October 26, 2012 4:58 pm

Bertelsmann’s Rabe ‘bullish’ on China

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Thomas Rabe, chief executive of Bertelsmann, declined to comment on talks between the German media group and Pearson about combining their book publishing companies, Random House and Penguin.

At a press briefing in Beijing, where he had gathered Bertelsmann’s senior management, he pointed to the statement issued on Thursday by Pearson, owner of the Financial Times, which confirmed discussions but cautioned that the two companies had not reached agreement and that there was no certainty that the talks would lead to a transaction.

Mr Rabe said Bertelsmann was “really bullish” about Random House’s future prospects in China.

“Clearly Random House is not going to limit itself to selling a few English-language paperbacks here,” said Annabelle Long, chief executive of Bertelsmann’s China Corporate Center and Bertelsmann Asia Investments. She added that Random House was in talks with a number of Chinese publishers about co-operation in publishing Chinese-language books.

China does not allow foreign companies to publish Chinese books, but some publishers, including Penguin, have built a growing business in the country through tie-ups with domestic publishing houses.

Bertelsmann Asia Investments, a venture capital fund backed by the group and focused on greater China, has bought into 20 different targets. They include investments in other funds such as Innovation Works, the incubator backed by Kai-fu Lee, the former head of Google China, and stakes in start-up companies in niche e-commerce, business process outsourcing and social media.

Mr Rabe, underlining the message he has been hammering home this year that Bertelsmann needs to become more international, said the group would step up its activities in China. “China is our fastest-growing market,” he said, adding that the lack of growth in Europe was one key reason the group’s revenues had shrunk from €19bn in 2006 to €15.3bn last year.

More than 100 Bertelsmann executives, including its entire executive board and group management committee, were in China for their first management meeting outside Germany. Bertelsmann executives said similar meetings were planned for other fast-growing emerging markets, such as India and Brazil.

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