Over the past few years, an increasing number of bookstores in China, including the Photosynthesis Bookstore and the Beijing Forestsong Bookstore, have ended their operations as a result of a deteriorating business environment. This trend has drawn a lot of public attention and aroused a great deal of government support.

On December 31, 2013, a document released by the Ministry of Finance made an amendment to its tax policy, exempting bookstores from VAT in the wholesale and retail sectors from January 1, 2014 to December 31, 2017. For bookstore owners, this policy has been a long time coming.

"Tax exemptions will provide real benefits for large bookstores like us," said Zhu Min, manager of the Popular Bookmall in Nanjing, east China's Jiangsu Province.

The bookstore had to downsize its business from 10,000 square meters to 6,000 after relocating last year, with fewer book categories being sold but rent prices continually rising. According to Zhu, annual sales hit 100 million yuan ($15 million), but business costs, including staffs' salaries, social insurance fees and utility bills, remained a heavy burden for the operation.

The VAT rate is 13 percent, which accounts for a large proportion of bookstores' net income. "The VAT tax exemption could save us at least 1 million yuan ($165,200) net profit every year," Zhu noted.

The book industry has undergone a recession, according to Chen Jianguo, general manager of the Nanjing Xinhua Bookstore.

The state-owned, decades-old bookstore has a number of social responsibilities such as paying construction funds and charity donations, along with their operation pressures. "I am inspired by the new policy, and could see the dawn of a new book industry," Chen said.

More challenges ahead

Tax cuts will undoubtedly provide assistance for bookstores. However, it is still uncertain whether these "burning coals" can ensure bookstores survive.

There are several small bookstores located on the east Zhongshan Road in downtown Nanjing. The 40-square-meter Xinwen Bookstore is one of them. Owner Yuan Cuiqin, 54, knew nothing about the new policy. Her bookstore has enjoyed business tax exemptions designed for small- and micro-sized enterprises whose monthly revenue is under 20,000 yuan ($3,200).

Continuously boosting sales and profit are her top priorities, as "daily sales cannot cover all the costs," said Yuan, who has run the bookstore since 1991.

According to Yuan, people bought more books in the past, with literature and psychology books being particular bestsellers. But now, reference books are her pillar. "I think it is more profitable to sell snacks," Yuan said. "I would probably end the business if our bookstore was relocated due to a city renovation project."

In fact, less people reading books has become bookstores' biggest challenge. The changing reading habits of today's Chinese have had a devastating impact on the book industry.

According to the Tenth National Reading Survey in 2013, the national reading rate stands at 76.3 percent, down 1.3 percent from 2011. The average Chinese reads only 4.39 printed books a year, far lower than their counterparts in Europe, Japan and South Korea. In contrast, the rate of e-reading has increased by 65.5 percent.