Concerned about low margins, the group is courting partners which can offer alternatives Tom Group is in talks with state-run Xinhua Bookstore and other mainland press distributors to establish a joint venture that could herald a shift in the company's media-focused mainland development strategy towards incorporating large-scale property projects. In an interview with Hong Kong media, Tom chief executive Wang Sing said the company was courting partners with low debt levels and large property portfolios, such as Xinhua, so a joint venture could also develop property and other non-distribution businesses to supplement its core sector's low profit margins. 'Publishing and distribution has a stable and huge revenue base but low margins,' Mr Wang said. 'Our internet operation carries a net profit margin of 35 per cent, publishing 10 per cent and distribution just 3 per cent. 'For example, if one [of our distribution partners] has a three-storey building, we can develop it into 20 storeys while keeping the lowest three as bookstores and have shops or hotels on the upper floors.' Tom's apparent determination to pursue mainland property projects heralds a potentially significant shift in the Li Ka-shing-controlled company's business model, which has previously emphasised acquisition-led growth in the internet, media and advertising sectors. The company, which recently migrated from the Growth Enterprise Market to the main board, is also pursuing possible investment in the commercial operations of the Beijing-based Economic Observer newspaper and has expressed interest in taking a stake in Beijing Youth Daily's planned Hong Kong listing. The move into a sector more aligned with Mr Li's interests could also involve collaboration with the tycoon's property flagship, Cheung Kong (Holdings). 'The distribution joint venture won't be small in scale and will involve an investment of hundreds of millions or billions of dollars,' Mr Wang said, adding that details were expected to be finalised by the end of the year. 'We will learn from Cheung Kong and do not rule out seeking support from it.' Xinhua, the mainland's largest book distributor and retailer, is remodelling to compete more effectively in a market that will be opened to foreign and private investment in December, in accordance with China's World Trade Organisation accession agreement. It had earlier outlined plans to restructure itself into a joint-stock company and bring in a foreign strategic partner as its second-largest shareholder. 'Xinhua has a complete network with its own logistics arrangements,' Mr Wang said. 'If we join, we would take part in information technology and logistics development, improve financial management, combine networks as well as leverage its capital and assets.' According to the Chinese Publishing Science Academy, publishing industry revenues reached 72.7 billion yuan in 2002 - the last year for which figures are available - and generated profits of 4.9 billion yuan. Tom will report its interim results on Thursday.