Page 63 - How China Is Winning the Tech Race

no large catalogers, it is the biggest bookstore with some 200,000 titles for sale
on its Web site. And YuYu is well on her way to leaving her imprint on China’s
historic rise as an economic powerhouse. Dangdang has made books widely
available in a country where there’s a palpable desire for knowledge and
getting ahead, with reading being the most democratic route to riches.
These are no small achievements. The $7.8 billion Chinese book market
1
is growing by $300 million per year but is still small compared with the
2
$25.1 billion U.S. market. Book publishing in China is controlled largely by
the state and is highly fragmented. Unlike the huge Beijing Book Store, most
of China’s 100,000-plus bookshops are tiny, with a limited range of titles and
few foreign works. The dominant player, the state-owned Xinhua news
agency, has some 14,000 stores and until recently was the only national dis-
tributor of books. Only in the last few years have new privately owned retail
chains such as Xooyo and Xishu emerged in the bigger cities. Savvy foreign
retailers began to tiptoe into the burgeoning market after getting permission
to own majority shares in bookselling chains in late 2004 after China’s entry
into the World Trade Organization. It is rare to find a Western-style bookstore
like the Beijing Bookworm, a haunt of the city’s large expatriate, English-
speaking population.
Online book sales offer new, low-priced competition to traditional
bookstores and are booming, with business up by about 100 percent annually
in recent years. But they still account for only about 2 percent of the total
books sold. Internet usage is becoming a part of daily life in China, and e-
3
commerce bounds ahead by nearly 40 percent a year. In 2007, business-to-
consumer e-commerce in China will top $955 million (compared with the
current U.S. level of $131 billion), and books are leading the charge in online
4
retailing. Books are the top-selling online item in China, accounting for one-
third of all consumer merchandise
bought over the Internet. 5
Dangdang is also China’s larg-
“Someone is going to be the Amazon of
est online retailer. About 40 percent China, and it’s most likely going to be
of its $48 million in revenues comes Dangdang.”
from general merchandise ranging
David Chao,
from brand-name clothes and
cofounder and general partner, DCM
linens to cosmetics and toys. The
books-plus strategy comes directly

Dangdang.com—The Amazon-Plus of China 37