ICT

China's e-reader future hard to plot

Updated:2009/10/16 10:17

When Anne Ruan goes to work in the morning, the Beijing subway is so crowded she can barely find a spot to stand. But the real-estate agent ignores the jostling of the other commuters and focuses on her book. Her e-book, that is.

Ms Ruan is one of about 5m Chinese who have taken up reading electronic books on mobile devices, according to the China e-book development report, released this year by an alliance of publishing and internet companies.

But while the Chinese market is expanding, western companies may find it difficult to get their piece of the pie, due to the e-reading trends emerging in China.

"Amazon and other foreign suppliers will find this is a market with 'Chinese characteristics'," says Zhang Yanan, who follows the e-book market at Analysys, a Beijing-based internet research company. "First of all, consumers are not ready to pay for content. Moreover, the development of this market in China is mainly driven by the large number, and the growth, of mobile phone users." With more than 700m users, China is the world's largest mobile market.

This could help explain why China is not on the list of 100 countries where Amazon plans to launch the Kindle, its e-reader, on Monday.

According to the e-book development report, 95 per cent of Chinese who read electronically download pirated literature and 75 per cent of the country's e-reading population are under the age of 31. It is also dominated by people with relatively low levels of education, and their main purpose is entertainment, the report found, indicating that these are not traditional book buyers switching to a new medium, which has driven uptake of e-readers in the US, for example.

Of a total of 79m Chinese who read electronically, according to the e-book development report, 6.3 per cent do so on mobile phones and only 0.3 per cent on dedicated e-reading devices.

China Mobile, the world's largest mobile services -provider with 500m customers, started a big push to develop e-reading this year, centred on the affluent coastal province of- Zhejiang. It began contracting device-makers to develop custom-made e-readers and teaming up with content providers. The company claims to have won 2m e-reading users so far.

The device-makers themselves are also driving the market in China. DisplaySearch, the electronics research firm, forecasts that Chinese e-reader shipments will hit 800,000 this year and jump to 3m in 2010.

Hanwang, the market leader, says it sold 200,000 of its Hanvon-branded e-readers last year, expects to sell 500,000 e-readers this year and more than 2m in 2010 - partly due to an agreement to distribute its readers to China Mobile users.

State-owned Datang Telecom put out the first e-reader for TD-SCDMA, China's indigenous standard for third-generation telecommunication services. Huawei, China's biggest telecom gear maker, and Founder, a PC company, have also signalled they plan to enter the market.

But growth could be hampered by the fact that content is in short supply.

Hanwang has a library of just 30,000 books for download, which its users complain are not new or interesting enough.

The main content provider so far is Shanda Literature, a unit of Shanda Interactive, an internet portal that is dominated by online games. It offers user-generated literature - from mobile phone novels to magazines - mostly for free. China Mobile has teamed up with Shanda, helping the telecom company to tackle content shortfalls.

But analysts say the industry faces many challenges. "One big question is what monetisation models all these companies can develop for e-reading in China," says Shi Lei, an analyst at BDA, a telecoms and media consultancy.

Shanda Literature and other electronic literature companies generate revenues from a mixture of membership fees, online advertisements and copyright trading. In mobile e-reading, mobile adverts are likely to be added to the mix, says Ms Zhang.

 

Source:ft.com

 Source:Source:ft.com
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