2nd Annual China Media Forum
New Values in Traditional Media
By Donald Huang
China's media industry is now experiencing the greatest change of the past 30 years, driven by two forces: capital and technology. This was one of the messages passed on to the audience at CEIBS' 2nd Annual China Media Forum, held June 6 in Beijing.
Focused on the theme of "Capital, Technology and Media Innovation," the forum sought to foster cooperation and communication within China's broad media industry, while also helping media groups to better leverage capital and technology.
"In the new century, China is striving for a great rejuvenation. We crave to boost the national economy and to promote an advanced society. The question is: How can we achieve all that?" asked CEIBS Honorary President Liu Ji, at the event opening. Prof. Liu went on to state that new media creates an important opportunity for the nation. Although China lags behind global standards in many industries, in the just-emerging field of new media, the nation enjoys the same starting position as developed countries.
The 2008 China Media Forum highlighted three main points: the development of China's media industry during the past 30 years; the impact of capital and technological innovations on the media sector; and value reassessment and financing for today's media enterprises.
THREE DECADES OF MEDIA DEVELOPMENT
The 2nd Annual China Media Forum began by taking a backward glance at the progress that China's media industry has made since the beginning of the reforms and opening-up of the country. It was the consensus of the guests that the Chinese media industry has leapt forward during the past three decades, from fledgling beginnings to increasing sophistication and prosperity. Along the way, institutional innovation and industry integration have been the two pivotal forces driving the rebirth of China's media industry. Over the past 10 years, the internet-based technological revolution has further speeded the development of China's media development and strengthened the forces of market operation.
The transformation of the media sector during China's modernization and globalization was further illuminated by CEIBS Professor of Economics and Finance Xu Xiaonian. "The service sector made up less than 40 percent of the GDP in China in 2007, compared to more than 50 percent in India, 65 percent in Japan and more than 80 percent in the USA in the same year. The more developed the economy is, the more prosperous the service sector will be, and the economic structure will accordingly become 'lighter' rather than 'heavier'." To avoid an overly "heavy" economy, he explained, the Chinese government is now consciously shifting the economic focus to the service sector including, of course, the media.
Giving further insight into the development of China's media from the "single media" that existed before economic reform to the new era of multimedia, was Tsinghua University Vice-Dean of Journalism and Communications Xiong Chengyu. "Today's multimedia platform has been considerably expanded, making vast quantities of information available on the Internet," said Prof. Xiong.
DUAL PROPELLERS: CAPITAL AND TECHNOLOGY
Characterizing new media as allowing "everyone to communicate with everyone else," Communication University of China Professor Huang Shengmin predicted that the future will bring about changes to both media content and channels, and that the traditional B2C pattern of communication will face challenges. These changes date back to the burst of the Internet bubble in 2003, when Sina.com, Sohu.com, 163.com and other Internet portals launched. Born during the turbulent post-bubble period, these newcomers eventually found success by providing network communities, instant messaging systems, and search engines.
The hottest topic at the 2008 China Media Forum was the question: "How can traditional media blend with new media?" Many ideas were discussed on how old-school print and broadcast media can best make use of capital and technology, expand products and services, and partner with new media.
Many speakers argued that opposite poles of "old" and new media can benefit by finding a common middle ground. Several speakers advocated the sharing of content, and the joint use of communication terminals and channels such as mobile phones, IPTV and outdoor video presentations.
Many speakers agreed that turning a profit via "old" media is extremely challenging. As
China Times Editor in Chief Shui Pi explained: "Only those with a strong sense of social responsibility would invest in traditional media; currently, profits are rather meager. Recently, investments in the field have been on the rise, but it is a difficult path indeed. Profitability cannot serve as an indicator for the success of traditional media."
"Old" media historically has been considered as a public utility, providing information or entertainment to audiences for free. In its roadmap for further development, this role must be altered, speakers said, in order to enhance profitability. Guests generally agreed that emphasizing higher earning power is the only way to gain recognition from the capital market.
Technological advances are also fueling the growing integration between traditional and new media, speakers said. For example, both sides are now using new advances in computer technology to enrich their communication means.
Talents magazine Editor-in-Chief Song Lixin shared his experience in successfully expanding his publication's readership by promoting the concept of "community". Meanwhile, traditional media are actively using Internet technologies to stay up-to-date and attractive.
MEDIA'S VALUE REASSESSMENT
Despite questions concerning the profitability of traditional media and concerns over continued strict regulations on this sector, potential investors shared reasons for optimism. "Three state-owned media companies were listed last year alone, namely
Xinhua News Agency Sichuan Branch,
Guangzhou Daily, and Liaoning Media and Publishing Co. We can anticipate more and bigger media agencies becoming listed 2008 through 2012," declared businessman Chen Hang (CEIBS MBA 1997), who is executive director of BOC International (China). Mr. Chen pointed out that media companies currently make up only 0.35 percent of the total value of China's A-share market, but he expects this number to increase dramatically in the coming few years.
The number of listed media companies in China will continue to expand in the near future, eventually calling for a value reassessment of the industry, experts said. The media sector may emerge as a focal point of interest in the capital market, given that media companies are generally endowed with greater profitability than other A-share companies. As the overall industry matures, giants such as Baidu.com and Tencent.com will be drawn back to an A-share market listing, attracting other investors to the sector.
"State-owned media companies are privileged with a monopoly of resources which are highly valued in the market. The next concern should be the opportunities arising from the integration of those resources with the Internet and the mobile phone," added CDH Fund CEO Wang Gongquan.
One question of general concern during the forum was: how capital can best be invested after financing. Time has not yet been right for large-scale acquisitions across industries, but media groups are all keeping an observant eye and making every necessary preparation.
China's traditional media has walked out of the shadows into a bright new future, declared Macquarie (Hong Kong) Managing Director Philip Zhai. He argured that investors today should not be focused on short term success but on the long-term perspective.
As the event came to a conclusion, CEIBS Co-Dean and Vice President Zhang Weijiong summarized the forum findings and offered final words for attendees to take away. He stressed two concurrent trends that give investors strong reasons to remain bullish on the future of China's media sector. "The need for media will be limitless in the future, while the cost of media production is limited and sinking ever lower," said Prof. Zhang - a combination that adds up to a promising future for this fast-changing industry.
