Friday, September 12, 2008

Bertelsmann eyes opportunities

Global media conglomerate Bertelsmann still sees China as an important growth market despite the closure of its book club business here, said Thomas Rabe, the firm's chief financial officer.

In July, the German company closed its book club in China, its biggest business in the nation with over 1.5 million members and 38 bookstores.

But Rabe, the company's global chief financial officer, said yesterday in Beijing that China will remain one of its key growth markets.

The firm expects to see a significant increase in its business in China over the next five to 10 years, he said. And, as a sign of its commitment, the company set up one of its three global corporate centers in Beijing this year.

It will seek opportunities in outsourcing business solutions, and has also established a 100-million-euro strategic investment arm in China, looking for startups in media and education.

At the moment, China contributes little to the global revenue of Europe's largest media company.

Around 95 percent of the company's revenue comes from Europe and the United States, accounting for 18.8 billion euros in 2007.

Rabe said the company's revenue in China mainly comes from Arvato, a third-party business outsourcing provider and the largest CD/DVD replicator in China, and G+J, through which it partners with fashion, parenting and automobile magazines.

Bertelsmann brought its book club system to China in 1997, offering readers membership discounts, and selling books through catalogue delivery, bookstores and online stores.

The method, which at first proved popular among white-collar workers and young people, lost its appeal as online bookstores began to boom.

Rabe said the company quit the sector because, compared to Europe, book prices in China are relatively low, while operating costs are higher, and that makes the book club business unprofitable in the long term.

Rabe said the company has redirected its book club resources, which include over 500 workers throughout the country, to other branches.

The media giant, which also owns Random House, the world's largest publisher, has been faced with the challenge of more people reading online. It also closed its book club business in the US this year.

Source: China Daily

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