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Bertelsmann plans to boost investment

Updated: 2011-04-26 09:49

By Chen Limin (China Daily)

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BEIJING - The German media group Bertelsmann AG plans invest up to $100 million to the Chinese market through its investment arm in each of the coming five years, as part of its efforts to tap emerging markets amid lower growth in developed economies.

 

Bertelsmann plans to boost investment

The company hopes to increase its presence in China by investing more in the new media, education, and business process outsourcing sectors through its investment arm, Bertelsmann Asia Investments (BAI), according to Thomas Rabe, the company's chief financial officer.

"As we get more comfortable with China, get better established, have local managers and a strong corporate center well networked in the community, we'll be prepared to make more significant investment going forward," Rabe told China Daily.

BAI, which was established in 2008 with initial funding of 100 million euros ($146 million), has invested in five Chinese companies. Two of those - the online education provider China Distance Education Holdings Ltd and the automobile information service Bitauto Holdings Limited - are listed on the New York Stock Exchange.

Bertelsmann reported revenue of 15.8 billion euros ($23 billion) last year, with its Chinese operations accounting for 1.5 percent of the total, according to Rabe. He said the company's business in China is expected to grow at about 20 percent annually, given the continuous economic development in the country.

Bertelsmann entered the Chinese market in the 1990s with its book club business, which experienced a significant decline in 2006 and eventually closed down in 2008.

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Now the majority of the company's revenue in China comes from its business process outsourcing arm Arvato Services, Arvato Systems China and Arvato Digital Services Asia Pacific.

To fuel growth, Rabe said Bertelsmann will tap into emerging markets and explore new business because of slowing growth in Europe and the United States.

He said the company is considering introducing its music rights management business to China through Bertelsmann Music Group (BMG), its joint venture with the private equity fund Kohlberg, Kravis & Roberts & Co LP (KKR). BMG's board will discuss the strategy later this year, he said.

During a three-day stay in China, Rabe visited the General Administration of Press and Publication and the National Copyright Administration to gain insights to the country's copyright protection development.

"Music consumption in China is rising all the time, but the monetization is still pretty low, but we'll see that in time this will change so the music market will become more profitable," Rabe said.

BMG is looking at Warner Music Group, and possibly EMI Group, for acquisitions, in an effort to expand its business in addition to organic growth. It will also attempt to generate revenue from its copyright management business rather than dwindling sales of recorded music.

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