CHINA: MOVING INTO MEDIA - What Great Wall of restrictions face western media owners when entering. China? Chris Walton reveals the facts every western media owner needs to know

limited for two reasons: the regulatory barriers limiting development of

foreign-owned media and the lack of appeal of non-local media to Chinese

consumers.

These factors mean that the current potential for growth in China for

foreign media owners is restricted. So the big players are biding their

time, focusing on other areas of Asia with more immediate potential.

It is almost impossible for foreign media owners to reach the Chinese

population as, officially, foreign TV stations are allowed to download

their satellite feeds only to foreign residential compounds and hotels

with three or more stars. Print media face more complicated

barriers.

All international publications must pass through the authorised

government distributor - the China National Publication Import & Export

Corporation.

Once approved, these titles can be distributed only through hotels,

international airports and certain bookshops. What's more, local Chinese

citizens are forbidden to buy foreign titles by law.

In Shanghai, for instance, most bars in which foreigners hang out have

satellite TV and there's nothing to stop anyone watching it, just like

nothing can physically stop them from buying a magazine in a hotel

lobby.

Yet most Chinese citizens simply don't want to hang out in these bars

and would not be able to afford to eat and drink in them. Similarly,

most magazines fix their cover prices "in co-operation" with CNPIEC and

they are too expensive for local people. An issue of Newsweek retails at

$4.20.

The government still tightly controls media output. Foreign publications

still face the problem of having entire issues banned due to the subject

matter covered. This is a situation the main weekly titles face about

six times a year.

For TV and print, China remains a marginal market for foreign media.

The Economist is a good example: its circulation in Thailand (population

60 million) is 80 per cent higher than its circulation in China

(population 1.4 billion).

While most Chinese people appreciate that there is some sort of

censorship of the media they consume, we need to ask whether they really

care about this. Western media vehicles have a reputation for high

production quality but it would be unwise for media owners to think this

will automatically result in success in China. Indications are that

western media would be successful in China only if the product is

tailor-made for the Chinese audience.

Given the size of China, this should not be too hard an undertaking to

justify.

Taking news as an example, CNN International's global audience is about

110 million people and this pales in comparison with the audience

achieved by the evening news on CCTV, the Chinese national station,

which is estimated at more than 200 million people.

Western media will have to "China-ise" themselves to succeed, either in

output or how and where it appears. To date, probably the most

successful western media vehicle in China is Star TV's Chinese channel,

Phoenix TV - a joint venture with Today's Asia and China Wise. This is

basically a Chinese channel that NewsCorp has a stake in: more than 90

per cent of the programming output is in Chinese and 95 per cent of

viewership happens in China. It works, but is it western media?

This approach has also worked in print. In 1986, Business Week

established a joint venture with the Ministry of Foreign Trade and

Economic Co-operation, enabling it to publish Business Week/ China, the

only licensed international business magazine in China. This meant it

effectively circumvented restrictions facing other titles. This entirely

Chinese language title has an audited circulation of 73,000, which

compares favourably with the mainland circulation of 2,300 enjoyed by

its big sister.

Success will be achieved only by researching what Chinese audiences want

and remembering that, just because it has worked elsewhere, it may not

work in China. When Phoenix began broadcasting The X-Files, MindShare

carried out some focus groups among local Chinese citizens where we

showed the pilot show and asked for the groups' views on it. Feedback

was, at best, lukewarm, so Phoenix no longer shows The X-Files and the

majority of its peak schedule is given over to Chinese programming, not

western programming dubbed into Chinese.

Western media will also have a big brand-building job to do in China, to

familiarise the local audience with their offerings. One approach is to

syndicate an hour or two of programming to local channels throughout the

country. This strategy not only side-steps the rules of direct

broadcast, but also builds familiarity among Chinese viewers with their

output in a well-known environment (a favourite TV station). This is

already popular with several foreign channels such as Discovery and

AXN.

It is hard to predict when prospects will improve for foreign media

owners, especially as the government sees the TV industry as a key

revenue generator.

Surrendering part of this to outsiders will not be popular, especially

at a time when TV revenue is decreasing for the first time. The

government also remains keen on retaining its ability to control output

at certain times, for instance the 80th anniversary of the China

Communist Party this year.

Perhaps these issues, much more than market-led issues, will dictate how

soon the hitchhiking can stop and western media owners can start making

real progress in China.