Digital publishing in developing countries | Octavio Kulesz
» China « include companies like Jinke – with its popular device, Hanlin –,242 Newsmy and Netronix. According to Zhang Yanan, an expert in electronic devices from the consulting firm Analysys International, foreign e-readers have little penetration as yet in China, since companies like Amazon or Sony are proceeding with caution, whether it is because of copyright issues, because of the lack of sales channels or because of difficulties related to Chinese fonts.243 This state of affairs, added to the fact that the very gadgets distributed by Apple or Amazon in industrialized countries are assembled in China, may lead us to believe that the Asian giant has a comfortable advantage in this area. However, Chinese e-reader manufacturers face a similar challenge to the one plaguing IT service companies in India: namely, the difficulty of creating a brand and competing over variables that go beyond price alone. Indeed, competition between e-reader manufacturers is so ferocious that profits keep falling, forcing many of them to withdraw from the market – as was the case with Foxit and its eSlick device –244 or to migrate to other activities, such as tablet production245. Perhaps over time we will witness the phenomenon of commoditization in the new sector of tablets, as more players join the field. At the end of the day, value and profits go to wherever the devices are designed, not to where they are manufactured. The New York Times recently described how the assembly of an iPhone 4 earns Chinese companies just 6.54 dollars – about 1% of the sales price of the appliance –, while Apple’s profits amount to 360 dollars.246 Apple and Amazon – just like countless multinational companies –247 employ integrated business models that reach far beyond the sale of hardware, which enables them to withstand the price war far better. As the vice president of Hanvon, Wang Bangjiang, explains: 242
Cf. “COMUNICADO: Jinke lanzará los dispositivos de panel táctil de ePaper e infrarrojos de 9,7 pulgadas”, Europa Press, 3rd January, 2011.7 243 Cf. “E-readers writing a new chapter”, Global Times, 1st March, 2010. 244 Cf. “eSlick Reader”, Foxit. The same thing happened with the company Edo, which – as we will analyze later – had to team up with the Xinhua bookstore chain to maintain its line of e-readers; cf. Wuping Zhao: “In Fierce Competition, Leading Chinese E-reader Manufacturer Halts Production”, Publishing Perspectives, 16th August, 2010. 245 This migration is encouraged by the fact that the patent for the electronic ink used in most e-readers is in the hands of a single company, Prime View International, based in Taiwan. Cf. Tuo Yannan: “Is this the end of the chapter for e-book manufacturers?”, China Daily, 14th January, 2011. 246 The study is based on a report by the consulting firm iSuppli. Cf. “Inside your iPhone”, The New York Times, 5th July, 2010. 247 Cf. “Chinese manufacturers increase trade figures, but multinationals enjoy most margins”, People’s Daily, 2nd January, 2011.
111