Liu: In China, we used to have only digital copyrights for B2B [business-to-business] publications, such as those for libraries, but not for B2C [business-to-consumer]. But this has changed with the invention of e-readers. There are proven successful business models for profit sharing between the content providers and device makers, such as with Apple and Amazon.
Hanvon’s business model is based on four principles: the first is that publishing firms have a say in determining the pricing of their e-books. All their e-books will also be encrypted to protect copyright. The third is that the content providers earn 80 percent of the profit and we earn the rest. The fourth is that we will be in charge of digitizing books into the database. This business model attracts a lot of publishing firms to work with us.
The total value of printed books in China averaged more than 60 billion yuan [US$8.8 billion] a year for the past five years. Half of these were textbooks. If downloading digital content is a piece of cake, and the price is affordable, this will spur more consumers to download e-books.
TT: How would you define your relationship with Taiwanese manufacturers?
Liu: We realized that when it comes product design, Taiwanese manufacturers are the cream of the crop. Hanvon isn’t strong in manufacturing and if we want to churn out products that have world-class quality, then we need to work with world-class companies. I started to pay aggressive visits to Taiwanese manufacturers in the second half of last year, looking for suitable partners. There are a slew of sleek products that we will introduce later this year and they are designed by Taiwanese firms. Also, we are currently talking to Book11.com for e-content and plan to bring in our e-reader and TouchPad to Taiwan in the second half.
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