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China’s bookshops struggle to turn page in profitability

On a recent weekend evening at the western end of Shanghai’s leafy Hengshan Road, a three-storey bookstore was filled with young people. But most of them were taking photos instead of reading.

The Mix Place, a newly opened store featuring art and photography books with a cafe and weekend lectures, has apparently become more of a tourist destination than a place to read.

Despite the emergence of some popular venues like the Mix Place, mainland brick-and-mortar bookstores are struggling and book consumption remains low.

And although the central authorities have rolled out a detailed plan to support physical bookstores, they remain underfunded amid the country’s investment frenzy in the cultural and creative industries in recent years.

“There’s a wide gap between the number of people who visit us and those who buy a book during their visit,” said Linghu Lei, creative director of the Mix Place.

Opened last year by a fashion designer, it seems to have fallen short of attracting enough of its major target – photographers and other creative professionals – to consume its main offering: books.

“Shanghai is a very picky city. Its residents are more sensitive to prices than other major cities. They hope the price gap between print books and electronic ones will narrow,” said Linghu Lei, whose store is known as pricey.

But it is not just Shanghai that is reluctant to spend on books. Nationwide, more than 40 per cent of adults didn’t read a single book in any format last year. On average, they read four or five printed books and three or four digital ones, according to a study by the Chinese Academy of Press and Publication in April.

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In comparison, only 16 per cent of Americans did not read a book in 2014, according to online statistics portal Statista.com.

In the same year, more than 60 per cent of Germans aged 14 or older said they read a book at least once a month, Statista found.

Chen Shaomin, general manager of the Belencre bookstore chain, said that after a period of expansion the business was now facing difficulties.

With more than a dozen stores in major cities like Beijing, Shanghai and Suzhou (蘇州), Belencre only has 20,000 registered members. Chen said the biggest problem was finding talented staff.

“Working at a bookstore like ours is quite demanding. Besides selling books you must be able to plan and organise activities that enrich the customer experience at the store. This is not a very profitable industry and we can’t afford highly paid employees.”

The online equivalents are not doing much better. Dangdang, the mainland’s largest online bookstore and one of the first e-commerce platforms, recorded an increase in gross profit of less than 2 per cent last year, according to its annual financial statement. Dangdang shocked many industry insiders when it announced late last year that it would open 1,000 physical stores over the next three years, mostly in county-level areas.

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But the decision appeared to be in keeping with the central government’s wishes. Last month, 11 ministries jointly issued a plan to support traditional bookstores, especially in smaller cities and rural areas.

Bookstores, however, continue to be neglected by venture capitalists, who otherwise have shown great interest in cultural and creative sectors such as film in recent years.

“We’ve seen some physical stores that are making money but we haven’t seen the momentum for expansion. From an investment point of view, they are difficult to develop to a bigger scale,” said Li Chuan, managing director of China Media Capital.

Li believes that printed books will one day become luxury items as most will be in electronic or audio formats.

“If not as a luxury shop for a niche market, then physical bookstores must be combined with food, lifestyle, social communications and so on,” he said.

One example is Muji Books, which sells groceries as well as books and was opened late last year in Shanghai by the Japanese retailer Muji.