Table of Content Section1|2|3|4|5|6|7|8|9 Appendix1|2|3|4|5|6|7 Notes|Executive Summary|Download(PDF format, 798KB) SECTION TWO - EXECUTIVE SUMMARY AND RECOMMENDATIONS Industry overview 2.1        The information outlined in theCouncil's report highlights two important characteristics of the textbookindustry in Hong Kong. 2.2        The first concerns theeconomies of scope and scale for the textbook industry. There is limitedopportunity for publishers to market Hong Kong targeted textbooks outside theSAR. The consequence of this is that the costs to publishers in meeting demandwill be borne only by Hong Kong consumers. 2.3        The second characteristic isthat under the current system the demand for textbooks is different from demandfor many other products, where end users exercise choice over the products to beconsumed. In the case of textbooks, schools exercise choice, and once a textbookhas been chosen from a Government recommended list, the end user, i.e. thestudent, has no other course of action but to purchase that particular textbook. The need for change 2.4        The Council considers that itis in relation to this particular demand characteristic that change is required,in order to bring about efficient purchasing decisions. This is particularlyimportant because Government is playing an increasing role in using public fundsfor the purchase of textbooks. 2.5        Government exercises influencein the industry through developing an education curriculum, recommendingtextbooks for schools to choose from, and issuing guidelines for schools tofollow in selecting textbooks. Importantly, it also administers a scheme ofassistance for students in financial need, by providing those students with asubsidy to purchase textbooks [4].The cost of administering the scheme is substantial, increasing from a level of$94M in 1996/97, to $341M in 2000/01. The breadth of coverage of the scheme isalso significant. At present, almost 40% of the student population arerecipients of financial assistance to purchase textbooks. Those students receiveeither a full grant, or half the amount required to purchase the textbookschosen by their particular schools. 2.6        However, while the Governmentplays an important part in the consumption of textbooks, it exercises no controlover deciding whether the cost of purchasing a particular textbook is justified.In the context of this free market, ED does give guidelines to schools onselection of textbooks bearing in mind quality of textbooks and financial burdenof parents [5]. 2.7        Nevertheless, it isunderstandable that when schools are faced with making a choice within aRecommended Textbook List, the primary concern will be intellectual content andpresentation. This is in order to satisfy the school's main concern with thetextbook as a valuable educational resource. It is also understandable thatbecause the party who pays for the textbook is absent from the selection process(i.e. either indirectly by Government or directly by students) the pressure toconsider price in the selection process will be marginal; if at all. Extending textbook life and transferring roles 2.8        In this regard, the Councilconsiders that the Government has to consider a major revaluation of the role itplays in the industry. In particular, how it maximizes its current use of publicfunding to subsidize the purchase of textbooks, and its level of involvement inthe textbook purchasing decision. The Council considers that the Government hasthe ability to increase the efficient functioning of the market approach that iscurrently used to distribute textbooks, by undertaking the following. (a) First, to direct current and future Government financial assistance used in funding textbook purchases, towards the creation of textbook loan libraries. This would entail the creation of an adequate store of textbooks that would be made available for loan to students during the schooling period, and that would be kept for a number of years for use by other students in subsequent schooling periods. (b) Second, to transfer responsibility for the actual purchase of textbooks away from students, and onto schools themselves. For example, by providing schools with periodic financial grants that they can use to create and maintain stocks of textbooks for use by their students. 2.9        The Council considers thattransferring responsibility for making textbook purchases to schools willredress the anomaly where existing purchasers play no part in the selectionprocess. The current system of distribution is based on the notion of acompetitive marketplace. A competitive marketplace assumes that informed buyersmake decisions on sources of supply taking into account the three dimensions ofprice, product range, and product quality. Under the current system the normalcondition of a buyer in selecting a product where there is pressure to choosethe lowest price (all other factors being satisfied) is lacking. The proposal bythe Council, as noted above, would introduce this necessary condition andthereby resolve the required circumstances for a market to function asefficiently as possible. In addition, schools would also be more likely toconsider price seriously if they could benefit from savings in the textbookfinancial grant, e.g. savings from this grant could be re-deployed by the schoolfor other educational purposes in the school. An incremental approach and variations 2.10        Section Nine of this reportoutlines in detail the current cost of administering financial assistance fortextbook purchases. The section also outlines one option for using fundscurrently assigned to provide financial assistance, to create stores oftextbooks for loan to students. There are a number of permutations in which theconcept of creating a store of textbooks for loan to students can be broughtinto fruition. 2.11        In view of the novelty of thisconcept (at least as far as Hong Kong is concerned) it may be preferable toundertake a pilot study where its effects can be closely studied. This isparticularly important because the extended life of textbooks will mean areduction in the volume of sales; with a corresponding impact on publishers andretailers. Taking an incremental approach would therefore provide publishers andretailers with time to adjust to the changes and lead to a more managedrestructuring of industry. 2.12        The concept of a loan libraryis offered by the Council as a means to address a problem of increasing costs ofschool textbooks, while at the same time, maintaining as much as possible thecurrent freedom of schools to choose textbooks from a wide range of choices.There are further changes that could be contemplated in terms of educationpolicy, that could have an effect on the demand and supply of textbooks. 2.13        SectionEight summarizes different approaches that governments in otherjurisdictions take in relation to how textbooks are supplied to satisfy theireducation policies. These can range from direct government involvement innominating textbooks and funding all purchases, to allowing a degree of freedomof choice, with limited or no government financial assistance. 2.14        There is therefore, a range ofoptions that the Hong Kong Government can take in regard to school textbookpolicy. In the final analysis it is up to the Government to decide on how far itshould intervene in the market, or whether market based mechanisms should beused in the supply of textbooks at all. It is clear from current levels ofGovernment involvement that education is not a matter that will be left solelyto the open market. The Council itself does not consider that the open market isthe best means to serve all aspects of an education policy. The task at hand forthe Council, given current government policy, is to identify those benefits thata market based approach can bring in terms of lowering costs, increasing choicesand maintaining high standards of quality, while at the same time recognizingthat the Government has an important role to play. Improving the industry generally 2.15        In examining the industry asit currently stands, the Council identified a number of matters that should beaddressed to improve efficiency. These matters have been identified, andrecommendations made, notwithstanding the Council's major recommendation tocreate loan libraries. Some of the recommendations may become redundant if theloan library concept is taken on board, while others will be importantregardless. On the other hand, if loan libraries are constructed on a pilotbasis, then there will in effect be two systems for some period of time. Inthese circumstances, the Council's other recommendations will be relevant forthose parties involved with maintaining the current system of textbook supplyand demand. The recommendations are as follows. Publisher recommendations 2.16        Publishers should be furtherencouraged to produce addenda to update minor revisions in textbook contents. Toextend the reusability of textbooks, publishers should also consider separatingexercise sheets, workbooks, and supplementary materials that students need tofill in or write on, from textbooks. These measures would assist the viabilityof a second-hand textbook market. 2.17        Publishers should furnishprice lists (for both new editions and revised editions) for schools'consideration during the textbook selection stage, and for the information to begiven to ED to put on the Recommended Textbook List for easy reference byteachers. 2.18        Publishers should reducesuperfluous pictures, excessive spaces, or unnecessary supplementary exercisesin the textbooks (recommended in Choice Magazine of September 2000). In additionpublishers could use loose leaf presentation, to allow for the separation ofdifferent textbook sections, so as to reduce the weight burden for students andprovide flexibility in future changes. 2.19        Teaching aids that do not comeas a package (an integral part of the textbook) and other items of teachingequipment should be treated as separate from textbooks. Accordingly, separateinvoices should be issued to schools for them to purchase the equipment asindividual items. (Section Fourand Appendix Five). Government recommendations 2.20        The Education Departmentshould consider the various concerns that publishers have expressed with regardto the lead time allowed for submitting textbooks for approval. In addition,recognition should be given as to the costs incurred by publishers where thereare changes to the teaching language used and the teaching method. (SectionSix). 2.21        The Education Department couldalso consider applying a strict needs based approach to the Three-Year Rule forRevised Editions. Approval should not be automatic. Revision should not beapproved if there is not sufficient improvement or significant change. (SectionSix). 2.22        Consideration could be givento the monitoring of compliance by schools with the various guidelines thatEducation Department has issued relating to the selection of textbooks. AllEducation Department frontline staff in contact with schools have a role inadvising and monitoring the guidelines. Better dissemination through seminars toschool staff involved in selecting textbooks will be helpful. School recommendations 2.23        Schools should be urged to usetheir bargaining power, through the selection process, to exercise preferencefor low cost features in textbooks, including reduction in superfluous picturesor other features that may unnecessarily contribute to high costs of production.Schools could consider enlisting the support and advice of parents associationsto assist in this process. 2.24        Schools should indicateprominently that any prices quoted on the booklist are for reference only, andthat parents are free to purchase textbooks from any booksellers. 2.25        Where schools are involvedeither directly or indirectly via designated booksellers in the sale oftextbooks to students, they should stress to parents and students that purchasefrom these outlets is discretionary. (SectionSix). 2.26        A number of recommendationshave previously been made in the Council's Choice Magazine (issue of September2000) following a survey of textbook prices at the time. The recommendationswere: (a) Non-profit making organisations and schools could undertake to organise sales of secondhand textbooks. (b) Wording such as 'optional' or 'for reference only' should be printed on the booklists for non-compulsory books /workbooks. Schools can play a role by providing more copies of these materials in their libraries. Use of information technology 2.27        Regardless of what policyoptions are chosen in terms of using market based principles or Governmentintervention in purchasing hard copy textbooks, greater use of informationtechnology should be explored. (SectionFour) 2.28        For example, the CurriculumDevelopment Institute could support schools to devise their own teachingmaterials, along the lines of web-based learning resources. In the long run,teaching materials could then be tailor-made to match students' learningabilities, and the updating of teaching materials could be greatly facilitated.This implies that the role of the Curriculum Development Institute wouldgradually evolve from centralised control on curriculum to supportive monitoringof schools in developing a flexible curriculum. Nevertheless, copyrightconsiderations in sharing materials which may be copied or adapted, would needto be taken into account. 2.29        Greater use of the Internetcould be made in terms of making soft copies of textbooks available bypublishers.