The media has always been a sensitive issue in China. However in recent years, the country's leaders have begun to acknowledge that some opening of the media sector is an inevitable step on the road to prosperity.
China's World Trade Organisation accession has already cleared the path for some foreign media participation. New rules that take effect this month allow, for the first time, the establishment of foreign-funded book, newspaper and magazine distributors. Firms like Hong Kong-based media corporation Global China, which has signed a deal with People's Daily to be an official distributor of magazines and newspapers in China, are already moving in, and more foreign media companies can be expected to follow suit.
Prior to their entry, however, one of China's most intriguing media battles is already being staged. This struggle concerns the fate of the many English city magazines, which have been fighting in a small corner of the media sector for over a decade now.
Shanghai has no fewer than six English city magazines serving an expatriate population of roughly 60,000 and an unspecified number of overseas Chinese and English-proficient local professionals. Compare this with vast markets like London and Hong Kong, where one or two listings magazines predominate and many lesser magazines run after deep niche markets, and the problem becomes clear.
A cursory view – and often, these magazines get little more – reveals a market of virtually identical offerings. All of them promise essential information about how to live in China: listings, maps, book and movie reviews, events calendars and dining highlights. And all of them offer local advertisers virtually identical free distribution profiles and the selfsame promise – to connect advertisers with the city's wealthiest consumers.
There is ample fodder in this market for cynics and know-it-alls, from political infighting, exclusive advertising contracts and inflated distribution figures, to shallow content. But one needs to remember that these magazines once pointed the way to the future – they were, after all, the first publications since 1949 to be produced without government control.
In the early 1980s, shortly after China's initiation of its open-door policy, there were no independently operated English publications of any description in China. In the mid 1980s, Minnie Yeung, a classical pianist whose family represented China Daily in Hong Kong and Macau, founded Ismay Publications in Hong Kong and stepped softly into the Mainland market with a series of Welcome publications. These were welcomed by Chinese authorities, which saw an opportunity to promote the country to the outside world. In 1991,Yeung's Welcome publications were transformed into magazines (Shanghai Talk and Beijing Journal) to cater to the rapidly growing expatriate communities in these cities.
The next, perhaps boldest move into this market was made by former UPI journalist Scott Savitt in 1993. His magazine was Beijing Scene, and it offered independent English content to a level that had not yet been seen in the market. "The magazines out at that time were all very innocent," recalls one long-term Beijing resident. "Scott's publication was much more in your face."
In 1997 City Weekend, a biweekly magazine, was formed in Beijing by foreign businesswoman Ann Stephenson-Yang. By this time, others were starting to wake up to the opportunities of this market. British national Mark Kitto, who had formerly worked as a metals trader in south China, formed Ish magazine, which would later become the popular That's series, in 1998. At roughly the same time, former Reuters correspondent Graham Earnshaw established Shanghai Buzz, Shanghai's first independent English weekly.
Kitto, who has carved out a small magazine empire from his office in Shanghai's old French Concession, with publications for Shanghai, Beijing and Guangzhou as well as a national edition, recalls a market of virtually untapped opportunity: "There was Shanghai Talk and basically that was it. There were a number of government publications knocking around, like China Today. Even Shanghai Daily [Shanghai's government- backed English daily] hadn't been launched."
Now all that has changed, and things are getting very crowded. Earnshaw, who now runs his own media services company in Shanghai, says the reason for this is three-fold. The first and most obvious reason is an immature market, which opened up opportunities for less experienced start-ups.
Given the grey nature of the regulatory environment for these magazines, there was an opportunity for people to produce them for little upfront cost. The biggest cost is printing, and there is a natural tendency to exaggerate the number of copies produced. A rough estimate of the base cost of getting one of these publications off the ground in China would be about US$2,000.
Of course, many of these publications are technically illegal. But herein lies the beauty of China, says one media analyst, speaking on condition of anonymity: "It is the land where nothing is allowed and everything is possible." Thanks to this fuzziness, aspiring publishers are able to operate under a veil of administrative tolerance, forming tenuous alliances with various state organs, from the Yangzhou city government to the Shanghai Tourism Board.
"Everybody's got a grey argument," explains the media analyst. "You can get away with anything in China as long as you have a ?shuofa,? an explanation. The genius of China is in its greyness. It drives foreign business people crazy, but the greyness is an opportunity."
Earnshaw adds a second reason for the market saturation of these magazines – simply excitement. "The motivation is not purely commercial. You can do things here you can't do anywhere else in the world," he says. "If you ask these publishers to intellectualise the reason for their involvement, they will say they are waiting for the day when the media opens up – but people really do it just because it's a blast to do these magazines in China."
The last factor is the opacity of the business model itself, which is based on a largely unsubstantiated promise to advertisers, who buy an assumption about distribution numbers. The truth is that nobody really knows who's reading these magazines. "They are all free publications placed in random bars and restaurants. It's a leap of faith on the part of the advertiser," says the media analyst.
Minnie Yeung of Ismay Publications says that the market will decide which media offer the best value. "It is probably fair to comment that normal market dynamics are not the only deciding factor when it comes to the question of survival. There is obviously much duplication – as each new competitor entered the market, they merely imitated the forerunners. A serious lack of imagination has produced a number of look-alikes and created a buyers market. The buyers will decide the best media for their money."
For now, advertisers seem to be merely overwhelmed. One marketing manager at a major five-star hotel in Shanghai confesses that she divides her advertising budget more or less evenly across the English media. "We just cover all the bases," she says.
Threats to these magazines are imminent from a number of directions. Big foreign groups are already beginning to appear. Zurich-based publisher Ringier has stepped behind City Weekend, which is now in Shanghai and Guangzhou, and has begun to produce a series of supplements, guides and trade magazines that City Weekend's managing editor Jo Lusby describes as "extremely profitable."
London's Time Out has licensed with CIMG China to publish Time Out Beijing and Time Out Shanghai magazines in Chinese and plans to publish English-language city guidebooks beginning next year. Although Hong Kong's Tatler seems to have slipped more or less unnoticed into the market last autumn with its paid-for bilingual magazine aimed at Shanghai's upper crust, it has grabbed the lion's share of the highly lucrative luxury advertising market.
Another threat to these publications is the wireless internet. In the next three to five years, 3G, GPRS and Wi-Fi mobile web technologies are expected to become market standards, particularly in tech-savvy Asia. This could mean the advertising market here will tip in favour of the internet. The information lists that give these magazines much of their value are ideally suited to mobile internet devices, a prospect that threatens their future.
"Right now the market perceives value in a page of paper, but cannot see the value in a banner ad," says Earnshaw. "From the perspective of these publishers today, the focus on print publications is totally astute. But with the rise of 3G and wireless broadband, internet ads will begin to have value. Beyond the three-year point, I can't see how the magazine market will develop. I'm guessing these magazines will be disappearing in three year's time." So what are these publishers doing to prepare for these eventualities?
Asked if he thinks city magazines will diversify and seek their own niches in order to survive, Kitto suggests this is unlikely. "It would be a good idea if they did, but they're not brave enough," he says. As for his own publications, he is confident that That's will emerge victorious simply by doing what it does best. "One of the reasons for our success is that we came out with a good idea and stuck with it," says Kitto, who modeled his own magazines on Time Out and Bangkok Metro. "We create the magazine for the readers, and then the advertisers come."
Kitto is so convinced of this strategy that he eschews soft advertising, which is endemic in the market. "Just today I turned down US$1,200 for an interview. The client said, 'If you don't do it, we won't advertise,' and I said sorry. I would rather lose advertisers and win readers, because that's what advertisers really want."
At City Weekend Joe Lusby emphasises professionalism and quality of information. "The magazines doing well are those who know what they're doing and are doing it well. We position ourselves as a magazine that is in China long term. We have primarily Chinese staff, and we write things that are informative about China if you read English. For this reason, advertisers have shifted their interest."
Shanghai Talk publisher Minnie Yeung says she has plans to broaden the magazine's distribution to include overseas circulation, but gives no indication of how this can be done effectively without incurring a substantial cost increase. The content of the magazine will also continue to "enlarge and sophisticate," she says.
Achieving customer loyalty
The future turns on the question of 'value.' The biggest problem with these publications is that they cannot demonstrate to advertisers that they have achieved real customer loyalty, says the media analyst – and this is ultimately what creates value." For magazines like Time you have a subscription, and this amounts to a commitment. These magazines are free, so readers treat them as free. There is no sense of loyalty. As soon as readers sense their irrelevancy, they will die," he says.
Few doubt that independent English listing publications have played an important role in China. They have served as indispensable resources for expatriates and helped to introduce China to the world. Working in the cracks of China's most sensitive industry, they have also provided compelling examples of how private interests can operate in one of the world's murkiest markets. Still, the times are changing, says Earnshaw.
"There was a brief window of opportunity for foreigners to independently start up publications here. Now the future belongs to Chinese publishers, who are getting smarter and smarter, and to big fancy media groups."
"But it's all been a lot of fun.?