Is the US$75 million that Amazon is paying to enter the Chinese market by
buying its counterpart,
Joyo.com, well spent? I of course have not been able to do the thorough due diligence that's normal for this kind of purchase, but as an ordinary Chinese consumer I do have my doubts about the profitability of retailing books, DVDs, and music online in China.
Compared to the rest of the world, books are cheap, low-margin products that are widely available in Chinese cities. It might be more difficult to get them in the countryside, but that is unfortunately also the place where very few people have online connections yet. The main trouble for legitimate publishers is that when they have a successful book, pirated copies will show up to prevent any decent profit making. For music and DVDs, it's even worse -- at least from the perspective of the producers and retailers, not that of the consumers.
DVDs with movies that have not yet been released to the home market are available here for less then US$1; they are tremendously popular, and most households have stacks of hundreds of them. In that way the official censorship of movies does not work, but it also stops any legitimate retailing business. That can change, of course, and last month US and Chinese law-enforcement agencies cooperated in the arrest of
Randy Guthrie, a Shanghai socialite from a wealthy New York family, for allegedly selling illegal DVDs. That's nice publicity, and shows the eagerness of Chinese authorities to do something on maintaining intellectual property rights. But it has not even put a dent in the supply at my DVD shop; that might be much harder to eradicate. Making a profit in legal DVDs might prove impossible for the time being.
