Listing heralds quick media reforms
Today's trading debut of Beijing Media on the Hong Kong stock exchange marks the first overseas flotation of a mainland newspaper - a significant step to modernize China's media industry.
The ground-breaking listing of the advertising and sales unit of the Beijing Youth Daily, one of China's most popular newspapers, will help lift industry standards while giving international investors an unprecedented opportunity to invest in China's media industry.
The retailing portion of this initial public offering has been covered 422 times - a figure which bears full testimony to overseas investors' great interests in the newspaper and the promising Chinese media market it represents.
The Beijing Youth Daily reported a 20 per cent increase in revenue last year to 900 million yuan (US$109 million), and after-tax profits of 150 million yuan (US$18 million).
Aiming to build one of the biggest media groups in China, the newspaper has raced hard against its rivals to achieve listings in the home stock market in recent years.
A Hong Kong listing has made it the clear victor.
However, the more important message this signals is about the policy-makers' resolution to pursue more aggressive market-oriented reforms.
The country has increasingly come to terms with the need to turn itself into a global media power.
China now has over 2,000 newspapers. But few of them are as profitable as the Beijing Youth Daily.
To modernize and rationalize the industry, more than 1,400 newspapers and periodicals were shut down, or merged with commercial groups or forced to finance themselves earlier this year.
But such elimination of inferior players does not guarantee the growth of media giants who can survive the harsh market tests.
We can draw on our experience of the opening of many other domestic industries to foreign money and ideas over the past two and a half decades.
The remarkable success China achieved in making use of foreign investment convincingly exemplified how a developing country can accelerate its modernization cause with the import of funds, sophisticated technology and advanced management.
To our joy, as the Beijing Youth Daily's listing of its business operations on the Hong Kong market has manifested, the country's policy-makers have firmly grasped the essential role that the market plays in developing the media industry.
Overseas investors' enthusiastic response to the first listing of a Chinese newspaper is surely predictable.
Think about this. Growth in China's advertising market, the world's seventh-largest, has exceeded 20 per cent a year for the past 10 years. Newspapers account for about one third of total advertising spending in China, with revenue growing at more than 25 per cent a year.
According to China's WTO commitments, foreign service suppliers will be permitted to engage in the distribution of books, newspapers, magazines within three years after the country's accession.
Fierce competition from foreign companies in the domestic media market will soon arrive. In this sense, the Beijing Youth Daily's Hong Kong listing is a needed response to the inevitable challenge domestic media will face.
The latest effort to reform the domestic media industry shows that, three years after its WTO entry, China has grown much more confident about its integration into the world economy.
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