Shoppers at Zhongguancun’s Disanji Bookstore were greeted with the following message over the weekend:
Important notice: In accordance with a memo from GAPP, Disanji’s promotion offering a 30% discount on all inventory will end on 15 October.
Why does GAPP care about a sales promotion at a local, independently-owned bookstore? Harmonious and smooth economic development, of course.
For the last month and a half, Disanji has been locked in a price war with nearby Zhongguancun Book Building, and according to Tan Wen, vice-director of the circulation department at GAPP, price wars are detrimental to publishing and distribution. This particular price war is particularly threatening since several hundred small booksellers occupy nearby Haidian Book City, and the area around Peking and Tsinghua Universities is also home to several other major independent shops, all of which have been caught in the crossfire.
Our story so far:
· 15 July – Disanji Bookstore opens in Zhongguancun, Beijing. To welcome its new competitor, the Zhongguancun Book Building offers a 25% discount on its entire inventory for a period of one month.
· 16 August – The 25%-off promotion is extended indefinitely.
· 21 August – ZBB sets 15 October as the conclusion of its campaign. Disanji and smaller bookstores begin to complain.
· 1 September – Disanji responds by cutting prices 30% on its entire stock.
· 7 September – Dangdang, the largest domestic online book dealer, offers 31% off 300,000 items.
· 20 September – 49 mid- and small-sized booksellers release a signed agreement to stay out of the price war. Dangdang halts its promotion.
· 13 October – GAPP steps in and advises Disanji and ZBB to halt their discount programs on the 15th.
· 17 October – ZBB announces a new, one-year 20% discount and double points program on everything but textbooks and imports. This applies only to members; membership is open to anyone who buys a book or pays a 1-yuan processing fee.
· Same day – Disanji resumes 30% discounts on 96% of its inventory (minus textbooks)
GAPP’s getting ignored here. On the 16th, Disanji general manager Li Song said:
Although Disanji has returned to original prices, ZBB continued discounting. One of our people went over there every hour to buy a book, and through 1:42 they were still marking things down to 75%. And the date on the receipt was the 15th.
Moving to a membership system – even one that is not at all exclusive – and eliminating discounts on textbooks to give other bookstores some profit room, might be sufficient to placate GAPP for the time being.
The affair also highlights the problem of transparency within China’s book sector. Disanji moved 20 million yuan worth of books (according to cover price) during its month-and-a-half promotion, while ZZB sold 60 million yuan worth over three months. Both Disanji and ZBB originally claimed that their campaigns were profitable despite the deep discounts, something disputed by the small booksellers’ alliance, and Disanji president Ouyang Xu recently said that his store would have to write off the campaign as advertising since it brought no direct economic benefit.
Consumers were generally delighted by the price war, since they have long considered book prices far too high; recent GAPP figures show an average annual price increase of 20% since the 1980s; average prices in 2005 were 30-50% higher than the year before. And in both 2004 and 2005, book publishing was listed among the top ten most lucrative industries, alongside baddies like real estate, patent medicines, and training centers. But industry insiders take a different view, and a recent survey found that 80% of dealers and sellers felt that book prices were actually too low. (See this piece from last year for more insight into the situation.)
- Longhu Net (Chinese): GAPP calls a halt to 3-month-long Beijing book price war
- The Beijing News (Chinese): What’s up with the bookstore price war?
- The Beijing News (Chinese): Battle conditions change in the book price war
- Disanji Bookstore homepage
- Zhongguancun Book Building homepage