Bertelsmann bets on China's growth

In 1992, the company started its business in China with call centers and logistics services, becoming one of the first Western media companies with an operation in China.

Five years later, Bertelsmann brought its book club system to the nation, offering readers membership discounts and selling books through catalogs, bookstores and online stores.

The method, which at first proved popular among white-collar employees and young people and built up a membership of 1.5 million, then lost its appeal and experienced a significant decline when online bookstores began to boom in China in 2006.

In 2008, Bertelsmann eventually closed all of its 36 bookstores in 18 cities across China.

However, despite the closure, Rabe remains optimistic about his company's business prospects in China.

Bertelsmann reported revenue of 7.6 billion euros ($9.7 billion) in the first half of this year, with its Chinese operations accounting for 2 percent of the total.

Rabe said although China currently contributes little to the company's overall revenue, its business in the nation is expected to significantly increase over the next decade.

"Bertelsmann is benefiting from China's emerging urban middle class, with its high purchasing power and affinity for all things digital," Rabe said.

"We are ready for more significant investments to work with local partners, to increase our market share in China."

Venture capital

As a sign of its long-term commitment to the China market, Bertelsmann established Beijing Bertelsmann China Corporate Center in 2006. It was the first of the company's three global centers set up in emerging markets.

"I can tell you that the China Corporate Center in Beijing is a role model for what we implemented in India and Brazil," Rabe said, adding that with more than 20 years of experience in China, it has more advantages than competitors in exploring concrete strategies and tactics for business creation and expansion in China.

Currently Bertelsmann employs more than 4,600 people in the media and service sectors in China and the number is continuing to grow.

The company plans to boost its presence in China via investments in new media, education and business process outsourcing through its investment arm, Bertelsmann Asia Investments, a strategic venture investor focused on early-to-growth stage investments.

"The media sector is seeing double-digit growth, and the environment for foreign investment has improved in China in recent years. This is especially true in the sectors of digital media and education, where we plan to invest more in the future - worldwide, and also in China," Rabe said.