Magazines Take China Plunge in Search of Growth

HONGKONG: Three high-profile US magazines have entered the China market in recent months, seeking growth opportunities amid one of the worst global advertising slumps in recent memory.

But despite the potential, the birthplace of moveable type presents unique obstacles for Newsweek, Forbes and the Harvard Business Review, including censorship and a competition for advertisers pursuing rich city dwellers.

'Ultimately, all these publishers are trying to reach different segments of the same audience - an urban elite audience in Shanghai, Guangzhou, Beijing and Shenzhen,' said Tom Gorman, chairman of Hong Kong-based CCI Asia-Pacific Ltd, which has published a mainland edition of Fortune magazine since 1996.

Newsweek became the newest China-come-lately in mid-December, when it said it would license its name to Hong Kong's Vertex Group for a Chinese-language publication in the mainland called Newsweek Select.

Such agreements have been the rule for most foreign publishers in China, which rely heavily on content translated from their English editions.

Forbes magazine formed a similar partnership in November with Hong Kong's Morningside Business Publishing Ltd. Around the same time, Morningside published its first issue of a mainland China edition of Harvard Business Review.

Newsweek and the others are taking the plunge as China's economy booms and Beijing slowly relaxes its attitude towards overseas media, although foreign newspapers and news broadcasts remain off-limits to most Chinese.

'The market's changing every day,' said Frank Proctor, general manager of Newsweek's Asia-Pacific edition. 'Anyone who's sitting back waiting for a magic green light to say everything's okay . . . the train will pass them by.'

In a nod to China's sensitivity towards political issues, Newsweek Select will position itself as a lifestyle magazine publishing articles about non-China topics, said Vertex chief executive Joseph Poon. And despite its name, Newsweek Select will publish monthly.

'What we do is import information for the Chinese people,' he said.

All three publications insist they will not compromise their editorial integrity just to be in China, and that the parent publication retains final say over what gets published.

Fortune China has a circulation of 100,000 and has been profitable since its second year.

CCI's Mr Gorman said the magazine's ad sales have recently accelerated as local companies beef up media spending. He declined to comment on Fortune China's revenues but said a full page sells for about US$14,000.

With 40-45 pages of ads per issue and 12 issues a year, that adds up to about US$7 million in annual ad revenues.

'Our growth last year (in ad sales) was 40 per cent over the previous year, and it was about 40 per cent for the year before that,' he said.

'When we started out for the first few years, our ads were all international companies,' he said.

He estimated Chinese firms like domestic airlines, computer maker Legend Group and appliance maker Haier Group now account for about 30 per cent of ad revenue.

A well-known name is not enough to crack the China market.

The venerable Time magazine, a sister publication of Fortune, launched a bilingual edition in China with CCI several years ago called Time Digest that was positioned as an educational product for young Chinese aiming to improve their English.

CCI pulled the plug on the magazine in 2001 after determining it would take many years to become profitable, Mr Gorman said. - Reuters