When the Chinese government responded to the Covid-19 outbreak in January, the world’s manufacturing base came to a sudden and unexpected halt. Like a children’s game of statues, people were stopped in their tracks. The three billion passenger journeys that usually mark the beginning of the world’s largest human migration, at Chinese New Year, never happened. Instead, entire cities went into quarantine, and an extended public holiday was followed by the world’s largest ever work-from-home experiment.
As new cases in China begin to recede, offices have gradually begun to reopen and companies try to get back to work. Publishers, along with the rest of the business community, must now assess the likely impact on their businesses in the Year of the Rat and beyond.
The period between Christmas and Chinese New Year is, in general, a quiet one for Chinese publishers, with relatively few new title launches. As it turned out, January’s annual retail fair in Beijing—where booksellers and distributors view titles and plan their buying for the year ahead—was among one of the final events to take place before large exhibitions were called off.
It will come as no surprise that local online streaming services, including iQiyi and Youku, were immediate beneficiaries of the national shutdown, with the three main platforms reporting record numbers of new subscribers in the first two months of the year. Short-form video services TikTok (known as Douyin inside China), Kuaishou and Watermelon also saw a surge in the popularity of their newly launched long-form video offerings.
Online gaming companies also reported a boost in both revenue and traffic; the average time users spent playing individual games also increased. Interestingly, however, data from the period suggests that the number of new users actually fell slightly.
For publishers, the commercial picture is a complicated one. Preliminary sales reports suggest that e-book sales experienced an uptick, unsurprising given that online retailers were unable to move physical stock from warehouses or secure customer deliveries. But with price points and profit margins on Chinese e-books substantially lower than for print books, the shift to digital is cold comfort.
The China Publishing and Media Journal reported one bright spot: sales of classics and biographies registered a slight increase during January and February. It seems a month spent at home with the family was the right time to finally tackle Cao Xueqin’s 18th-century epic Dream of the Red Chamber.
A new generation of social media platforms offer live broadcast slots featuring editors, publishers and authors talking about their books. These have been thrust into the spotlight, with channels experiencing upwards of 250% growth in viewer figures.
From a simple work point of view, editors spending extended periods at home has not posed significant problems; indeed, many have admitted to productively reading, editing and generally getting ahead on things. Domestic publication schedules, however, are entirely in flux, and printers are struggling to get the presses rolling again. Most Chinese publishers estimate delays of at least two months for new titles—and the highest-priority releases are likely to be held back until later in the year.
A rights hit
Rights teams report that with such a significant backlog of new titles, acquisitions are likely to slow slightly, although the good news for international publishers is that the long-term appetite for foreign titles remains strong. Meanwhile, there are industry rumours that at least one large privately owned publishing company has already laid off staff as a direct consequence of lost revenue over the holiday period.
Where the real and lasting commercial impact on the book trade has already been felt is in the retail sector, which faces an existential threat. Theirs was an already fragile existence, with soaring rents and an ever-larger share of sales taken by online stores, which sell 70% of print books in China. Beloved independent One-Way Street Library was forced to launch an online crowdfunding effort to help pay the rent and stave off bankruptcy—attracting a public pledge of support from Japanese composer and bookstore fan Ryuchi Sakamoto.
In response to the plight of booksellers, the government released a set of measures on 26th February that included rent relief, interest-free loans and the bulk- buying of books by government departments from ailing bookstores.
For publishers, the main topic of conversation now is whether the sudden collapse of physical retail is temporary, or has accelerated an inevitable shift to digital that their business models cannot keep pace with. “We’re increasingly talking about subscription models, and ways to earn money away from print publishing,” said one Beijing-based literary editor. “But we don’t yet have any answers, and this makes us very nervous.”
The reality is that there is only so much that the government can do to help. Core business models for publishers in China must change urgently if audio and e-book revenues can come close to replacing lost profit from print sales. Local media calls the coronavirus a “big test” for the industry, challenging publishers to change their retail models in the face of an ever-more sophisticated consumer market. Whatever the outcome, it seems that publishers in China will be talking about a pre- and post-virus commercial world; one that looks very, very different.
Jo Lusby is co-founder of Pixie B Ltd, a consultancy and agency based in Hong Kong. She previously ran the Penguin Random House business in North Asia, and has lived in the region for the past 25 years.