Bertelesmann China Axes Lossmaking Books Business

13 June 2008

GÜTERSLOH, Germany: Bertelsmann, Europe's largest media company, has shuttered one of its key businesses in mainland China, the cash-haemorrhaging Direct Group

Although operating the nation's third-largest online book retailer plus a book club and a chain of bookstores, the unit has struggled vainly to establish a profitable beachhead in a market that is as challenging as it is tightly regulated.

According to an anonymous company executive: "Most of the stores and infrastructure will be shut down. Bertelsmann has invested millions and millions of euros and is yet to see any return from this unit."

The sole survivor of the axe appears to be the company's online bookstore, operation of which has been transferred to Bertelsmann's Arvato Group

According to recently appointed Bertelsmann chairman/ceo Hartmut Ostrowski, Direct Group is currently undergoing a global  strategic review. He has said that all options are on the table, among them a sale of the unit.

Data sourced from Financial Times; additional content by WARC staff