Tucked in a sizable pink box reminiscent of the display case of a wedding day Barbie is not only the October issue of Elle China - its 17th anniversary issue - but also a free gift, a large canvas tote bag in either maroon or khaki that is emblazoned with the word "Elle".

Although this extravagant package may appear to indicate otherwise, what Hachette Filipacchi - an international publisher with 250 titles worldwide and which cooperates with its Chinese partners to publish six titles on the mainland, including Elle - would really like the Chinese readers to notice are the magazine's feature photos from the first fashion shoot in China's Forbidden City.

In the fiercely competitive mainland market, where price wars and gift giving have compromised the profitability of industries from electronics makers to credit card issuers, the rise of the cover gift strategy to entice magazine buyers is a cause for alarm. But Hachette Filipacchi's Asia Pacific Chief Executive Officer P. Victor Visot, believes that the fight for readers lies in the content.

"You can sell a magazine by adding some gift with the cover, but this does not create loyalty."

Competition: international and local

Hachette Filipacchi has nearly two decades of experience in China's mainland, bringing it in close contact with the dramatic changes to the mainland's magazine reading audience. Where once there was an almost "natural acceptance" of foreign titles based mainly on their international prestige, with continued economic development and its effect on purchasing power and travel access, mainland readers have gained a clearer grasp of what they want. Consequently, Visot says that the magazine market has become further segmented - titles focus on beauty, automobiles, travel, etc - as companies look to better serve the needs of contemporary Chinese, thus opening more room for new titles.

"China is getting more and more sophisticated because readers are more sophisticated. They are more experienced with fashion, lifestyle... (They) want more."

As such, the mainland has become a real strategic market for Hachette Filipacchi, as well as other multinational publishers.

Statistics on the website of the International Federation of the Periodicals Press (FIPP), a publishers group with 209 members in 53 countries, reveal that there are 8,000 plus magazine titles circulating on China's mainland today. Although only a fraction of these are truly competitive and growing, Visot notes that in the last two years, more than 15 new titles in the wide-scope lifestyle segment have been introduced.

Comprising the successful group are undoubtedly many of the approximately 40 or more international titles, such as Hachette Filipacchi's Elle, Marie Claire, Woman's Day, and Car & Driver, and other well-known magazines such as Cosmopolitan, Harper's Bazaar, and the newest market entrant Vogue.

Because of deficiencies in circulation auditing, data on magazine sales are not wholly reliable, though some surveys have shown that international titles lead the market. Visot says that Hachette Filipacchi's titles average about 10 per cent circulation growth a year.

While the international magazines have done well, Visot also speaks highly of local competitors, noting that Chinese publishers have in a short period of time learned to make good magazines.

And there is much to contend for.

Last month Nielsen Media Research released a report indicating that advertising spending in China in the first half of 2005 was US$17.7 billion, a 20 per cent jump from the same period of the previous year. The FIPP estimates 30 to 50 per cent year-on-year growth in advertisement spending in major magazine categories.

Without revealing specific numbers, Visot states that Hachette Filipacchi outperforms the average numbers.

Gifts vs content

Whether it can continue to perform well will depend greatly on how it is received by the new generation of readers on the mainland, many of whom are inclined to explore their choices before making a decision.

At this point, competition hasn't been on price (by law, cover price is fixed for the year). Rather, cover gifts - free items provided with the magazine - have become very popular. This international practice had appeared on China's mainland earlier, but really took off in the last two years as it has proved to be a very attractive element among magazine buyers.

Hachette Filipacchi offers gifts three or four times a year, approximately one per season. Issues with gifts generally see a boost in sales.

But gifts add to the cost of producing the magazine, and if this strategy is used too aggressively it could erode margins, an all too common occurrence on the mainland.

Visot recognizes the danger of this trend - "a problem in certain countries in Europe" too - seeing it as a double-sided promotion strategy that can distract attention from the real product.

"We don't want to build a position where we sell the gift and offer a magazine".

Predicting that "Chinese readers, whether they are male or female, will be more demanding", Visot would rather take the fight to what is actually inside the magazine.

"The real battle is a matter of content," he said.

Content has changed quite significantly over the years, with the importance of local content growing. Though he wasn't with the company in 1988, when Elle was launched on the mainland, Visot indicates that the percentage of local to international content was 30 per cent to 70 per cent, respectively.

This has changed over time, and at present is completely reversed (70 per cent local to 30 per cent international). Not only does Elle China's editorial team have a great degree of autonomy - a rule that applies to any addition of Elle in the world - it is free to take material from Elle's international network to access all articles that have been published in editions of Elle from around the world, spanning 37 countries.

"It's important for Chinese readers that they have a full range of information coming from everywhere," says Visot.

But it all comes back to serving the needs of local readers. This is why the local editorial team is so important, especially in the mainland's rapidly changing environment.

The sensitivity of editors in understanding the place they live, what people think, why they buy things, is necessary for the magazine to fit the market, says Visot, and adapting when there are changes.

"Chinese readers want to have content which is related to their life. They like to open the window to watch the world, other experiences... as long as this applies to their way of life. They are extremely keen to know what is in their own country. This has made real change in the past years."

And the payoff?

"There will always be room for (readers) to accept to pay a certain price for what they are looking for," he says.

For the future, Hachette Filipacchi "intends to introduce more, and as much as possible". With hundreds of titles worldwide, the publisher has a huge reservoir of titles which could be used on the mainland.

In 2004, this meant launching two titles - Elle Decorations and 25 Years. The company now has plans to introduce three new titles in 2006, with Visot only saying they "might not be female fashion magazines, might be something different, really different".

(HK Edition 11/10/2005 page4)