Bertelsmann turns the page on Shanghai, closes 9 stores

By Chen Qian  |   2008-7-4  |     ONLINE EDITION

Bertelsmann AG, the German media group, announced today that it will close its nine bookstores in Shanghai by July 31.

In a statement Bertelsmann sent to Shanghai Daily today, it said the decision was reached after its business strategy was adjusted. Two weeks earlier, Bertelsmann announced it would close 36 Beijing 21st Century Book Chain stores.

Despite the closures, the company denied it was retreating from the market.

"The company won't retreat from the Chinese market and will focus on other fast developing businesses," the announcement said.

The company said that book club members would receive any money in their accounts through a postal remittance. Bertelsmann is a pioneer of the book club concept and entered China in 1995.

According to a Shanghai Morning Post report, there are more than 500,000 club members with an outstanding balance. Bertelsmann hopes members can contact them to leave an address for postal remittance.

The report said everything looks normal in the store on Fuzhou Road. Club members didn't rush to buy books, store workers said.

Bertelsmann also promised to compensate all store employees according to Chinese law and regulations.

Bertelsmann said its book club members hit 1.5 million in 2000 and its sales reached 150 million yuan (US$21.7 million) in 2002. But sales dropped sharply in 2004 and 2005.

One reason for Bertelsmann's failure in the Chinese market is the rise of online bookstores that also weaken the profits of other bricks and mortar bookstores.

Yu Le, chief executive of China Corporate Center, Bertelsmann, said in an interview with Shanghai Daily published on June 17 that despite significant managerial and financial resources, the business lacked the scale and profitability necessary to make it a sustainable option.

Yu said that growth in online book sales and increasing competition in China contributed to the firm's decision and that the joint venture was not profitable.