When books can be bought at the click of the mouse, about half the bricks and mortar bookshops in China have closed in the last decade. Han Bingbin looks at the battle for survival.

Rising rents, heavy taxes and the encroaching popularity of online shopping are the three boulders that have crushed many private bookstores in China. According to statistics by the All-China Federation of Industry and Commerce, more than 50 percent of China's private bookstores have gone bankrupt in the last 10 years, and during the last five, not a single new private bookstore has been registered.

During the recent plenary "two sessions" in Beijing, writer Zhang Kangkang's proposal to save the private bookshop started with a call for tax rebates.

She used the rebates that the State-owned Xinhua Bookstore enjoys as a reference. At the end of each financial year, the value-added tax paid by Xinhua bookstores on and below county level, which accounts for nearly two thirds of the total number of its bookstores, is fully returned.

Zhang Yashan, secretary-general of the China Xinhua Bookstore Association, explains that the distribution business in the countryside is more of a social benefit and describes the tax rebate as compensation for the losing proposition.

The only preferential policies the Xinhua bookstores have enjoyed, Zhang says, is in the early years when they were given free land to build retail outlets and warehouses.

Xinhua still enjoys discounts if they buy land to expand their business.

That probably explains why the Xinhua bookshops have been less affected by the online challenge than the private bookshops.

While many private shops have given up the ghost amid a wave of bankruptcies, Xinhua bookstores all over China still enjoy an average increase by around 5 percent in sales each year. But Zhang says this is already a sign of decline, considering that the average rate of growth was a double-digit 12 percent about 10 years back.

Many of their customers are lured away to online bookstores, where intense competition often allows shoppers to enjoy discounts as much as 80 percent off books.

For Xinhua Bookstore, however, books are purchased from the publishing houses at around 30 percent discount and according to Zhang's calculation, a 15 percent discount in sales is already the bottom line to make ends meet.

Zhang is happy with the "irreversible trend" of online shopping.

Xinhua bookstore launched its own online store in the late 1990s, but Zhang says there's simply no way to compete with online malls where "the dumping of books" is obviously a business strategy used to entice buyers into buying other products on the site.

But don't the consumers benefit from the lower prices? Zhang says it can only be temporary.

"They are destroying the industry. As time goes on, readers won't be able to read good books because no one would be willing to produce them. The writers and editors aren't getting anything from the price war."

Last year, China Xinhua Bookstore Association, along with two other national publishing associations and 24 publishing houses, initiated a boycott against famous online booksellers such as 360buy for illegal dumping.

Zhang hopes the government would also regulate the vicious competition.

As for Xinhua, Zhang says, it is also learning to change to attract a new generation of book readers. The bookstore has put aside its somber image and learned to market like the more stylish bookstores.

Xinhua bookstores sell more than just books now.

In Zhang's words, "all cultural products such as digital products and calligraphy tools are acceptable".

And taking Taiwan's Elite bookstore as a role model, the association is trying to persuade its franchises nationwide to bring in more diversified businesses such as cafes and cinemas in store.

Xinhua also has the added burden of being the official government bookstore.

In the early 1950s, Xinhua Bookstore was a chain store and its headquarters in Beijing was responsible for managing all its branches all over China.

But from 1995, the main store gave up its role as manager, and the Xinhua bookstores were incorporated into each provincial publishing corporation. Every year, each provincial publisher sets up a quota for bookstores within its precincts to sell books from local publishing houses.

In that sense, Zhang says, the Xinhua bookstore can no longer be called a national bookstore now.

Liu Binjie, China's minister of General Administration of Press and Publication, has suggested that all stores in the Xinhua system be integrated into one business entity to form a collective distribution system.

Zhang applauds the proposed scheme, saying readers will be able to broaden their access to other provincial publishers as well. But he has some hard business questions.

"Should the central government come forward and purchase the bookstores first? Or, should one province with the best performance initiate the action? And will other provinces be willing to follow?"

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