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Unlocking the Mysteries of the Chinese Market, Part III
By Charlene Gaynor
In this third and final installment of the China series, AEP Executive
Director Charlene Gaynor offers tips from U.S. publishers who have
already established a presence in the Chinese market and discusses
AEP's possible role in facilitating international relationships.
As with any new venture, doing business in China has its risks,
rewards, and lessons to be learned. But what makes such an endeavor
especially challenging is the lack of prior experience on which
to base a business model. Before the current government opened
up the country's economy to foreign trade, getting content or products
into the Chinese market was nearly impossible. Although some U.S.
publishers found ways to circumvent China's strict laws and regulations
through strategic partnering, these exceptions were few and far
between, and the landscape of the market has changed vastly in
recent years so that even these examples don’t hold much
water in the country's current business environment. For many American
companies, just figuring out where to begin can seem a daunting
task. To this end, AEP hopes to facilitate interaction between
American and Chinese publishers by providing a clearinghouse for
product requests. In the meantime, we will continue to seek out
and pass on new information on this developing market.
At the Frankfurt Book Fair last month, I caught up with a few
individuals whose companies have successfully established ties
in China. A small but representative cross-section of the industry,
these examples offer perspectives on what deals look like in three
different sectors of educational publishing - large companies with
the staff and resources to pursue a number of different channels
in the market, and smaller companies and non-profits that selectively
choose partners and find rewarding inroads. Since our visit to
China in September, AEP has been working to inform its members
of the opportunities that exist and encourage them to venture into
this brave new world; with this, we hope to offer advice on what
to expect once you get there.
Tom Reycraft, president of mid-sized publisher Benchmark Education,
recently met up with a Chinese company at the Frankfurt Book Fair
and has since set up a deal licensing Benchmark's English learning
materials in China. Reycraft said the one of the first hardships
he encountered was finding a partner with the market focus that
worked best for his product.
"If your product works in the retail market in the U.S.,
that will more than likely be the best market for it in China as
well."
Being selective from the start when seeking out partnerships,
he said, will save you a great deal of time and money.
Leah Mansoor is Senior Vice President of International Business
at Encyclopaedia Britannica (EB), a company that found its way
into the Chinese marketplace as early as 25 years ago by licensing
their content to The Encyclopaedia of China. Now the company's
presence in China consists of a multi-partner, multi-channel campaign
of rights licensing and direct importation. A veteran of the Chinese
market, Mansoor agreed that the country has become more accessible
in recent years, but insisted there are still many difficulties
for foreign publishers to overcome.
"The basis for any deal in China is a good relationship,
and you can't establish that without someone on your side who speaks
the language," she said. "Even though most of the people
you'll deal with speak English very well, they prefer to conduct
their business in Chinese."
In this respect, EB is lucky enough to have a number of employees
- including editor-in-chief Dale Hoiberg - who speak the language
fluently. According to Mansoor, this has been an enormous advantage.
On the other hand, John DeSimon of the non-profit Association
for Supervision and Curriculum (ASCD) said the language barrier
has not been so much a hindrance as contract negotiations.
"The key for us has been to establish an effective contract
template," said DeSimon. "Over the span of about five
years, we've developed a solid set of terms that suit the types
of deals we are doing. Early on, we had some problems with payment
and general follow-up, but we've been able to make adjustments."
ASCD's main business in China has been much smaller in scope.
As opposed to EB's multi-partner approach, ASCD mainly deals with
one publisher in Beijing, with whom they've established a dependable
relationship. They chiefly sell rights to their existing professional
development products. Since this is still a relatively new and
fairly Western concept, DeSimon said many of the publishers ASCD
deals with have been educated in the United States and therefore
are generally fluent and more willing to do business in English.
Content censorship also remains a major issue in the realm of
Chinese publishing.
"The Chinese culture is one that is still heavily censored," said
EB's Mansoor. "Now that the market is opening up faster, there's
been a resurgence of that, especially in the past 12 to 18 months."
Another major factor to consider is the vast differences in culture.
Like the Middle East, negotiating is part of the Chinese culture,
and according to Mansoor the Chinese are some of the toughest negotiators
in the world.
"Dealing with the Chinese requires a great deal of patience," she
said. "They will negotiate every point of a contract and expect
you to negotiate as well." Knowing the laws or hiring a lawyer
familiar with Chinese law is important to make sure you're not
being taken advantage of, she said.
DeSimon said that negotiations for ASCD have been especially rigorous
when dealing with publishers that have ties to the government.
These companies often are required to shop around for the best
bids before they are permitted to enter into a contract, and the
U.S. companies they partner with have to prove they are offering
the best price for the product in question.
Building relationships face-to-face is held in high regard in
China, and Mansoor points out that the Chinese tend to prefer not
to travel, so visiting the market as much as possible will only
help to build credibility and trust.
The face of China's publishing industry has undergone - and continues
to undergo - vast changes, almost on a daily basis. This change
brings about a number of opportunities for AEP members, but in
most cases - and especially for smaller publishers who may not
have the resources of an Encyclopaedia Britannica - finding these
opportunities is not easy. Under AEP's proposed clearinghouse plan,
interested American companies would be put on a mailing list to
receive content and product requests from Chinese publishers -
and possibly companies in other Asian countries - as they come
in. In the future, we hope to provide an online rights database
and business-to-business portal. While several Chinese publishers
have requested AEP host this international clearinghouse, the level
of interest among American companies remains unknown. If your company
would like to participate in such a program, please contact AEP
at mail@aepweb.org.
Questions, ideas, or
in need of more information? Please contact Stacey
Pusey at 856-241-7772. |
