STIEG Larsson's global best-seller "The Girl with the Dragon Tattoo" was a money-spinner in China for Shanghai 99 Readers' Culture Co. In the Land of the Dragon, books have become big business and the face of the once stodgy publishing industry is changing rapidly.

Though a strong strain of social responsibility still pervades on what is allowed to be published in China, the choice of books to read has gone far beyond the former diet of academic tracts, dry textbooks, and revolutionary sagas.

As the mix of what's available to readers expands, so too the market potential. The once monopolistic state-owned publishing industry is being opened up to more private investment, and the lessons of free enterprise are shaping the printing, marketing and distribution of books.

An estimated 80 percent of the best-selling books sold in China involve privately-owned companies, though many of the works are published by state-owned firms. The line between government versus private ownership in the industry is beginning to blur - to the benefit of both sides.

"Our market started much later than Western publishing," said Huang Yuhai, chairman of 99 Readers. "We began at a much lower level, so it is no surprise that we are growing so rapidly, especially in light of the growth rate of the whole economy in past years."

In 2011, 370,000 titles were published, a 12.5 percent increase from the prior year. Forty-eight of the books sold more than 1 million copies each. The revenue from publishing, printing and distribution reached 1.46 trillion yuan (US$228.62 billion), up almost 18 percent from 2010.

The scope and depth of book publishing will be evident at this year's Shanghai Book Fair, to be held from Wednesday to August 21. The exhibition will display 150,000 titles from more than 500 publishers in China. The one-week fair last year broke records with sales of 54.7 million yuan and visitors numbering 300,000.

Diversity of tastes

Not all popular books in China come from the West. The best-selling charts published by Joyo and Dangdang, the two biggest online booksellers in China, show a diversity of tastes. Among the popular sellers are a translation of a South Korean book on personal motivation, a biography of Chinese architect Lin Huiyin and a photo cookbook based on a popular CCTV program showcasing Chinese cuisine.

Among those who will be participating at the Shanghai Book Fair is Horizon Publishing House, the mainland publisher of books by Turkish writer and 2006 Nobel Prize winner Orhan Pamuk. Horizon is the Beijing branch of Shanghai Century Publishing Group, a state-owned company.

"We operate more like a private business," Wang Lei, Horizon's deputy manager, told Shanghai Daily. "We focus on commercial publishing rather than on textbooks or academic books like state publishers do. Although we have sales targets, we also bear the responsibility of picking good-quality books of cultural merit."

Privately-owned 99 Readers recently secured the Chinese mainland copyright to JK Rowling's forthcoming novel "The Casual Vacancy." Huang said foreign copyright firms are often surprised to find that his company maintains close ties with state-owned publishers.

Many of his company's books are published by the People's Literature Publishing House, one of the oldest and most reputable state publishers in the field of literature. 99 Readers had sales of more than 300 million yuan in 2011, while its profit totaled more than 20 million after disbursing two-thirds of it to state-owned partners.

"Many supportive policies have been implemented in the past 10 years, but I still think there is more to go in opening up publishing to the private sector," said Huang of 99 Readers. "It hasn't been very easy for private companies in this field."

Beneficial partnerships

His company recently signed an agreement with Xinhua Media, the largest bookstore chain in Shanghai, to set up a featured section in their shops for 99 Readers' books.

To enhance their competitive edge in commercial publishing, state heavyweights in the industry are gradually starting up smaller, market-oriented branches that operate more like private companies. Partnerships between state-owned and private publishers benefit the latter because their bigger counterparts have more resources and more clout in snagging copyrights.

The government has been working for years to reform state publishing into a more competitive force in the global arena. However, modernization has lagged behind many other industries.

The current policy is to encourage the integration of smaller publishers into larger, more competitive entities, according to the most recent publishing industry report from the Chinese Academy of Press and Publications.

Nearly all provinces have consolidated state-owned publishing, printing and distribution units into larger companies. Some of them are planning to go public through share listings.

At the same time, private investors are being encouraged to go into publishing, especially in the distribution and overseas printing segments.

China's publishing industry is on the rise just as book sales in Western developed countries are showing the strains of an economic downturn. In the US, the total sales of books overall fell 2.5 percent to US$27.2 billion in 2011, according to statistics available from Publishing Weekly.

British sales slid to almost 3 billion pounds (US$4.5 billion) from 3.1 billion pounds, according to the UK Publishers Association's website.

"Our market is growing, but we really need to carefully examine where the growth is," said Zhang Yanan, a senior analyst at Zero2IPO, a venture capital and private equity firm in China. "Is it distribution, printing or publishing? In terms of publishing, is it the textbooks or commercial publishing?"

At this point, she added, "it's hard to say because many areas weren't really open to private investors until 2011. We will need to wait and see."

Horizon's Wang and Huang of 99 Readers both agreed that textbooks continued to grow huge by growth figures, but the commercial publishing market has been catching up in the last three to five years.

"Publishers are now better equipped with marketing strategies and more supportive policies, and they are increasingly more concerned about what readers want," said Wang.

Like many of his peers, Huang started his publishing career in a state-owned company, rising to deputy editor-in-chief at a young age. He founded 99 Readers in 2004, when private publishing was in a gray area - neither promoted nor forbidden. "At the time, many areas were monopolized by state-owned enterprises, so we had to find our own market," he explained.

His choice was the mainland copyrights to best-selling foreign novels, a very small market at the time. Foreign copyright holders weren't particularly interested in China. The cultural gap between Chinese readers and contemporary foreign literature was wide.

Throes of change

"In 2008, foreign companies started getting interested in this market and began considering us as equal partners in the process of acquiring copyrights," Huang said.

The industry finds itself in the throes of change not only in its own ranks.

The digital market, which is rapidly expanding in China, offers new challenges and opportunities. Publishers are taking notice.

The revenue from digital books in China jumped 31 percent in 2011, comprising about a tenth of all publishing revenue.

Online bookstores and cell phone service providers have acted quickly to capitalize on the trend. In February, online marketplace 360Buy.com announced it was increasing its offering of digital books to 300,000 by the end of year. China Mobile also launched a service to enable its users to read digitally on its cell phones.

But the content providers aren't very satisfied about the prices their material fetches online. Most digital books sell for about 5 yuan, with some costing as low as a yuan or two. That's much cheaper than buying a paperback in a bookstore.

"We must prepare ourselves for the digital era," Wang said. "We have been archiving our physical books, waiting for the right time to create a good online platform for them."

99 Readers has taken a further step by selling some of its most popular titles, like the Stieg Larsson thriller triology, in digital editions for 18 yuan, about 60 percent of the paperback price. The company said that sales figures using the strategy aren't available yet.

"In terms of content, we are more than ready to welcome the digital era," Huang said. "But we definitely need to provide reasonable prices for publishers and authors to survive and continue to produce good works."