On a freezing Beijing morning in early January 1937, with the Japanese Imperial Army poised to invade China, American journalist Helen Foster Snow stumbled across a horrible find under the city's ancient walls—the murdered, eviscerated body of 16-year-old English schoolgirl Pamela Werner. Down the street, Ms. Snow's husband, Edgar Snow, was writing his classic book, "Red Star Over China," a sympathetic account of Mao Zedong's guerilla army. Of similar height and build, Ms. Snow wondered: Had an anti-Communist killer meant to strike her?
Scotland Yard's suspects included an unknown psychopath; Ms. Werner's dentist, the American Dr. Prentice, who ran a swingers' club (a "love cult" in 1930s parlance) to which the schoolgirl belonged; and the victim's own father. The killer was never found.
This forgotten cause célèbre, a true crime tale authored by Shanghai-based entrepreneur Paul French, is the first book deal struck by Penguin China chief representative Jo Lusby for a new, exclusively China-originated list to be launched next year. Modeled on the launch 22 years ago of Penguin Books India, the five to eight fiction and nonfiction titles will be printed in English, in China, and sold domestically and across the Asia-Pacific region. The wholly owned venture will be run out of Penguin's Hong Kong office, as ISBN numbers are tightly controlled in mainland China.
Penguin wants to take advantage of signs of buoyancy and change in China's 6.5 billion yuan ($950 million) publishing market, long strangled by censorship and a bewildering mass of regulatory controls. Things gathered pace in April when Liu Binjie, minister of the General Administration of Press and Publication (GAPP), announced de facto legalization of the country's 10,000 private publishers.
The relief across the industry is palpable. "It's like this: If I had a girlfriend before, now I have a marriage certificate. She's my wife," joked He Xiongfei, founder of the private publisher Jewish Culture Workroom, which publishes a range of titles including books on art collecting, cannibalism and social commentary, as well as subjects of Jewish interest.
For Ms. Lusby, it's a step away from Penguin's parent company in London, a process of devolution she believes will grow as publishers globally increasingly respond to local demand. "Rather than us sitting halfway round the world asking for other people to please publish this book for us because we actually believe it will work, it's us being able to take the ball and run with it," said Ms. Lusby in an interview last week.
Penguin's move is a big deal in China, where private publishers, called "culture companies" or "workrooms," have inhabited a shadowy world for nearly 20 years. Although they are smaller than state-run publishers, they are more commercially savvy and have growing clout. Up to 60% of China's bestsellers are published by private companies that must cooperate with state houses, still the only source of coveted ISBN numbers. To stop publishers sneaking in politically unacceptable content, the government grants ISBN numbers just weeks before publication, making advance sales and marketing very difficult. In a revealing admission, GAPP Vice Minister Wu Shulin said in June that 600 books out of the 275,000 published last year were denied publication for unacceptable content, with the offending material relating to what the government calls "splittism," or calling for regional or ethnic independence; subversion; or incitement to war.
While welcoming the legalization of private publishers, Huang Yuhai, president of the highly successful Shanghai 99 Readers—the local publisher of Dan Brown, Stephen King and Philip Roth books in China—wants more. The new rules "don't really give private publishers the ability to publish, because they don't give us the ISBN number," he says. Cooperating with loss-making, state-owned publishing houses also drains profits.
Yet there's another change working to Chinese private publishers' advantage: the government's three-year "commercialization" plan to remove all subsidies from state publishers by spring 2012. The subject is politically sensitive, with publishing and media widely expected to be the last barrier to fall in China's long process of economic restructuring that began in 1978 with Deng Xiaoping's Open Door policy. Even the name is carefully chosen: "We don't say 'privatization'," said Hang Min, an associate professor of media economics and management at Tsinghua University's School of Journalism and Communication.
Still Ms. Hang is upbeat. "I think this sends a very good signal to other aspects of the media industry. The government wants to have certain kinds of reform and progress and the book publishing industry is a good place to start."
Whereas before, private publishers bought an ISBN from state companies for around 25,000 yuan ($3,600), the relationship now is that of joint investors, said Shanghai 99 Readers Deputy Editor Peng Lun. "We have had five or six state-owned houses approach us with a view to cooperate just in the last several months," he says. For its part, Penguin is not a local private publisher but aims to act like one. "We're in a market, to be honest, that demands we be more nimble, because things in China are changing very fast," says Ms. Lusby.
One sign of that change is the next book on her list: "Notes of a Civil Servant," a roiling tale of government corruption and mafia by Wang Xiaofang. Mr. Wang is an impeccable source, as former secretary to the deputy mayor of Shenyang, Ma Xiangdong, executed in 2001 for corruption. Only a few years ago, this kind of book would have been banned in China. Now, it's easily available in big cities. It's a different kind of true crime story than what was happening in the 1930s, but no less important.
Ms. Tatlow is a former China correspondent for the South China Morning Post.