Why Kindle in China Won’t Work

Let me start with a story I heard from an editor friend from Shanghai: a publisher recently ordered all of its employees to delete the Microsoft Office on their computer and replace it with WPS office, an Office clone made by KingSoft.

The reason for this switch is venal: Microsoft is at the gate, demanding 5000 Yuan per head. Threatened, the publisher simply decided to steal from Kingsoft; if they come a-knocking, I am sure the publisher will steal from somewhere else instead of paying a cent.

Now, if anyone should be interested in protecting intellectual right, it should be the publishers, whose goods are often plagiarized, downloaded, even counterfeited outright. However, the friend who relayed this story to me, an editor at the publisher, asked me why Americans are always so adamant in enforcing the law.

“Do people actually pay so much to Microsoft in the U.S.?” He asked. I said as far as I know, people do pay, it’s simply the cost of doing business, and they can make it back, because most of their goods are not stolen and are sold at full price. My friend seemed to have an epiphany: “Oh that makes sense. But since we can’t make the money back, we are not going to pay.”

Here, then, is a live example of what the book Why Nations Fail means by “vicious cycle”. Protecting intellectual rights benefit everybody, especially a content provider like a book publisher, but if no one plays by the rule, you don’t want to be the only sucker at the poker table.

This is also the reason why Amazon Kindle won’t work even if it’s allowed to enter China, which is still a question mark at this stage. Amazon prospered in the U.S. because of a comprehensive strategy, of course, but it also succeeded in a country where there is a strong foundation of copyright protection, and in a market enough people were willing to pay for the connivence of reading premium contents.

For Kindle to prosper, Amazon must succeed where others failed. Amazon must eradicate all of the free downloads from the Internet, closes all the small bookstores selling books for less than $1, and chases people who sell pirated books from their bicycles off the street. So basically do, what the omnipotent Chinese government is unwilling and unable.

Then, Amazon will have the pleasure of trying to persuade Chinese consumers to pay for stuff, digital stuff at that. Remember, this is a place where publishers, who rely on intellectual properties for a living, steal stuff relentlessly. And it will have to make sure they don’t pay for stuff to read on their Ipads or their phones, or pay to other vendors to obtain the same material.

With no illegal competition and a ready market to exploit, at last it comes the fun part. Amazon will have to negotiate with hundreds of publishers, most of whom are still affiliated with the government and move at glacial pace. Amazon would have to convince them that offering their content through Kindle is a good deal, even though all of them still rely on bookstores for much of their sales.

Faced with so many obstacles, I just don’t think Amazon has what it takes to make it work. Yes, in the long run offering Kindle may make sense, but then again, in the long run we are all dead.