The Consumer Council has proposed major changes in the distribution of textbooks, with a package of recommendations and policy initiatives to address the chronic problem of rising textbook prices and parental burden

12 September 2001
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The Consumer Council has proposed major changes in the distribution of textbooks, with a package of recommendations and policy initiatives to address the chronic problem of rising textbook prices and parental burden.

The proposals represent the culmination of the Council's incessant efforts of over two decades of annual price surveys and a number of research studies to keep the textbook industry under monitor.

Notwithstanding the Council's vigilance and concerns, problems of high textbook prices and issues related to publishers offering incentives to schools and wasteful textbook revisions, etc. remain unresolved.

The recommendations, aimed at publishers, the Education Department, and schools, were contained in a most comprehensive research report on the supply and demand for textbooks and other related issues, which the Council released today (September 12).

A major recommendation is directed at changing the marketplace dynamics to bring about more efficient purchasing decisions in a market that has an estimated annual sales turnover in excess of $1.5 billion. 

The report points out that a current characteristic of the textbook industry is that the end users exercise no choice over the products to be consumed, nor the price. Schools exercise choice in selecting textbooks, and once a textbook has been chosen, the end user, i.e. the student, has no other course of action but to purchase that particular textbook.

This demand characteristic distorts the efficient operation of a competitive marketplace which assumes that informed buyers make decisions on sources of supply taking into account the three dimensions of price, product range, and product quality.

Under the current system the normal condition of a buyer selecting a product under pressure to choose the lowest price (all other factors being satisfied) is lacking.

The Council considers that the situation can be improved through transferring responsibility for the actual purchase of textbooks away from students and onto schools themselves, by requiring them to purchase textbooks for school loan libraries. 

This would entail the creation by schools of an adequate store of textbooks that would be made available for loan to all students during the schooling period. The textbooks would be kept for a number of years for use by other students in subsequent schooling periods.

An important point in this regard is the increasing role Government currently plays to support students in financial need, by assisting them to purchase textbooks. Public funds are currently provided to 40% of the school population, to the tune of $341 million in 2000/01. One option proposed by the Council is to redirect these funds to schools for use in maintaining the textbook loan libraries.

By adopting the Council's proposals, the Government would redress the anomaly where existing purchasers play no part in the selection process. It would therefore introduce the necessary conditions for a market to function as efficiently as possible to the benefit of the community as a whole. 

In view of the novelty of the proposed concept of a textbook loan library in Hong Kong, the Council suggests an incremental approach which would provide publishers and retailers with time to adjust to the changes and lead to a managed restructuring of the industry.

In the study, the Council has also examined the different approaches that governments in other jurisdictions take in relation to how textbooks are supplied to satisfy their education policies. The textbook loan library concept is in line with the practice in many jurisdictions such as the UK, US, Canada and Australia.

The Council observed that: "In the final analysis, it is up to the Government to decide on how far it should intervene in the market, or whether market based mechanisms should be used in the supply of textbooks at all. 

"However, given current government policy to use a competitive market to supply textbooks, the task at hand for the Council is to identify those benefits that a market based approach can bring in terms of keeping downward pressure on costs, increasing choices and maintaining high standards of quality." 

The Council also made a number of other recommendations that address concerns expressed by publishers, schools and parents aimed at improving features of the current system. These matters have been identified, and recommendations made, notwithstanding the Council's major recommendation to create loan libraries. Some of the recommendations may become redundant if the loan library concept is taken on board. However, others will be important regardless.

Details of the full report will be available on the Council's website.