Imagine a couch potato sitting at home in remote Liaoning province and ordering a microwave oven from Sydney via cable television. Imagine no longer. This is a trend that has attracted millions of mainland consumers. The new form of electronic retailing operated by Sydney-based Television Shopping Network (TVSN) has reached eight million mainland households and sources say the country is TVSN's second-largest market after Australia. China has about 2,000 cable television operators with about 55 million viewers. It is not that easy, however, to turn these figures into money-spinners. The mainland keeps its door closed to foreign cable and satellite television operators. Regulations set by the Ministry of Radio, Film and Television in August ban private homes from using satellite dishes and have made it illegal for cable operators to beam foreign broadcasting into private homes. TVSN has signed contracts with 10 cable operators in Guangdong, Hainan, Liaoning, Guangxi, Shandong, Zhejiang and Yunnan. Negotiations with Shanghai Television are under way. The Asian economic crisis has put many companies out of business and forced others to cut back. For TVSN, the cutbacks in other Asian markets several months ago coincided with expansion efforts in China and Japan. TVSN laid off 20 per cent of its workforce and shut down its operation in Indonesia. Sources added the network was preparing to open an office in Hong Kong to cater to its expansion. A source in Guangzhou said the regional economic turmoil had not affected the network as sales had increased slightly over the past few months. A market commentator in Sydney said TVSN's operation in China had opened up a set of questions for the mainland's retailing and broadcasting laws. 'It is highly political as it has made all conventional rules and restrictions irrelevant,' he said. He said TVSN was given the green light because television shopping channels were labelled educational, with local authorities categorising TVSN's programmes as 'consumer education'. 'The vague categorisation has enabled TVSN to enjoy broadcasting throughout China without delay. It's quite an achievement because of the nature of the programmes,' he said. TVSN is the only foreign satellite broadcasting directly into China, apart from Star TV's subsidiary, Phoenix. TVSN president and chief executive Bill Schereck, who stepped down suddenly in February, had declined to tell how the company was able to bypass top regulators but admitted local authorities had been 'very enthusiastic'. He said provincial cable operators shared 5 per cent of TVSN's net revenue. 'Each of the provincial broadcasting authorities makes their own decisions as to what will be carried on their systems.' Local post, delivery services and telephone services all shared a slice of TVSN's revenue. It works like this: the mainland cable operator receives TVSN programmes from satellite and rebroadcasts them to viewers. The viewer dials a 24-hour toll-free number and orders an item. The order arrives through Express Mail Service within a week with A$15 (about HK$77.70) delivery charge on all items. It is cash-on-delivery with yuan payment. Products are delivered from Sydney or a distribution centre in Panyu, Guangdong. The most popular items are die-cast collectible model cars, sandwich grilles, popcorn machines and jewellery. The Sydney-based commentator said the mainland had great potential for electronic retailing, and a TVSN survey showed an average mainland customer spent up to A$1,200 a year, compared with A$400 in Australia. However, the firm has still to make a profit from its US$70 million investment over the past two years. TVSN was launched in late 1995 and broadcasts live over 24 hours to about 50 countries in English, Japanese and Mandarin. The Search Group, an investment arm of Duty Free Shoppers, owns a 65 per cent stake in the network and Prudential Asset Management Asia 30 per cent. The remainder is held by other investors.
