At the old Beijing Hotel back in 1985, the most efficient way of communicating with the outside world was the dusty telex room. Messages were first drafted on an ancient Flying Fish manual typewriter and then passed to a telex operator for not always accurate transcription onto punch tape. Telephone calls – on bugged phones – to the rest of the world had to be booked in advance and could be put through to the guest rooms at any time within a window of about three hours.
Fast forward to 2010 and mobile phones will be turned on as soon as aircraft wheels hit the tarmac at Beijing’s massive new international airport, a Norman Foster building which makes his Heathrow Terminal 5 look like a modest garden shed by comparison. iPads will be on show using the wi-fi in Starbucks although signs of the old China may still persist as you find internet access blocked to some news and current affairs websites not to mention subversive networks such as Facebook.
Colossal transformation
After 25 years based in Hong Kong in the publishing, business media and events industries, I am returning to Europe for an exciting new job. My time in Asia has marked one of the most colossal transformations in the balance of world economic power ever seen. Back in 1985, the United States ruled the roost with Japan as the rising power which frightened most people the most. Europe bumbled along in a muddling, bureaucratic and relatively unexciting way, much as it does today. Korea, Taiwan, Hong Kong and Singapore were the Asian Tigers manufacturing most of the world’s consumer goods. China was just over five years into the “kaifeng” open door policy and although things were changing, everything there was potential and most people around the world doubted that potential could ever be realised.
There have been stumbles along the way: the Chinese student protests of 1989 and subsequent crackdown put everything on hold for a couple of years and killed the ambitious, but premature young magazines I was responsible for publishing in China at the time. The Asian financial crisis of 1997/98 temporarily derailed what had seemed like the unstoppable train of Asian growth (although China escaped that meltdown) and SARS in 2003 emerged from some of the dodgier food markets in China and scared the world.
The story of Asia’s growth in the past 25 years and the emergence of China as a real world economic power has been often told and this article is not the place to re-tell it. But clearly, as the rest of the world continues to struggle with the impact of the recent economic and financial crises, we are seeing the major nations of Asia stepping up for the next round of growth. Business opportunities, if anywhere, will be emerging in the most interesting ways in Asia.
Economies of scale
Parallel to this economic transformation has, of course, been the transformation of communications technology. The impact of hundreds of millions of mobile phone users in China, India and Japan on how information and media are consumed is only just beginning to be understood. The fact that digital natives are coming into the workforce now in all these countries, the generation which cannot remember a time before the internet, will transform again how media is consumed across Asia as it is transforming the industry in the rest of the world.
And the numbers are staggering; there are now over 400 million internet users in China alone, close to the entire population of the EU. At the last count, there were 786 million mobile phones there, almost 20% of the world total. If somebody is going to work out how to develop the magazine content world on a mobile screen, it’s more likely to be in China than anywhere else. That is, after all, where the money is today.
What lessons have I learned in all of this which may be useful to publishers in Europe and other parts of the world?
Multiple markets
Firstly, Asia is not a single market. Even China is not a single market. But, the concept that a media consumer in Karachi is doing the same thing according to the same preconceptions as a reader in Taipei is clearly nonsense. Just as there is arguably no European single market when it comes to media and marketing, the same applies to Asia.
And, outside the giants such as Japan, China and India, most of the markets are relatively small which has made developing effective strategies to attack them relatively challenging. For consumer publishers in particular, a good licensing strategy is normally the only approach that makes any sense in lively, but relatively small markets such as Thailand, Malaysia, Singapore, Hong Kong, Taiwan and Korea. Each of them has its own special challenges in terms of regulation, distribution, language and cultural issues.
With this in mind, it is clear that a really well-considered localisation strategy is critical. Even if, as Incisive Media has done with its new financial planning publications in Hong Kong and Singapore, a choice can be made to use English, the content still needs to be localised. Very rarely is it going to be the case that content developed for US or European markets is going to suffice as the core for a publication targeted at an Asian market.
I said: DO YOU SPEAK ENGLISH?!?!
Outside India and Singapore, English is generally going to be a minority language not really suited to anything other than some specialist titles. Foreign publishers have continuously over my 25 years in the region tried to convince themselves that English is the language of the ‘elite’ and that they don’t therefore need to worry about local language. It also provides convenient cover for decisions – normally doomed – to try to launch Asian regional publications. There is not in most cases a market for regionally-targeted advertising and what little there is tends to be scooped up by the in-flight sector. For those in Europe, think Robert Maxwell’s failed European to see a direct analogy as to why this doesn’t really work.
West is not always Best
Another clear lesson of the 25 years in Asia is that it is dangerous to assume that well-established western brands are always going to trump local ones. This has happened time and again with magazines. Business Week’s Japan ‘adventure’ in the 1980s is a good case in point where that magazine eventually died and was replaced by the locally-respected Nikkei Business, produced by their former partner. The perils of joint ventures is a topic of another article, but these partnerships across Asia have often proven, to put it politely, fraught.
More recently, the relative weakness of foreign brands has been seen particularly in the online world. In China, eBay, Yahoo! and more recently Google have all failed to overtake dynamic local competition. Taobao, Sina.com and Baidu are all now hugely powerful companies filling those market niches in China and are beginning to stretch themselves into other markets including Taiwan and Japan. That doesn’t mean that foreign brands can’t win. Amazon appears successfully to have transformed its acquisition of Joyo.com into Amazon.cn but the process has been a very cautious and steady one.
And ... not forgetting print
Despite all the excitement about mobile and online competition, it is clear that the major markets of Asia remain both highly literate and very amenable to the use of traditional print media. We have dynamic newspaper businesses in most of the countries in the region. Free sheet competition has been intense in markets like Hong Kong, where Metro’s efforts to launch were followed by four or five of the local newspaper publishers. But paid newspapers continue to thrive in ways largely forgotten in western Europe and North America.
Consumer magazines remain strong in the markets of Asia too although the B2B magazines sector has never been large or healthy and looks unlikely ever to develop in any significant way in terms of print. Companies such as Global Sources (Nasdaq: GSOL) now report half of their revenues coming from online, 30% from events and just 20% from print titles.
And this gives us some indication of where we might look for the competitors of the future: they probably won’t emerge from among the traditional media companies. I believe that the most interesting media businesses will emerge from the internet in Asia to establish exciting new businesses in events, marketing services and, who knows, even possibly print. Top of my list for this is the Alibaba Group, best known for its Alibaba.com B2B website, now listed in Hong Kong and a hugely profitable, fast-growing business. The group also controls Taobao, the eBay busting B2C site, Alipay, a payment service and Yahoo! China. Given their database of tens of millions of active users, they are already providing Chinese banks with credit reports so that small businesses can get loans. Watch out Dun & Bradstreet! Alibaba’s user base is over 30 million strong and growing fast. With a live database that powerful, they have the capacity to launch almost any media product they can imagine.
This is all a very long way from the dusty telex room in the old Beijing Hotel and it has been exciting to watch the emergence of modern media in Asia over that period. Some of the issues media companies face in Asia are the same as elsewhere. In other cases, they’re dealing with the happy challenges of booming economies. That’s a challenge which I’m sure most western publishers would dearly love to be grappling with in the coming months!
