Chinese companies step up efforts to tap into E-reader business

Updated: 2010-04-06
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An electronic book-reading device made by Hanvon. Chinese companies have been stepping up efforts to tap into the country's burgeoning digital-reading industry.


BEIJING: As the popularity of wireless reading devices like Amazon's Kindle or the Sony Reader grows, Chinese companies have been stepping up efforts to tap into the country's burgeoning digital-reading industry.

But navigating the new market, closely intertwined with copyrights issues, is proving to be a complex one.


Apart from e-reader makers flooding the market, companies focusing on content integration also appear to be a sizeable new force.

One such company,, is a website where users can upload, read, and download e-books for free.

Online since last September, now has 150,000 users who have uploaded about 30,000 e-books.

Users often locate and read both pirated and copyrighted digital copies of their favorite books on the Web, and later upload them to the site for "credits". These credits can then be exchanged for downloads of other books from the site for free.


According to Zheng Xiaoyun, chief executive officer of the website, the free online-content platform plans to build user loyalty now and later profit by converting to a fee-based format.

"We will later turn the free platform into an online bookstore, which we can really cash in on," said Zheng.

The ambitious Zheng is one of many entrepreneurs looking to profit from digital reader content at a time when e-reader makers are doubling their efforts to satisfy consumer demand for the devices.

According to IT research firm DisplaySearch, China's e-reader sales will soar from 800,000 units in 2009 to 3 million units this year, accounting for a whopping 20 percent of global e-reader sales.

Ironically, copyrighted versions of Chinese-language books aren't available in electronic formats online, and if they are, they are more often than not pirated.

Nevertheless,'s Zheng is predicting a rosy future for digital reading, despite the fact they could end up in hot water over pirated resources being uploaded by their users.

"We will gradually focus on e-books that don't have copyright problems and bring in publisher resources," said Zheng. "But it will take some time to make the transition."

While copyright problems remain a headache for many smaller websites, bigger players have taken a broader approach to the digital reading market by selling e-readers, building online sales channels and providing copyrighted editions of e-books.

Digital publishing solutions provider the Founder Group Inc, last July launched, a platform to conduct e-book searches as well as the reading and purchasing of digital content. The company's site is touted as a combination similar to Google's book search service and Amazon's Kindle Store.

The website claims to have 600,000 e-books available for trial reading and purchasing online.

Buying online is definitely more friendly to the pocketbook, with a Chinese-language copy of Pride and Prejudice retailing at stores for around 13 yuan, while a digital version goes for a mere 4 yuan online.

Shanda Literature Limited, the online publishing arm of Nasdaq-listed Shanda Interactive Entertainment Limited, said it plans to mimic the format used by Apple Inc's App Store in the near future.

The Shanda store will provide five million online novels and 10,000 e-books, some of which the company owns the copyrights to.

Both the Founder Group and Shanda Literature hope to sell their own copyrighted resources in an effort to link different parts of the industry chain together. The Founder Group has also gotten into the e-reader market, releasing a digital reading device called the "WeFound" last year, which is priced at 4,800 yuan. Shanda Literature has also teamed up with e-reader makers to share e-reader content.

Bringing all the various parts of the e-reader puzzle together has not been easy.

"The most difficult problem in the digital content market is the lack of a comprehensive platform connecting publishers, e-reader makers, and users," said Zhao Ge, chief executive officer of Founder Group's

The market entry of large companies like Shanda Literature and the Founder Group into the digital reading market may help improve consumer recognition at an early stage in industry development, said analysts. But even the big boys are not without challenges.

"The copyrighted resources Shanda Literature has are mostly entertainment-oriented online novels, which are far from what the average person is interested in reading," said Zhang Ya'nan, an analyst with domestic research firm Analysys International.

While some publishers remain cautious about throwing their support behind content providers, others have established partnerships with both e-reader makers and content providers. One publisher says the incentives to forming partnerships are just not there.

"We are usually offered an extremely low price for granting digital copyrights. It is so low, in fact, that we just can't accept their offers," said the deputy editor of one of the largest publishers in China, who declined to be named.

He added that publishers are in a weak position in the digital reading industry and therefore tend not to sell the copyrights to other players in the industry.




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