Gosh, gee whiz, so there are still some remnants of Communism there after all.

Very interesting post. I was just writing a report on this precise subject concerning the PRC (as part as a comparative study of the book business between the PRC and other countries in particular the USA). The previous comment is funny because we are here really far from communism. The PRC/GAPP are up to now rather liberal compared to most other developed countries, apart the UK and the USA. The little fights in the Haidian book street area are really far from the big fights in most other countries during the last 2 decades, for example within the European Commission with its member states in the 90's or in S Korea 3-4 years ago with booksellers demonstrating in the streets. Amateurish one may say, yes, but a communist or totalitarian attitude, no, not really. Besides, I don't agree with the 20% growth on book prices in the PRC in these articles, I may agree with a 9-10% for the last 5 years, which is already very high compared to inflation (and this growth is calculated on the cover prices of the full output of publishers; it doesn't consider discounts given later on). In fact roughly Chinese publishers compensated a 5% decline of the book market by a 10% growth in prices. There is no regulations in the PRC concerning list price maintenance and discounts along the supply chain including retail. Nevertheless systematic discounts on books are rather low in the PRC compared to the UK or the USA (retail to individuals: e.g. dangdang 20%, Carrefour 5%, bookmarkets 10-15%)

Concerning other countries, a few details are given below.
Quote "For more than thirty years a debate has raged within Europe: should book prices be fixed or free? Fixed prices are often also called Retail Price Maintenance (RPM) and mean the publisher fixes the price of a book; bookshops and other retailers are not allowed to sell it at any other price. Free prices mean bookshops and other retailers may sell the book at whatever price they choose. The background to this fierce debate is that, in general, the European Union (EU) favors free competition and its member states have in place a competition law that aims at encouraging free prices on all goods, discouraging/disallowing price cartels. In many countries, mainly on the basis of cultural arguments, the book trade has been granted an exemption from this principle of free competition..."
http://www.euricom.si/Pub1104.html

RPM (retail or resale price maintenance) for books has been a very hot subject, in most European countries (between the EC and its member states), Canada, Australia, Japan in the 90's and in S Korea more recently. All these countries mentioned had, or have been trying to have RPM in the past for books (and for a few other cultural products such as press). Often their governments, or otherwise (small) retailers associations with most publishers, had regulations or agreements implementing RPM in order to preserve the small traditional companies all along the book supply chain, in particular because of the specificity of these "cultural products" (all these governments usually consider that press and books are special products and should not be purely left to market forces). They people against RPM are usually in all countries large or online retailers and a few large publishers, supported in Europe by the EC commission. The UK abandoned its Net Book Agreement (NBA) under the pressure of a few large companies, but France still has its 1981 law where retailers cannot give a discount on books lower than 5%, and Germany has a similar RPM. In S Korea the minimum discount for books is by law 10-15%. Japan still prohibit new books from being discounted at all, through specific provisions in its Antimonopoly law.

Abandoning the RPM may have a significant impact. In the UK because of the abandon of the NBA in the 1995, today chains like Tesco are selling books with high discounts on cover prices (e.g. 30-40%), some publishers print some of their books in the PRC in order to afford these discounts, and many specialized bookstore chains, including WHS, are in trouble (WHS was the largest world bookseller still a few years ago, but had to sell its all its US and Asian bookstores to cover its losses in 2004-2005) .

"in the spring of 2002, the European Parliament submitted recommendations to the Commission on the drawing up of a directive for the protection of national retail price maintenance systems. It is recommended that every EU member state should be entitled to introduce, maintain or allow retail price maintenance systems for books. At present, most member states have some kind of legal provision, which does not apply, however, to the sale of books from other countries. The current proposal sets out to prevent an erosion of the retail price maintenance system for books by online trading with other countries."
http://www.austria.gv.at/site/4021/default.aspx

In the US, contrarily to the EC and Japan, vertical price-fixing (=RPM) has been condemned since 1911 by the Supreme Court, but it seems that the FTC or other enforcement authorities, or the judiciary, have turned a blind eye on the press markets in particular, and that RPM remains a rather controversial subject, with regular court cases with variable results still in recent years.
Concerning books nowadays online stores such as Amazon, B&N, and Wal-Mart offer a minimum of 30% discount, going up to 80% discount sometimes. By consequence, small independent book retailers are disappearing rapidly. Nevertheless, books having traditionally low margins and a short life cycle as hard covers, the whole book industry, starting with publishers, seem to try to avoid price wars at retail level.
This text below is an abstract concerning the US of the very interesting OECD paper presenting the situation in most developed countries worldwide and presenting the debates within the EC commission on the subject
www.oecd.org/dataoecd/35/7/1920261.pdf
"There is much disagreement about the extent to which each of these anticompetitive or procompetitive theories underlies the actual use of vertical price fixing in the marketplace. Each theory has its critics. The controversy in turn has resulted in different policy prescriptions for vertical price fixing -- per se illegal, rule of reason standard, and per se legal. In the meantime, the rule of per se illegality, though circumscribed in its application by the courts, continues to be the legal standard in the US."

It's interesting to note that Joyo.com, Amazon's Chinese subsidiary, declined to take part in this particular price war. Wang Hanhua, the Joyo president, said that he's more interested in focusing on customers than competing directly with Dangdang and other bookstores. I'm not sure how he intends to do that, but there you go.

It's also been said that if another price war were to take place, Joyo might be forced to participate to keep its book-buying customers.