China: Should we be worried?
I had about fifty trips to China in the nineteen nineties and early two thousands.
The assignment was to launch Mills and Boon books in China, and I travelled all over the country in order to do this. In these early stages, I was accompanied by a Taiwanese, Vincent Lo, who was always very helpful.
Several of these trips included the CEO of both Harlequin and our then parent company Torstar, so I had full support for everything that transpired.
On one of my early trips, in 1993, Vincent and I went to Chengdu in the Western Province of Sichuan. The primary motivation for this trip was I had just read the book Wild Swans which had been published a year or two earlier.
We were also able to learn how the very opaque publishing industry in China worked by purchasing a number of books and then tracing those books back to distributors and publishers. We often did this just in the street, which usually attracted a small crowd. There was never any hostility, just curiosity and often people just provided the information we needed.
Vincent and I did one longish trip outside the city and during our return to Chengdu stopped at a roadside stall run by a young teenage boy, who pointed to a muddy footpath suggesting that we talk to his father and grandfather who lived in a house down the track.
So that is what we did. There was a water buffalo tethered nearby. We eventually knocked on the house door and were soon welcomed by a garrulous old-looking man ( he later told us he was fifty-eight).
We were given a cup of Chinese tea and were then regaled with the man’s story. He told us that Mao had instructed everyone to burn their title deeds if they had such a thing. Did he do that? “No,” he said. “We buried them.”
“Then,” he said, “Deng Xiaoping has now told us that if we can prove ownership we must give the local village rent in the form of a few bags of rice and then we can sell any surplus for our own account. We were also allowed to get rid of the people we didn’t need that had been sent by the village to ‘help us’.”
The net result of all that was that just with his family he grew a lot more rice, paid the village its tithe and he was able to sell the rest. Later I realised that this was the practical result of China's ‘Opening Up’, which had been started in Sichuan as a test, and what a successful test it was.
Our host then asked what we were doing. He nearly fell off his chair, laughing, when we told him we had come to China to introduce our books to the Chinese market.
“Mao told us to burn all the books twenty years ago, and they have stayed burnt,” he said, “If you go into the village there is no bookstore and nobody selling newspapers. We just have CCTV -television from Beijing.” He pointed to an aerial above the house. “That is all there is.”
The man was very generous with his time and in the ninety minutes we spent there we learnt a great deal. Our internal discussions centred around the 1.2 billion people in China. After that discussion, we eliminated 800 million (rural people) from the plan. In the end, with a lot of analysis, we reckoned that our target market was about 120 million urban women.
We eventually set up a small operation in Beijing, where we translated the books. We did a deal with a local publisher and several others after that.
When we asked about distribution we were told that Xinhua Bookstores had twenty-two thousand bookstores throughout China…
By this time we had engaged Stephen Fitzgerald, who was the first Australian ambassador to communist China in the mid-seventies. He has a photo of himself shaking hands with Mao and was very well connected. He speaks fluent Mandarin.
Stephen introduced us to Yu Youxian, who was then the head of the Press and Publication Administration of China (PPAC). He was responsible for authorising all books published in China. Stephen and I travelled the world with Yu showing him some of Harlequin’s (the owners of Mills and Boon) operations around the world including Australia. One of the more interesting conversations we had with Yu was when he asked to see the Minister of Publishing in Australia. We then had to explain that there was no such person. We then went on to explain the laws of Copyright and the laws of Defamation. I managed to get Yu to read a couple of our books, in Chinese of course.
We did launch our books with TV advertising in Beijing.
However:
There are about six hundred publishing companies in China, owned by various arms of the Government. They are absolutely terrified of Western Publishers and did not want us to succeed.
Distribution. We assumed that Xinhua bookstores would give us National Distribution. This is not the case. We had to negotiate with each of the 32 provinces for distribution.
For example, when I tried to get the Xinhua operation in Shanghai to list our books the answer was: “No, the people in Beijing might like these books, but the people here in Shanghai are more sophisticated than those in Beijing. People in Shanghai would never read these books.”
The bottom line was that the Xinhua operations in each province used the local operation to support their own publishing operations and were ‘reluctant’ to support what they saw as outside influence. Also, having visited Xinhua stores in various locations such as Guangzhou, I found the Xinhua operations were more or less moribund- they were unable or unwilling to do anything much.
Xinhua did build a number of ‘Book Cities’ in the main centres where we had some success, but there were too few of them to make our business viable.
The publishing operations we had arrangements with did very little work on our behalf. We made all the contacts and did all the promotions. I personally went to several cities to promote our books (Nanjing, Shanghai, Shenzen, Kunming etc.)
The final straw was that Yu Youxian, who had complete control of everything that was published in China, said to me: “You can have permission to publish thirty-five books a year.” We needed at least that number every month; in Australia, we published eighty books a month.
So we pulled the plug. A few attempts have subsequently been made to see if anything could be made of the business in China, with no success.
This is not true of Western Educational Books which indeed have enjoyed considerable success in China.
In general, the people we dealt with were reasonable and straightforward. We had quite a lot of interesting meals with our Chinese colleagues. Some of the Government hosted meals were ‘interesting’ to say the least:
the deep-fried scorpion. There really was nothing left except the shell-tasteless
Camels hoof. Not very appealing
On one occasion hosted by the mayor of Tianjin. I was the only non-Chinese-speaking person present. I had already eaten lunch, dinner, lunch, dinner, and this was lunch on the third day. There was a lazy susan in the middle of the table and I was busy trying to flick it on when my neighbour said to me: ‘Oh I think you would enjoy this dish.’ It was a ghastly grey-looking mess. My neighbour explained to me that it was a Cuban(I think) toad made into a sort of stew. Anyway, he heaped three large tablespoons of this mess onto my plate. I said to him: ‘What about you? The answer: ‘Oh No I don’t like this dish.’ I did manage to eat some of it.
Snake. I was not present on this occasion. When my two female colleagues ordered a snake, they were asked if they wanted the snake to be slaughtered in front of them. ‘No.’ They said, ‘Not necessary.’ Just before the meal was served two glasses were presented: one red(snake’s blood) and one green (snake’s bile). One of my colleagues said she would have the bile, saying, “It’s good for my complexion.”
Worms. In a village outside Guangzhou, when we sat down there was a boy shoving what looked like pieces of wire into worms in a galvanised iron bath, getting rid of sand or something. Anyway, I was persuaded this was a specialty of the house.-Tasteless.
Despite the above comments, the food in China was excellent, especially when we treated ourselves. Over something like ten years, I was never ever sick or had a bad reaction to any meal.
Safety. I walked all over Beijing and other cities at all times of the day and night. Not once did I ever feel threatened or unsafe. I always carried a card with our hotel’s address on it so I could catch a taxi if needed.
What does all this say about China? Basically, they will always row their own boat. As far as I can tell they never had any intention of letting us succeed, and no Western Publishing Company has ever succeeded in setting up business in China.
In the many sometimes quite rowdy meals I had with Chinese colleagues, after a glass or two of Moutai many of them opened up to us. The overwhelming sentiment was that China had suffered a great deal of damage and loss of dignity during the ‘opium wars’ of the early part of the nineteenth century, as well as subsequent invasions. The desire to ‘get back’ at Western powers is overwhelming. Most thought it was their absolute duty to gain access to Western knowledge and skills by whatever means. I am sure this sentiment remains.
That China has succeeded economically is beyond question.
Largely this success has been based on cheap labour.
Will China overtake America as the largest economy in the world? Probably not.
Why?
America, despite all the nonsense spoken and written, is still a very vigorous, growing, and dynamic economy. Two statistics illustrate this:
America with 4% of the World Population generates 25% of global Output (Economist May 26th, 2023).
America’s working-age population (people between the ages of 25 and 64) has grown by almost 40% in the past 30 years.
This is because of continuing immigration, as has always been the case. Both sides of politics realise this. Don’t believe the political rhetoric.
Regarding China:
The population is already in decline. India has a larger population now
More importantly, China’s working-age population is aging and therefore will be less productive. The population over age 65 will be about 400 million by 2050. (i.e. about one-third of the population).
This is unless, in the most unlikely event, China agrees to allow immigration from say, Africa…China has over the past generally made good decisions
There is no benefit in going to war over any issue (not even Taiwan).
There is considerable benefit in coming to terms with America. America sees this as well.