TODAY JAMES MURDOCH, chief executive of Star TV, will announce in Beijing that his company has won the right to broadcast one of its channels in Guangdong province. His is one of a handful of firms to have been given legal access to one of China's most lucrative markets - the booming media industry - which remains largely off limits to foreign and private capital. Many other firms have gone into the market semi-legally or illegally, by channelling money through domestic firms or 'hanging out a sheep's head and selling dog meat' - setting up a joint venture advertising company that is responsible for editing a magazine. Media is not included among the sectors China has promised to open as a new member of the World Trade Organisation, which it joined last week. But the market is so large that it cannot be ignored. According to official figures, advertising revenue this year will reach 86.1 billion yuan (about HK$80.6 billion), making China the largest market in Asia, ahead of Japan, up from 71.26 billion yuan last year. Television attracted the most advertising, with newspapers earning 14.65 billion yuan. According to the China Magazine Association, the country last year printed 2.94 billion magazines under 8,725 titles and had an income of 10 billion yuan. Of these, 23 had a circulation of more than a million. This market has been almost off limits to foreign investors because of ideological considerations. But the constraints are being eaten away by fierce competition, the increasing reluctance of the state to support non-profitable media and desire by editors and publishers for foreign capital and expertise. Among the most successful is Computerworld, a magazine set up by the United States-based publishing giant IDG. The company has earned US$250 million from investments of US$150 million in China in the past two years, it told Guangzhou's Southern Daily. IDG said it planned to invest US$850 million over the next five years. Two of China's most popular fashion magazines are joint ventures with US and French firms - Shi Shang (Fashion) and Elle, which sell 385,000 and 300,000 copies a month respectively. Tom.com, the Hong Kong-listed Internet and media unit of the Li Ka-shing group, spent 50 million yuan to purchase a well-known news magazine. But these are exceptions. Officially, private and foreign investment remains banned in the media. 'A lot of private and foreign money has come in, although it is hard to give a figure, and this inflow will increase,' said Liu Bing, a Beijing writer who 'leased' a magazine called The Celebrities from a state company and turned it into a national success with a circulation of 170,000. As part of its effort to split government from business, Beijing has ordered the Press and Publications Administration (PPA) across China to get out of business and stop subsidising magazines and newspapers, according to Mr Liu. 'Most are badly run and will either go bankrupt or have to find new investors. But, since the law is unclear, private and foreign investors have to put in money indirectly, like setting up an advertising company which takes responsibility for editing and publishing the magazine,' he said. Mr Liu said the Government would gradually give up control over 'non-ideological subjects', such as cars, furniture and beauty. 'The closer you get to ideology the more sensitive and difficult it becomes. Many foreign investors are not comfortable with this. So I expect a gradual inflow of money, but not the flood in other sectors.' Yu Guoming, a professor at the College of News at People's University, said media was excluded from the provisions of China's WTO agreement so its entry would have no impact. 'Government policy does not allow foreign or private investment [including Chinese] into the media. So foreign firms have used other ways to enter the market, like trading of copyright, like Shi Shang, which the Government allows. Other ways are for the foreign party to take a minority stake in a company in which the state firm holds the controlling share or to invest in a domestic company which uses the money to invest in the media,' he said. 'Some advertising, Internet and media companies are wholly owned by foreign firms. This is against policy but there is room for experiments, as long as you avoid politics and the most sensitive issues.' In August, the PPA published a list of subjects banned in the media. They include 'denying Marxism, Mao Zedong Thought and Deng Xiaoping Theory, going against Communist Party policy and direction, revealing state secrets and harming national security and interests, spreading rumours or interfering in the great work of the party and the state'. Such sweeping powers mean editors are always working on the 'white of the ping-pong table', as a popular saying goes, steering between the demands of the censors, often hard to predict, and the needs of the market which wants something new and unexpected. 'You cannot afford to slip up,' said Li Ming, who works for a lifestyle magazine. 'One mistake and your magazine could be closed overnight.' Last week, a senior editor of a fashion magazine had to resign after it published a photograph of a well-known model wearing a dress with the design of the flag used by Japan in World War II, enraging the censors. The two women had to issue a public apology. These regulations have not changed with entry into the WTO. But the Government is preparing for the post-WTO world and the gradual entry of foreign firms by encouraging the creation of its own media conglomerates. The first newspaper group was set up in January 1996, built around the Guangzhou Daily, the most profitable newspaper in China with advertising revenue of 1.2 billion yuan in the first 10 months of the year. Now, the country has 16 such groups. In April this year, Shanghai announced the creation of a film, television and radio conglomerate, with Beijing following suit in May. A national broadcaster, which aims to become the AOL Time Warner of China, was set up in Beijing earlier this month. With a staff of 20,000, the China Radio, Film and Television Group (CRFTG) aims for revenue of more than 11 billion yuan a year and includes property management, advertising, science and technology, Internet and newspapers among its operations. In theory, these conglomerates are supposed to operate independently of the government bodies regulating them but no one expects this to happen as their investors are the most powerful state television, film and radio firms. 'We want to set up our media 'aircraft carriers' or 'combined fleet' to deal with the foreign media giants,' said Xu Guangchun, director-general of the State Administration of Radio, Film and Television, at the launch ceremony for CRFTG on December 7, just four days before WTO entry. 'The Government's thinking is to let in the big players, like AOL Time Warner and Murdoch, which it can regulate,' said one media industry analyst. The state-owned stations that will offer the foreign channels will be able to charge their customers more. This is a smarter way than allowing no foreign access and trying to stop your people tuning in illegally.' Graphic: anal19gbz
