Run by bookstore staff and an army of volunteers, the festival includes sessions for fans to meet their favourite authors, and workshops for aspiring authors.

Now, greater plans are in the works. General manager Peter Goff says The Bookworm is going to become a publisher, something he sees as a natural step forward.

Its newly established China Bookworm Press will focus primarily on contemporary Chinese fiction, translating books into English to make them more accessible to readers outside China.

To kick-start the venture, a competition is to be launched in the next few months, inviting authors to submit previously unpublished works. Three winners will be chosen, and their stories translated into English and published in print and e-book formats.

"There's an interest in China, and literature is a fantastic window to find out more about it," Goff says. "Contemporary Chinese literature is strikingly different from that of the Cultural Revolution [genre] that is widely read in the West. Modern Chinese literature hasn't received much attention, and we hope to showcase it."

The Bookworm, which opened in 2003, already publishes short stories, poetry and creative fiction in its quarterly literary journal , which has theme-based issues such as "Arrivals and Departures", and "On Reconstruction".

"Showcasing writers and their work is very much part of what we do. We do organise readings with Chinese authors and provide a platform for them; we have our magazine, and now publishing is another dimension," Goff says.

"Our connections made through our literary festivals help put us in touch with writers, so we are always looking for more ways to give more voice to them."

Goff says some readers like to stick with established writers, but he hopes the new publishing venture will shake things up by presenting a diversity of styles, including science fiction, erotica, horror and realism.

Penguin Random House North Asia had a similar vision 10 years ago when it became the first foreign publishing house to set up on the mainland, says Jo Lusby, its managing director.

"The plan in 2005 was much the same as the plan when Penguin launched in India 25 years ago - to create a platform for local authors to gain visibility in international markets, with the hope of finding new voices that will appeal around the world," she says.

Its first release was 2007's by Lu Jiamin, under the pen name Jiang Rong, which won the Man Asian Literary Prize that year.

Released in Chinese in 2004, the semi-autobiographical novel follows a young man who is sent to the Inner Mongolian grasslands during the Cultural Revolution, where he learns about the lives of wolves and the impact man has on the natural environment.

It became a hit in Chinese, selling four million copies; its message of being a leader rather than a follower spoke to many.

Penguin China paid Jiang US$100,000 to secure the worldwide English rights to the book, setting a record for translation rights to a Chinese book. A film adaptation of the novel by French director Jean-Jacques Annaud was released on the first day of the Lunar New Year last month.

Lusby is enthusiastic about the prospects for China Bookworm Press. "I think it's great news, and part of a broader trend - bookshops creating their own books. They know their readers, they know what people want and they meet lots of great writers. It's a natural trend and one that I welcome," she says.

Another champion of contemporary Chinese literature is , a quarterly literary magazine that was founded in 2007. Co-founder Eric Abrahamsen used to translate Chinese stories for his own pleasure before doing so for publications. The magazine had started a blog that encouraged translators to discuss what they were reading and working on, Abrahamsen says.

"But then we found that the website was being used by editors and publishers outside of China who were curious to know what was going on. So in 2009, we began changing the focus to provide more information for them."

Despite the Chinese government's tight control of media, Abrahamsen says it is supportive of the work being done by groups such as Bookworm Press, Penguin China and , because their initiatives help boost the nation's soft power.

Abrahamsen, who is also a publishing consultant, says the government even offers stories to for translation and publication.

However, the fact that officials do not understand how and why stories are chosen, or rejected, can make for an uneasy relationship.

Lusby says: "Our approach to local publishing is purely based on whether we are confident we can do a good job and find a readership for the title. We do not come under undue pressure to take things on any other basis. Our point of view is well understood."

She says creative writing in China continues to evolve, both stylistically and in terms of genres. "The growth of different genres and the impact of digital on the creation of very short-form writing is the main trend at the moment," Lusby says.

"It is important that there are multiple stories told from multiple perspectives - it is not healthy if stories always come from one place. There is no single China story, like there is no one American or French narrative. Literature is the best way to gain insight into another perspective," she says.

Fiction tends to drive the market for translated literature from China, she says, although there have been some stand-out successes in non-fiction, such as the Zhao Ziyang diaries, , published by New Century Press in Hong Kong.

Abrahamsen says China's long and storied literary tradition was broken from the 1950s to the end of the Cultural Revolution. "Now, writers are influenced by the West due to [reforms and opening up] in the 1980s," he says.

"Over the past 10 to 15 years, the stories have started to become more about the individual. They are written by people who are more educated, and also by self-proclaimed peasants who talk about rural folk traditions and local cultures.

"The gravity has shifted to the cities. A few years ago it was all about migrant workers. Nowadays there are a lot of stories about strings of one-night stands, with nothing happening at the end," he says.

Abrahamsen also reads stories by people from small towns that have been transformed into cities. There's a feeling of transience in the works, he says: "The writers either got out of these places, or are still stuck in them."

Lusby says it is stories that "successfully paint pictures in the readers' minds that are most suited to translation. Those that rely on clever word plays can be the most difficult".

She says that while Penguin may have a good idea of what readers are looking for, "we need to tread the line of tapping into what people are keen to read, and what new writing could take them by surprise".

The risky business of finding the next "it" writer is something China Bookworm Press is willing to take. It will have a press run of 3,000 to 5,000 copies as well as e-book releases.

Goff insists the foray into publishing will be a labour of love. "We are an independent bookstore, so we're not strictly commercial. We'll be happy if we make any money out of this."