When Beida Jade Bird (parent company of GEM-listed Jade Bird) pledged 100 million yuan (US$12 million) to become a financial investor in 53-year-old China Youth Daily (CYD), many on the mainland knew what was happening - a historic event was in the making - reform of the government-owned media.

Even before the deal had been finalized, news of CYD's restructuring had already been held up as a national example of reform - despite Jade Bird's far-from-outstanding performance in the capital markets on both the mainland and in Hong Kong, and the vague terms under which the new capital was to be injected.

Jade Bird is an elite media organization whose standing in the industry is something only a handful of others can match. It is one of a group of long-standing media organizations under the direct supervision of the central leaders. Prior to restructuring, it belonged 100 per cent to the Communist Youth League Central Committee.

Along with its restructuring, and after adding new pages and feature columns, the revamped paper has begun appearing at streetside newsstands in Beijing where it is competing for readers' eyeballs and money instead of depending on bulk subscriptions from government institutions.

"We are firing real bullets now," one CYD reporter told colleagues from other press organizations. This means a serious fight for survival and success in a market economy. The change, as many people are calling it at investors' gatherings in Beijing, is the one of the last frontiers to be breached on the path to mainland reform and a gold mine of new opportunities.

The CYD deal hands over 40 per cent of its equity to Jade Bird, while the evaluation was based, apart from its licence, entirely on such physical assets as cash, properties and machinery.

While the CYD deal sets a precedent for reform of central-level media, a large number of media organizations and publishers have also received injections of funds from the private sector.

Before buying its way into CYD, Beida Jade Bird was also involved, through its subsidary Beida Cultural Co, in publishing Beijing Times (Jinghua Shibao), a popular tabloid; and weekly newspaper Elite Reference (Qingnian Cankao), a subsidiary publication of the CYD.

In Shanghai, Beida Cultural was one of three parties involved in the restructuring of Shanghai Youth Daily (SYD) and obtained 30 per cent of its equity worth a total of 60 million yuan (US$7.2 million) in the new company.

But so far, the most successful and profitable investment project for Beida Cultural is Beijing Times, a publication that industry observers call one of the most market-oriented media products in mainland today. For overseas investors, there are still a few major stumbling blocks on the mainland's road to media reform. Direct investment in editorial and programming operations is still tightly controlled. In addition, there are still no auditing procedures in place from services like the ABC and BPA.

Still, indirect involvement is not impossible - foreign investment can still find its way into these sectors through a third party, just as Jade Bird can raise money, whenever it needs, from the Hong Kong capital market. This alternative route opens up opportunities for portfolio investors. Direct investment and involvement through joint distribution and advertising partnerships are also possible - the modus operandi in fact, for most mainland private investors. In the new market reality, their success or failure is entirely a business matter now.

(HK Edition 07/07/2004 page16)