The fruit of Lai's labour

CATCHY Cantonese phrases have been swamping the media lately: 'Fat man Jimmy Lai has gone mad again. He says Apple Daily will sell for two bucks only.' It is far too early to say if Jimmy Lai Chee-ying, who made his fortune selling jeans and T-shirts and became a press baron by successfully launching Next magazine five years ago, has really gone mad with his $1 billion investment to launch a new Chinese newspaper in a fiercely competitive Hong Kong market with more than 20 established titles.

But his $2 appeal has certainly driven the owners of other Chinese newspapers mad by breaking their tradition of selling at $5, regardless of size and circulation.

Because Lai has a reputation of being strongly anti-communist, the Apple controversy has also taken on a political dimension.

At a time when some newspapers have exercised self-censorship in the face of pressure from Beijing, Lai has vowed that his paper will not back away from stories that might offend China.

Last year, he took everyone by surprise by publishing a highly critical commentary on Chinese Premier Li Peng's visit to Germany, where Mr Li was visibly disturbed by anti-Chinese protesters. Lai regarded that as a disgrace to the Chinese people.

His Giordano clothing outlet in Beijing was subsequently closed by the authorities for failing to register properly and was not reopened until a few months later.


To prevent his media interests from affecting his clothing business, which has a large number of outlets in China, Lai has given up all executive positions in the clothing chain he built up.

In launching Apple, Lai has promised to offer readers a new product styled after the easy-to-read USA Today.

Journalists working for Apple are reportedly being paid more generously than the industry average, with senior managers and writers said to be commanding annual salaries of more than $1 million. His venture is instrumental in preventing a drop in salary levels after the closures of the Overseas Chinese Daily and Hong Kong Today saw several hundred journalists and newspaper production staff laid off.

Nominally, Apple Daily will still sell for $5 when it hits the streets today.


But consumers can get it for $2 by presenting $3 worth of coupons freely available by buying Next magazine and its sister publications, and by making purchases above a certain amount at his clothing outlets.

At convenience stores, a promotion will see the paper selling for $2 without coupons, and buyers will be given an apple free of charge.


Even though the promotion campaign will last for only one month and the paper is not saying if other price incentives will be offered afterwards, most other Chinese newspapers see Apple's move as a full-scale price war.

They are also angry at Apple's allegations that five papers have conspired to obstruct their launch by putting pressure on newspaper hawkers, who were allegedly told they could not sell the five papers if they distributed Apple Daily.

Last week, the editor-in-chief of Apple Daily, Loh Chan, also revealed that some journalists working for Apple were pressured by the five papers to quit before its launch or they would be barred from returning to their old stables within the next two years.


For legal reasons, Apple Daily refused to identify the five papers, causing the Hong Kong Newspaper Society to cast doubt on its allegations and regard them as a promotional gimmick.

The society also regretted the decision by the Legislative Council's information policy panel to convene a meeting in response to the 'unfounded' complaint of Apple Daily as unfair to the newspaper indus-try.

However, in the latest development, Shum Tak-keung, the lead distributor of Apple Daily, was expelled on Saturday from the Hong Kong and Kowloon Newspaper Hawkers Association.


The expulsion lent credence to Apple's allegations that distributors and newspaper hawkers were being subjected to strong pressure from their peers and established papers not to sell Apple.

According to a report in the Oriental Daily, which took the lead in denouncing Apple's strategy, a joint conference representing 70 per cent of distributors and newspaper hawkers agreed at a meeting on Saturday that they would refuse to accept coupons.

It also called on the publishing industry not to resort to price cutting measures so as not to threaten their livelihood.

In line with the move, Oriental Daily, the market leader with a claimed circulation of 600,000, yesterday announced its sister magazine, Eastweek, would stop issuing coupons for the free purchase of another magazine Easttouch, which spun off from Eastweek two weeks ago.

For the past two weeks, Oriental Daily, which is one of the main rivals of Apple Daily, has taken the unusual step of reporting extensively the Apple controversy on its main news page and publishing two commentaries.

Last week, it also played a leading role in forming the Joint Conference of Chinese Newspapers, comprising 20 established Chinese titles.

In a declaration published last Tuesday, the papers reiterated their long-standing position that the $5 cover price was a fine balance between the newspapers' need to recover its operating costs and the public interest.

It said any attempt to lower the cover price, directly or indirectly, would cause difficulty to those with less resources, lead to a few papers rigging the market and eventually reduce the public's choice of access to information.

However, one day after the joint conference published its declaration in member newspapers, the Hong Kong Economic Journal criticised the declaration as smacking of the existence of a cartel and a breach of free market principles.

It said that while the Chinese papers had an understanding to fix their cover price at the same level, it was a non-binding consensus and those who went their own way - as the now defunct Kung Sheung Daily did in the 70s - were not subject to any pressure.

The paper said its representative left the meeting before the declaration was finalised and it had been erroneously put down as one of the signatories of the declaration.

Yesterday, Loh said Apple was definitely against the formation of any cartel.

'We would take the initiative,' he said. 'We don't want to follow the herd.

'Each newspaper should have the right to fix its own price.' Loh rejected criticisms that Apple's price-cutting move would lead to the death of other newspapers with less resources and reduce the number of 'voices' when it was in the interests of Hong Kong to have more media outlets with the arrival of 1997.

'In starting a new venture, we don't think about whether others will close,' he said.

'In fact, a lot of people feel that newspapers are too expensive since the price was raised by 25 per cent to $5 last year.

'The Overseas Chinese Daily and Hong Kong Today might not have needed to fold last year if they had been able to cut their prices to attract readers.

'It doesn't make sense nowadays for investors to expect any kind of protection by forking out a dozen millions.' Loh said his understanding was more than 200 hawkers refused to accept coupons, but there were many more who agreed.

None said they would boycott Apple because they knew it would have implications for their licences if they did, he said.

During the promotion period, hawkers would get $4.50 a copy, compared with $1.50 for selling other titles, he said.

Loh said the paper would have a print run of 200,000 as planned and would try its best to distribute the paper today.

Given that most papers took years to attain such a circulation, Apple's target is regarded as being too ambitious.

It remains to be seen whether Apple will hit the right chord with readers. But it has certainly struck a nerve in its established rivals.