Why the Kindle in China has become low-key, modest?

Tyrannical, domineering Kindle, why become low-key in China, modesty?

Text | CBN reporter Chen Lu Wu Yang Yang Xu Tao Huang Junjie

It's hard to say whether Amazon, the world's most eye-catching Internet company, is fast or slow in China.

Unconsciously, Amazon has been in China for 10 years. In May, it gave yourself a birthday present: a $ 20 million takeover of vertical fresh electricity supplier seventy-seven. Amazon's global vice president Steve Frazier said the first acquisition in a decade was to expand the business and enrich Amazon's portfolio.

Initially, it started operations in China through the acquisition of Joyo. In the e-commerce field, Amazon came too late, but the current market situation has made it a little frustrated. In April, China E-Commerce Research Center released the 2013 Data Monitoring Report on China's E-commerce Market. As of the end of 2013, the scale of China's online retail market reached 1.8851 trillion yuan, up 42.8% over the same period of last year. In B2C online retail market, Lynx Mall ranked first with a market share of 50.1%. After JD.com, Suning Tesco and Tencent E-commerce, Amazon China ranked fifth with 2.7% share.

This is not in line with its global brand position. By scale, Amazon is already the world's largest online retailer and the second largest Internet company, with founder and CEO Jeff Bezos catching up to Steve Jobs in the business world. As Apple revolutionized the music industry and shaped the smartphone industry, Amazon also used the Kindle to create the electronic publishing industry in the United States and around the world, further dominating the cloud computing industry.

It is precisely in these other two core businesses, Amazon's pace in China is very slow.

In the cloud computing market, Amazon's AWS has occupied more than 50% of the global market share and has just started in China. Around the Kindle, Amazon has gradually established an ecosystem through the hardware layout of e-readers, tablet PCs and set-top boxes. China, Kindle officially sold in June 2013, so far only a year.

For seven years, initially the price of $ 399, the rough Kindle has become the world's largest-selling electronic reader. Three years ago, Kindle's business was limited to the United States and Europe and now has localization services in 13 countries around the world. The expansion of the Chinese market is part of the acceleration of globalization.

A month after Kindle Paperwhite went public in July 2013, sales of Amazon China e-books tripled from January of the same year to January, and sales of Kindle e-books increased to January 2013 by a month after the release of the new Kindle Paperwhite in January 2014 When 4 times. At present, there are hundreds of publishing companies that cooperate with China, including the major publishers such as Commercial Press, People's Literature Publishing House, Joint Publishing and CITIC Publishing House, as well as domestic mainstream publishing houses such as Grinding Iron Books, Zhongnan Bo Ji Tian Mo, New Classics, etc. The rapid development of new book companies.

Starting from scratch, this is not a bad result, but many people think that the timing of Kindle into China is not good. Before June 2013, the rumor that "the Kindle will enter China one day" was basically a repetition of the "wolf" story. Huang Yikun, general manager of the e-book center of CITIC Cloud Technology Co., Ltd., remembers that industry comment was common Think "come in late, have no chance." Zuo Zhijian, the founder of thumb reading, has a representative view: "The Kindle business in China will not grow as well as the US business, and it may be a lot better if it enters China before the iPad."

This view is not without reason. The reading rate of Chinese paper book is not high at the original, the publishing industry is huge and mixed, and its own various traits will also restrict the development of digital publishing.

Russell Grandinetti, vice president of Kindle book publishing business, has been with Amazon for 16 years. In an interview with CBN Weekly, he also said: "More than 25% of the revenue of some major U.S. publishers comes from digitized publishing, The share of Chinese income in this area is still very small, and the price of Chinese books is relatively low, and digitization is still at a very early stage. "

It is reported that before the release of the Kindle in 2013, Amazon China has been preparing for Kindle nearly 3 years into China, indeed, due to many factors failed to make the trip. But experience shows that the success of MNEs in playing the role of industry champion depends largely on how they enter, not about time.

For more than a year, the Kindle explored in China a path that differed from Amazon's e-commerce business and from the U.S. strategy.

For the American publishing community, Amazon is a tough one. In 2004, Amazon sold books accounted for a large part of the United States book sales, began to seek lower wholesale discount, and to extend the bill payment time, if the publisher did not meet the requirements, Amazon books will be removed from man-machine automatic recommendation system Under the slump in sales, publishing houses were forced to take shape. In 2007, when the first Kindle was released, Amazon took control of the publishing industry. Amazon does not recommend electronic books on the publisher for other books that are not fast enough or hot. When Macmillan, one of the top six publishers in the United States, insisted on adjusting e-book pricing, Amazon once stopped selling online Macmillan e-books and paper books.

Without foundation, Bezos "instinctively" priced the bestseller and the latest book on the Kindle for $ 9.99, while the publisher sold the e-book for $ 15 at the same price as the paper book. Almost "screaming, struggling," the American publisher was dragged into the era of e-books by the Kindle.

This scene did not staged in China, policy restrictions and the initial stage of the market prompted Amazon to become modest, convergence.

A few days after the Kindle was sold in China, Kurt Beidler, Amazon's vice president at Amazon, visited Business Press management. "Baiju Yi know more about things in China and do a good job of localization." Sun Shuixue, director of the Digital Press Center of the Commercial Press, told First Financial Weekly that "foreigners' mentality has changed. However, many Chinese are not doing well do."

The Commercial Press's Modern Chinese Dictionary is one of about 24,000 e-book readers in the Amazon e-book market at the end of 2012. Six months later, Kindle paperwhite first launched in China, the number of e-books increased to 40,000. Baiju Yi predicts that by the end of 2014, this number will exceed 100,000.

In fact, as a necessary groundwork for hardware sales, Amazon secretly started contacts with the local publishing community. In the latter's view, the Kindle's initial gesture was "more active."

In the second half of 2011, Amazon visited China's largest commercial book publishing company: CITIC Publishing House. This is two years into the Kindle from China.

At CITIC, Amazon introduced its Kindle team, how to view the Chinese market, and the Kindle's hardware role and business model in the overall e-book business, including content uploading and marketing details, and taking the initiative to understand CITIC.

Cao Lingling, deputy director of e-books center of CITIC Cloud Technology Co., Ltd., was present at the scene. She left a good impression on the Kindle team: "They are well-planned and can be seen as a serious book-maker." Think, Kindle team "more detailed division of labor is clear."

Jiang Feng, director of digital content at Amazon, is a key player. Former head of the Higher Education Press, has a deep network in the domestic publishing industry. In 2011, he joined the Amazon. As an early preparer for the Kindle China team, he focused on recruiting several publishing professionals. The following year, the team increased to more than 20 people, from the functional equipment, content, quality control and other different divisions of labor, and now the number of about 50 people.

Before the official sale of Kindle, adequate content reserve is necessary. However, no matter for Amazon or a publishing house, there is a special difficulty in cultivating the e-book market in China.

China's e-reading originated in the "Internet literature" of the 1990s, and the serious publishing industry did not intervene. Although Shanda Literature and Hanwang e-books have conducted effective channel layout, but the lack of digital copyright awareness and lack of content in 2010, China's electronic publishing industry rules or barbarous. On the other hand, the active local Internet provides a variety of online reading platforms. The major distribution channels for eBooks of various publishers are China Mobile, followed by Internet-based platforms such as Appreciation, Multi-look, and Douban. Although divided into different proportions, but the way of cooperation are provided by the publishing house, the operation completely to each other.

In the overgrown, no clear rules of the market environment, in order to shelve enough e-books, over the past year, Amazon and many publishers to contact. Although not as strong as in the United States, China Press gradually felt the pressure during the negotiations.

"There is no bargaining process," said Cao Lingling. Amazon is in front of the publisher with a clear set of rules: Pricing is owned by publishers; sales are cost-based, split at 45:55, and publishers make up the bulk. In addition, Amazon requires publishers to give themselves the lowest price among all channels, attracting consumers with "lowest channel prices". Otherwise, if it captures the same book at a lower price elsewhere, it automatically depreciates to the same level, with the publisher's final settlement at 3: 7. Publishers make up a larger percentage, but earnings are hard to measure.

The local publishing industry, which has been protected by the policy, has a conservative attitude. They have always been concerned that e-books will impact the sales of paper books. Moreover, the local electronics publishing industry has no rules and they do not know how to price more favorable to themselves.

Amazon's rules of the game is actually forcing publishers to think about how to price, how to cooperate with the channel more reasonable. Zhao Jia, founder of "Love Photographic Workers' Society, believes that" giving pricing power to publishers "will encourage publishers to find a balance between price and sales volume. Love Photography Studio published "soldier twelve volumes", "EOS dynasty" and other eight books ready to log in Kindle. Pricing for the Kindle version at $ 9.99 will extend the cost-recovery time per photo book from one year to at least three years, but Zhao Jia said: "I hope more people can read the book and balance the cost with long-term sales. "

For big publishers, the problem is not that simple. "He himself has a sales price, which is not the same as the wholesale price you gave him. The checkout is based on the wholesale price and the agreed price gives you a checkout." Sun Shu said: "This is completely different from other channels. At that time, we also Quite tangled, publishers are opposed to this. "And Amazon in the United States publishing industry absolute pricing power is different in China, the publisher is still dominant. For example, in the Joint Publishing, for a book electronic version of the price, you need three leaders sign consent to shelves.

For traditional publishers, the difficulty of pricing lies not in the price itself, but rather in presenting a brand new cost accounting challenge: the logistics, ground activities and marketing costs of the original paper book are eliminated, but the transcoding cost is more than that. This requires a press for many measurements.

"We started pricing is really blind," said Cao Lingling. On the pricing of e-books, no one has been set by an administrative organization or trade association, and all the standards are to be explored by the participants themselves. However, publishers believe that, therefore, the establishment of a set of transparent rules of the game is very necessary. After a year of exploration, most publishers set the price of e-books at 40% of paper books. "There must be a strong channel to stand up and balance the price, all the standards are to find out their own." Cao Lingling said. Following Amazon's clear rules, the local publishing industry is exploring the digital publishing business model.

Kindle challenges to the Chinese publishing industry is comprehensive. "The traditional publication of some things is not suitable for digital publishing that process, there are many conflicts related to the conversion of data, resource management, and production process reengineering." Sun said the school of Business, as soon as the editor started editing system layout Code work, on-line process is relatively smooth.

For some editors publishing a variety of ways, the transcoding process prone to inconsistencies and other errors. In this regard, Kindle China team has a mature system of transcoding and quality control services. "Conversion is the need to communicate a lot of detail.We encountered some problems in the background upload can not be resolved, they will come to the scene, the basic come every two weeks." Cao Lingling said.

More disorganized old publishing systems In the absence of a timely digital document filing system, electronic books must be scanned, identified, collated and typeset so that capital and time costs increase.

The fundamental problem lies in electronic copyright. Most books outside the country depend on translations, but many of the earlier translations did not have digital rights and need to be discussed in more detail. Even translation works in early years often have only paper copyrights for translation. Therefore, today you will see on the market many translators who have been introduced for many years after being electronicized.

For multinational corporations, the issue of copyright is extremely sensitive. In 2008, the State Administration of Press and Publication promulgated the Provisions on the Administration of the Publication of Electronic Publications. For the first time, it was clear that the publication of electronic publications must use the China Standard Book Number as required. "Amazon is very strict, pure e-book must have a book number, otherwise can not be on, as a multinational company, this area should be more careful." Huang Yikun said. For both parties, this is a period of difficult run-in.

CITIC spent nearly a year re-negotiating electronic copyrights on some paper books and transcoding in electronic format. After the copyright, formatting and pricing were completed, the first batch of 400 e-books came online simultaneously when the Amazon Bookstore business was launched in 2012. In 2013, CITIC launched 600 e-books on the Kindle, reaching nearly 30,000 copies a month. Now, in the CITIC e-book sales, Kindle channels account for more than 50%. As for the Commercial Press, this ratio is as high as 70%. As more e-books enter the Kindle channel, CITIC Publishing now has 60% of books simultaneously signing two copyright contracts for both electronic and paper.

"Amazon has the concept and ability to create an ecosystem." Huang Yikun believes that Kindle's entry into China is a turning point in China's e-book industry. CITIC e-book revenue in Amazon then doubled. He disclosed that now, Amazon contributed revenue accounted for half of the total revenue of CITIC e-books. Although compared with the overall scale of revenue of 100 million yuan CITIC minimal, but "we are very excited, because this represents the future."

Almost all domestic publishers have examined the publishing industry in the United States. They clearly state: "The present publishing industry in the United States is the future of publishing industry in China."

As the number of Chinese books sold on the Kindle has risen, publishers have also noticed subtle changes in the roles of both parties. "In the past, all Amazon people came to us and now we become chasing them and asking them to push us for a new book." Cao Lingling told First Financial Weekly.

The big data business added chips to the Kindle. It will collaborate with CITIC in 2014 to expand into the field of data analysis. Describe the characteristics of the target consumers from the perspectives of age, consumption income and education situation, and let everyone know what the characteristics of the population are. Closer to the consumer, not just one more distribution channel, it's closer to imagining the future. "The era of paper books, you never know who bought the book away." Huang Yikun said.

Amazon uses a variety of means to track readers' needs. For example, not yet on the Kindle version of the paper have a button on the edge of the book, told the publisher itself want to see its electronic version. Readers are also recorded in the Kindle Bookstore for book titles, helping Amazon analyze readers' needs for ebooks.

Publishers begin to change the allocation of marketing resources. CITIC gradually reduce the floor signings and paper media book reviews, serial. "No one has ever read a newspaper, and the cost of signing up for the ground is too high," says Huang Yikun. "At the very least, e-books have become a very good marketing for paper books. Many publishers are still worried about the impact of e-books on paper books. They have forgotten that user habits have changed. "It is not possible to see a Kindle in the U.S. bookstore, but for now, CITIC is thinking of selling Kindle in the future.

Kindle in many ways to promote the local publishing industry for digital change. "Kindle's analysis of user data, a single patent under a single mode, including distribution, including pricing system, including the cooperation model are worth learning from." Sun said, "It promotes us to change, it does not come in, we are inert."

However, the Kindle into China is not smooth. In 2013, the Kindle team launched hardware sales in Amazon's official website, Suning Tesco, JD.com, Suning Appliance, IT stores and other channels, but sales of these channels accounted for a small proportion. "Last year's distribution in China was unsatisfactory," said one person familiar with Amazon China. "This year they want to sink channels to the fourth and fifth tier markets." In late 2013, Zhang Wenyi replaced Bai Ju Yi as the Kindle Head of China business. The former chief channel manager for Intel, China, is Amazon's global vice president, reporting to Russell High, Kindle's book publishing vice president. Amazon's three business lines are vertical management, deployment of resources by headquarters based on the degree of importance.

In addition, the Chinese market has a unique electronic copyright prepayment due to the very small number of best-selling Chinese authors. To this end, Amazon made adjustments: with Kindle Paperwhite into China, for Yuhua "seventh day" to pay 1000000 yuan advance payment. Originally, Amazon also negotiated Dan Brown "DaVinci's Secret" electronic 200000 yuan advance payment, but was Tencent to 1.2 million away. With the deteriorating pre-paid competition, Amazon headquarters in China to review the prepaid strategy.

Kindle enlightened China's e-book market, but also brought fierce competition. In 2013, the selling price of local e-books dropped. Publishers are open to all kinds of channels. In addition to Amazon, they also maintain cooperation with China Mobile (50.68,0.20,0.40%), see more, palm reading, watercress and other channels, this year, more powerful rivals in Tencent, Ali, a local Internet giant.

Amazon knows that China's e-book market is still in its infancy.

By the end of 2013, Kindle had 62,000 ebooks in China, and in 2007, the first generation of Kindle was launched in the United States, e-books have reached 90,000. Even around the Kindle ecosystem gradually complete. In April 2014, Amazon released Fire TV in the United States. Not only does it watch Amazon Instant Video, it also installs Netflix (390.6, 18.93, 5.09%) and Hulu's app to watch content from these vendors and embeds more than 100 games.

Amazon's business model is becoming clearer: Get people to consume more content, including books, music, movies, games and more, by launching low-cost hardware products like e-readers, tablets and set-top boxes. According to Consumer Intelligence Research Partners, a market research firm in April 2014, those who own a Kindle in the United States spend 30% more than those who do not.

In China, Amazon began to cooperate with different platforms in order to jointly cultivate the market. Who will be the dominant e-book market, the right to vote is not a publisher, but consumers. Amazon declined to release Kindle sales in China, but it is undoubtedly the most crucial promoter of e-book business in China.