DESPITE a massive boycott from publishing houses, China’s top two online booksellers continued promoting themselves with some discounts reaching over 60 percent.

    On Saturday morning, Beijing Jingdong Century Trading Co. announced that in the 18 hours after 6 a.m., books would sell at lower than 60 percent off at its Web site 360buy.com if the buyer spent more than 100 yuan (US$15.4).

    The announcement immediately triggered a response from Jingdong’s rival, online bookseller E-commerce China Dangdang Inc. Buyers at dangdang.com were promised a 200-yuan coupon after they spent 200 yuan on books. Given that dangdang.com has a larger variety of books available, the discount is eye-catching.

    Many buyers later complained that they could not log onto either Web site for hours, and by the end of the day, many books were out of stock.

    Liu Qiangdong, chief executive of Jingdong, reported that his retail Web site received orders worth more than 200 million yuan during the sales, of which half the transactions had been completed. “We need three more days to process all the orders,” Liu said in his microblog. “The online traffic was so heavy that our server responded slowly. We also found that we urgently needed to replenish our stock.” Liu forecasted a revived sales campaign this weekend.

    While online retailers celebrated their successful campaigns, publishing houses are trying hard to secure their diminishing profit margins.

    Only three days before Jingdong started the price war with Dangdang, 24 children’s book publishers held a conference in Nanjing to discuss boycotting Jingdong.

    Li Xueqian, president of China Children Publishing House (CCPH), said Jingdong’s actions would disturb the market. Some bookstores buy books from publishing houses at 40 percent discounts. When Jingdong sells books at 60 percent off, the bookstores could buy from Jingdong and send the books back to publishing houses for a refund.

    “Some dealers pressed us to further lower our prices, saying that they would rather buy from Jingdong if we don’t cut prices,” Li said.

    “Our publishing house has a profit margin no higher than 8 percent. We will sue Jingdong for such irresponsible discounts,” he said.

    Sheng An, attorney for CCPH, said that other publishing houses are also considering lawsuits against Jingdong.

    “The online retailer sells goods at a retail price lower than the cost. It is dumping,” Sheng confirmed.

    Bai Bing, editor-in-chief with Jieli Publishing House, said the cost for a book is about 45 percent of the retail price. “Of the 45 percent, 8 to 10 percent is royalty for the author, paper and printing will cost 20 to 25 percent, operation fees of the publishing house and logistics will cost another 15 percent. Apart from that, dealers will return unsold books back to the publishing house, incurring further expenses,” Bai said.

    “Jingdong’s dumping threatens both publishing houses and brick-and-cement bookstores.”

    Online booksellers don’t have to pay rent or employ salespeople, which gives them an advantage in competition. However, Li thinks Jingdong is going the extra mile to expand its market share.

    “Jingdong recently received US$1.5 billion in investment from six overseas private equity firms. The management team has signed an agreement promising to drive its total revenues to 75 billion yuan in the next three years. If they fail to meet the target, the management will have to leave the company,” Li said.

    “It’s obvious that the company is using dumping to establish its market status. The sale of children’s books is a strategy to draw more buyers, and the company can compensate the losses with profits from selling other goods.”

    Shi Tao, official with Jingdong, confirmed that the sales promotion aimed to draw more people to register at the site.

    “Revenue for books accounts for only 1 percent of the total revenue at 360buy.com, so we don’t expect to earn money here,” Shi said.

    Bai thinks Jingdong is seeking to monopolize the market. “Readers get cheap books, authors are promised a 3 percent cut from each book sold. Everything seems perfect. But once the company has monopoly of the market, it will get whatever it wants.” Walmart, for example, requires its suppliers to provide details of the cost of each piece of merchandise, then stipulates the price and allocates the profits. “There will be no room for publishing houses if this is the direction,” Bai said.

    Online book sales have been doubling for the past four years in China. Going hand in hand with the growth is the price war between online sellers.

    “The developing online platforms benefit readers and help industry restructure,” said Zuo Jian, president of Nanjing Publishing House. “However, online sellers should seek a win-win method to work with publishing houses. They need to work out ways to market better new books and cook a bigger cake, rather than try to fight and control publishing houses.”

    Qian Xiaohua, manager of a private bookstore, said it was most important to have manifest rules and a fair market.

    (Li Dan)