand the book market.”

Yeh says that the Republic of China government’s active promotion of digital publishing gives Taiwan a good chance to excel in the promising market. Stephen Chang, director of the GIO’s Department of Publication Affairs, noted that the technological advancements are bringing huge changes to the book industry. The main challenge to going digital is presenting content on an electronic platform while improving the content’s quality and quantity, Chang says. There are only a few large publishers in Taiwan, including Yuan-Liou and Cité, that have the financial and technical abilities to extend production from bound books to the multitude of diverse new media formats, he says.

To improve content, the government launched an action plan in 2009 with the aim of building a digital content industry in three years through an investment of NT$100 million (US$3.2 million) and the collaboration of large publishing houses and electronics companies, as well as government agencies including the MOEA, Ministry of Education, Council for Economic Planning and Development, Council for Cultural Affairs and the GIO.

Chang explains the government has also organized a series of courses on digital publishing and taken steps to promote digital learning, as well as worked to coordinate the efforts of hardware and software manufacturers. Moreover, it offers subsidies to assist domestic publishers with adopting the digital publishing process, he says.

In addition to the challenge of going digital, the dearth of original domestic content is a major problem the local book publishing industry faces. According to Li Xi-dong of the Association of Taipei Publishers, many publishers have tended to make ends meet by purchasing copyrights to foreign works and translating them into traditional Chinese characters for the local market. That has had the effect of ignoring creations by native writers, which should be the core value for the publishing industry anywhere in the world, Li says. A local book marketing association, however, has estimated that only 25 percent of books sold in Taiwan are written by Taiwanese authors. To address the problem of domestic content creation, the GIO holds the Golden Tripod Awards for Publications annually to recognize outstanding organizations and individuals in Taiwan’s publishing world, encourage reading and stimulate the release of high-quality publications by local writers.

The GIO also sponsors the Taipei International Book Exhibition (TIBE), which helps local publishers and writers establish a presence on the international stage, develop business relationships and generate sales of publishing rights. The annual event, which is scheduled to take place February 9−14 this year at the Taipei World Trade Center, has become one of the leading publishing trade shows in the Asia-Pacific region.

Trade relations between Taiwan and mainland China have been warming over the past two years, a process that accelerated with the signing of the Economic Cooperation Framework Agreement in June 2010. Generally closer economic ties, however, have had little impact on the publishing industry so far. While it is true that mainland China is the main target market for Taiwanese publishers opting to expand their business overseas, Chang says, there are still a number of restrictions enforced by mainland authorities, including stringent import screening, taxes and the prohibition against sole proprietorship of publishing houses by foreign nationals.

Alex Yeh of Cité Publishing says that it is premature to talk about venturing into the mainland book market because it is basically still a closed market. Until the mainland relaxes its publishing policies, publishers like Cité will likely remain focused on printing books with the traditional Chinese characters found in Mandarin-speaking societies including Taiwan, Hong Kong, Singapore and Malaysia.

“Taiwan is and will remain our major market,” Yeh says. “Based on our group’s operations, we’ve enjoyed consistent business growth. That was true even over the past two years, when the domestic economy was affected by the global recession. We’ll continue to move towards digital publishing because we believe that’s likely to open up new markets and create new business opportunities.”

There is little question that the local publishing industry faces a number of challenges. The written word, however, has maintained an elevated position in ethnic Chinese culture for thousands of years, and that is not likely to change anytime soon. The government and companies like Cité and Yuan-Liou are working to ensure that the tradition continues, although it appears likely that most of those words will be read on high-tech digital displays in the future.

Write to Kelly Her at kelly@mail.gio.gov.tw