Seeking self-improvement

Malaysia and Singapore have in recent years become increasingly popular holiday and transit destinations. But while the beaches have filled up with UK holidaymakers, the area's bookshops have been largely deserted by UK publishers.

In some cases, this is because a parent organisation has in its wisdom transferred management of the region to the US. However, recent years have also seen the deliberate withdrawal from the area of a number of UK companies, culminating in Oxford University Press' decision last year to close its office in Singapore.

And yet Malaysia and Singapore have made a remarkable recovery from the financial crisis that beset the East Asian region in 1997. Both may be highly export-dependent, and therefore vulnerable to the downturn in the economy in the US and the current world recession, but both also pride themselves on their political stability and the predictability this offers foreign investors. They therefore offer UK publishers a secure and steady marketplace in the longer term.

It is difficult to get reliable figures on the size of the book market in either country, as no trade figures are collected officially. Neither are UK and US book export statistics a reliable source of information, as they are masked by the numbers of books that are trans-shipped or stocked in Singapore for regional supply, not least to Malaysia.

However, based on discussion with leading figures in the local publishing industry, the total market in Malaysia is reckoned to be worth around RM390m (£70m) a year, and in Singapore Sing$200m (£77m).



Malaysia: the book market

There are about 145 publishers in Malaysia, with a total annual output of around 5,000 titles. About 90% of them concentrate on educational publishing, as this is the most lucrative market. The Ministry of Education is the industry's largest single customer. Most books are published in Bahasa, the national language; publishing in English is mainly limited to English-language textbooks and supplementary books for schools. There is limited local publishing of academic and trade books.

Malaysia has some 500 bookshops, half of which are located in the more affluent central and northern regions of the peninsula. Bookshops source locally produced titles directly through publishers or through wholesalers. Imported books are sourced through agencies or directly from overseas publishers. By and large bookshops in Malaysia stock only those titles they know will sell—usually educational books—and are unwilling to take single-copy orders.

A particular concern for UK publishers is the continuing illegal photocopying and unauthorised reprinting of college textbooks in and around universities in Malaysia. The problem is compounded by the fact that university officials condone the illegal activity. The copyright organisation in Singapore (Class) has estimated that about 30% of revenues are lost each year as a result of illegal university campus copy-shops in Malaysia.

A further difficulty faced by UK publishers is knowing whom to have confidence in, whom to trust, and with whom a secure and enduring business relationship may be established.

Most local book importers have been a credit risk at some time and tend to have irregular cashflows as a result of late payment by government for institutional orders. The supply of foreign books to public institutions, including universities, is restricted by the fact that they have to purchase books through government-appointed book contractors. As in other sectors of the economy, the criterion for selection favours ethnic Malay companies, which automatically rules out most established importers and distributors.

Otherwise there are no restrictions on the import of foreign books into Malaysia. The main lament of importers is over the unwillingness of UK publishers to offer discount terms that will enable them to make a reasonable profit margin. US publishers are perceived as having a more flexible attitude and pricing structure.



Singapore: the book market

Publishing in Singapore is a popular pastime. Despite its size, there are about 110 book publishers as well as more than 30 educational multimedia publishers and developers. Their numbers have swelled since 1998, when the government opened up the textbook market to commercial publishers.

Over the past three years total book imports on average accounted for 40% of the market. However, during the same period retained imports constituted only about 29% of the market, since a large number of US and UK-owned publishing houses use Singapore as their regional stocking and distribution centre.

Smaller booksellers are gradually dying out, and are being replaced by bigger players from overseas, such as Borders and Kinokuniya. These megastores, along with such local chains as Popular and MPH, now represent between 70% and 80% of the total retail trade. Independent bookshops operate mainly in the local markets, and double up as newsagents and stationers. Popular Books also operates a franchise system with many outlets under its brand.

The second-hand book market is strong in the independent sector and a thriving market for low-price exam revision books permeates all sectors of the trade. The largest market is for self-study publications aimed at the principal national school examinations.

The schoolbook markets

In Malaysia, the Ministry of Education traditionally monopolised school textbook publishing, all books being produced through its own publishing unit. Over time, however, the ministry has found this task to be beyond its resources, and has progressively brought in local publishers and local subsidiaries of multinationals to help produce all the books needed by schools. At primary level it remains the sole publisher of school texts, and engages publishers only for printing and distribution. But at secondary level the ministry has relaxed its regime and now invites publishers to participate, although it continues to control the pricing of all publications.

The textbook market is estimated to be worth RM110m a year (£20m) overall to publishers. The government controls prices, so margins are tight. However, traditional publishers feel compelled to work in this area, because the usage and reputation of a publisher's textbooks can boost dramatically sales in the more lucrative market of ancillary materials. Pearson Education (Longman) is the market leader with a school turnover of around RM22m (£3.9m), a market share of over 10%. The market is very fragmented, with a host of small-scale local publishers operating in their own catchment area with their own offset presses.

Because publishers cannot rely on a regular supply of ministry orders, and because payment is erratic, they look to the ancillary market for their main business. More than 50% of their "school" business comes from the sale to parents of supplementary revision and practice materials. This is worth around RM113m a year (£20m) in total. Parents buy for their children a workbook in each of the core subjects, plus a revision book, a book of test papers and possibly two reference books as well—such is the competition for places in the best secondary schools and the best universities at home or abroad.

The schoolbook market in Malaysia is closed to new entrants from the UK publishing industry for reasons of price, the need for close syllabus fit, and a bias towards local companies. Rights opportunities exist, however, for dictionaries, library books and readers for integration into English reading programmes. There is also a market in pre-school for UK materials, if the right deal can be struck for their distribution.

In Singapore, schoolbooks used also to be written, edited and produced by the Ministry of Education, and commercial publishers were consigned to making a business out of the supplementary and ancillary market for revision materials. However, there too government policy has been reversed, and in future the majority of texts will be provided by the private sector.

At the same time, the ministry is overhauling its curriculum, and new syllabuses are being introduced into schools on a phased basis from 1999/2000 to 2005/06. The schoolbook market is therefore expected to grow substantially in the coming years. Currently the textbook market is estimated to be in the region of Sing$25m a year (£10m). The market for exam preparation and revision books continues to overshadow the textbook market, and is estimated to be in the region of Sing$30m a year (£11.5m).

As a result of mergers and acquisitions, the sector has consolidated into three groups which dominate the textbook market: Pearson Education; Singapore National Holdings; and Times Media Group. OUP has closed its Singapore office and sold its list to the Times Group. Pearson Education is the overall market leader, with an estimated 40% to 45% share.

The primary and lower secondary textbook market is again largely closed to UK publishers, except for English literature texts for GCE "O" level (no gcse here). UK publishers can expect sales of established "A" level titles to continue, but at reduced levels. The opportunity for introducing new texts is limited, given the new "AS"/"A" level structure in the UK. There is still room in the ancillary market for UK revision and homework titles, although they need to be priced more competitively, especially as their syllabus and exam fit reduces.

Software publishers could capitalise on a government subsidy scheme (LIUP), and co-develop with Singapore partners multimedia learning materials that could be exported within the Southeast Asia region, or adapted for markets in the US, the UK and elsewhere.



The ELT markets

In Malaysia, the ELT market for UK publications is estimated at around RM5m a year (£0.9m). Local publishers are self-sufficient at school level, so UK publishers' business is mainly in pre-school materials, teacher materials, reference and business English. Sales are made mainly through the trade to individuals, rather than to institutions. Significant adoptions of any single text are rare.

In Singapore, English is the main medium of education, and there is only a small number of mainly elderly Singaporeans who can be classified as learners of English as a foreign language (EFL). It is the foreign nationals working or studying in the city who provide the comparatively small market for EFL goods and services.

The principal opportunities for sales are for dictionaries and grammar titles. In the private language market there is some demand for language courses for adults and young adults, and for business English materials. There is also a small market in primary schools for simplified readers.

The ELT market in Singapore is estimated by industry sources to be in the region of Sing$1.5m (£0.6m) a year. Because British English is used in the education system, 90% of books sold are UK-published rather than American-published. The leading publishers are those with established offices in Singapore: Pearson Education and Cambridge University Press.



The academic and professional markets

The Malaysian government's target is to expand participation in higher education from the present 8% of the 18 to 24-year-old age group to 40% by the year 2020. Simultaneously, it wants to establish Malaysia as the regional centre for higher education. This has led to rapid development of the public universities, and in particular to a massive growth in private higher education.

Allied to this has been the establishment of foreign campuses in Malaysia, a surge in the number of twinning programmes with foreign universities and professional bodies, and a proliferation of Malaysian and foreign franchising of courses and degree programmes.

Despite the fact that Bahasa is generally the medium of instruction at university, the majority of academic and professional textbooks are in English. On the basis of average spend per student, the overall market including professional books is in the region of RM100m a year (£18m). However, publishers estimate that about 30% of business is lost each year to campus copy-shops, so that the true market is estimated to be RM70m a year (£12.5m).

The key priorities for imported texts are computer books, business and management, technology and education. The priorities for rights sales are science, medicine and technology.

Publishers aiming at the Malaysian academic market have more than one access point. Branch campuses and other institutions twinned with or affiliated to UK or US universities often adopt the texts used in the parent university. However, publishers need to secure reliable local representation if they are to make any headway in the market. In particular, UK publishers need to understand the critical price points in Malaysia for adoptable texts. Also, increasingly, adoptions are made on the basis of accompanying support features and supplements. Both these factors give US publishers' texts an edge at the moment.

The Singapore government, too, aims to turn its universities into world-class institutions. Funding is high, and the government foots most of the bill. The largely middle-class Singapore students can therefore afford to buy books. Sadly, they are only too ready to conspire with copy-shops to reproduce adopted texts as soon as the reading lists appear. As a result, the market for academic textbooks is reckoned to be no more than Sing$10m a year (£4m).

The market for professional books is more buoyant, and is thought to be in the region of Sing$20m a year (£8m). It is estimated that 60% of the academic and professional market is served by direct imports, 30% by local reprints, and the remaining 10% by local editions.

Some 70% to 80% of academic textbooks adopted are American—and not just because of lower prices. More significant is the level of support given to the texts in the form of supplements and companion Websites. US publishers, and notably Prentice Hall (Pearson Education), have also raised the bar by producing Asian editions of their most popular titles, particularly in economics and business.

The best opportunities for UK textbook adoptions lie in the social sciences, where US texts and teaching approaches are less dominant. An opportunity also exists to sell professional texts on the back of UK qualifications being pursued by Singaporean professionals to further their careers.



The trade markets

It is impossible to gauge accurately the size of the trade market in Malaysia, because of the infiltration of books from Singapore. Industry estimates are that it is about RM39m a year (£7m). The market is now a hybrid. Regular bookshops still stock low-price and remaindered titles, and prices are conditioned to some extent by schoolbooks, which take up the majority of the floor space. But the new shopping mall megastores price right up to UK and US levels, although admittedly they are aimed largely, for the time being, at the fashionable élite, expatriates and tourists.

Malaysians do not generally read for pleasure, but rather to gain a qualification or to operate their computers. If they do read for pleasure, they have always had a liking for romantic fiction. Children's books are growing in popularity, and UK books are still preferred as British spelling is used in schools, though book importers resort to buying in only remaindered or bargain books, as the price of UK books is often out of reach for many Malaysian parents.

In non-fiction, the key demand is for dictionaries and grammar to help people with their command of English, which is important to their business or career. Computer book sales have dropped recently in line with the downturn in the economy; nonetheless they are still hugely popular.

It is equally impossible to gauge accurately the size of the non-educational trade market for English books in Singapore, because of the volume of books re-exported to neighbouring countries. Industry estimates put the figure at about Sing$80m a year (£31m).

Despite government efforts to encourage the reading habit and the growing affluence of Singaporeans, adult books are usually bought for the purpose of self-improvement and not for pleasure. Parents are generally more willing to invest in books for their children than for themselves. Children's books, therefore, are the fastest growing market sector in Singapore—especially picture books, home education books and reference materials such as encyclopedias. In the teenage market there is also a growing audience for "fashion purchases" such as Harry Potter.

Good quality adult reference books and self-improvement titles are also viable in Singapore. Computer books remain universally popular, and there is a growing demand for self-study business and management books.



Accessing the markets

Malaysia and Singapore are difficult markets to patrol from a distance, since bookshops and campuses need to be visited constantly, either to maintain shelf space or to secure and defend adoptions. Vigilance is particularly needed to police the illegal photocopying on university campuses, and the recovery of lost adoption revenues is almost impossible without local help.

A local sales office or a local agent is therefore a prerequisite for any UK publisher seeking to enter the markets in Malaysia and Singapore. Publishers also need to brace themselves and price to market, negotiating a deal with the local agent based on the realistic price that consumers will be prepared to pay, rather than trying to bargain for the lowest possible discount off the published price in the UK. There is also no substitute for visiting the markets yourself to direct operations on the ground, if not on the beach. The enterprising executive will manage to do both.



Jeff Andrew, formerly of Longman and Pearson Education, is an international publishing consultant. He can be contacted at jeff.andrew@ntlworld.com.