The massive size of the Chinese market is a fatal attraction for foreign capital, as every investor dreams of entering the Chinese market. Unfortunately, for many people, such as media mogul Rupert Murdoch, it remains nothing but a dream.
Not long ago, Murdoch’s company News Corp announced that it was selling a controlling stake in three Chinese television channels to China Media Capital (CMC), a private equity fund formed with government backing. Some analysts say this might be the crucial first step of the company’s withdrawal from the Chinese market, a tacit acknowledgement that the group’s efforts to expand into the Chinese media market in recent years have been in vain.
This failure comes at a cost, as the transaction price of the shares fell far below the actual value. In other words, Murdoch paid a considerable price for his misjudgment.
The mistake Murdoch made was his belief that China’s media market was a real market in which investors can invest, acquire other companies, expand their presence and earn a profit based on the rules of a market economy. Reality proved that he was wrong. He misjudged three crucial factors.
First, China’s liberalization is directed by policy concerns, which means that it is restricted. The control of freedom of expression is the Chinese government’s most fundamental concern. Total control of opinions is crucial for the continued rule of the totalitarian government. It is the untouchable lifeline on which its survival depends and this is something the Chinese regime is fully aware of.
Consequently, thought control is almost everywhere in China. In the fields of entertainment, fitness, beauty and other such sectors in which foreign investors and mass media think they can have a share, the Chinese Communist Party will not let go if it suspects that it may lose control. The so-called “anti-vulgarity campaign” recently launched in China serves as an example. Given this kind of logic, how could Beijing possibly be expected to allow foreign capital to break into its media market?
Murdoch’s company had spent a lot of time and energy on his endeavor after entering China 20 years ago, but he has now been forced to withdraw in disappointment. This is clear evidence that unless there are changes in the political environment, it will be impossible to enter the Chinese media market.
Second, even if we put aside political restrictions for now, foreign investors trying to enter the Chinese media market will encounter strong competition from local vested interests. The main founders and investors of CMC, which is buying Murdoch’s three TV channels, are all Chinese media groups with strong financial investment or cultural media background, such as Shanghai Media Group.
The media sector is very different from the infrastructure or financial sector, which can be completely dominated by capital, technology and management. As a kind of cultural industry in itself, the development of the media business is even further restricted by cultural background, wide contact networks and local conditions, and these are all aspects that make it difficult for foreign investors to compete with local media groups.
Third, many foreign investors seem to have misunderstood China’s reform and liberalization. As they saw China developing capitalist markets, they made the mistake of thinking they can judge this country using the same standards they apply to market economies. They failed to see that apart from market development, other aspects of China’s reform are still very underdeveloped.
Take policy stability for example. There is no guarantee of policy stability because the systemic foundations are missing. As a result, changes in policy direction and political atmosphere, as well as personnel adjustments, will have a significant influence on the media market, a market that is very easily affected by non-economic factors. The level of uncertainty is highly pronounced in the media market. I think this is something Murdoch and his group have experienced.
China is in great need of foreign investment — in other words, money. However, foreign investors, including investors from Hong Kong and Taiwan that have long dreamed about the Chinese media market, must understand clearly that power still outweighs money in today’s China.
This is the greatest difference between the Chinese and Western economies.
Wang Dan is a visiting assistant professor at National Tsing Hua University’s College of Humanities and Social Sciences.
TRANSLATED BY EDDY CHANG
US aerospace company Boeing Co has in recent years been involved in numerous safety incidents, including crashes of its 737 Max airliners, which have caused widespread concern about the company’s safety record. It has recently come to light that titanium jet engine parts used by Boeing and its European competitor Airbus SE were sold with falsified documentation. The source of the titanium used in these parts has been traced back to an unknown Chinese company. It is clear that China is trying to sneak questionable titanium materials into the supply chain and use any ensuing problems as an opportunity to
It’s not every month that the US Department of State sends two deputy assistant secretary-level officials to Taiwan, together. Its rarer still that such senior State Department policy officers, once on the ground in Taipei, make a point of huddling with fellow diplomats from “like-minded” NATO, ANZUS and Japanese governments to coordinate their multilateral Taiwan policies. The State Department issued a press release on June 22 admitting that the two American “representatives” had “hosted consultations in Taipei” with their counterparts from the “Taiwan Ministry of Foreign Affairs.” The consultations were blandly dubbed the “US-Taiwan Working Group on International Organizations.” The State
The Chinese Supreme People’s Court and other government agencies released new legal guidelines criminalizing “Taiwan independence diehard separatists.” While mostly symbolic — the People’s Republic of China (PRC) has never had jurisdiction over Taiwan — Tamkang University Graduate Institute of China Studies associate professor Chang Wu-ueh (張五岳), an expert on cross-strait relations, said: “They aim to explain domestically how they are countering ‘Taiwan independence,’ they aim to declare internationally their claimed jurisdiction over Taiwan and they aim to deter Taiwanese.” Analysts do not know for sure why Beijing is propagating these guidelines now. Under Chinese President Xi Jinping (習近平), deciphering the
Many local news media last week reported that COVID-19 is back, citing doctors’ observations and the Centers for Disease Control’s (CDC) statistics. The CDC said that cases would peak this month and urged people to take preventive measures. Although COVID-19 has never been eliminated, it has become more manageable, and restrictions were dropped, enabling people to return to their normal way of life due to decreasing hospitalizations and deaths. In Taiwan, mandatory reporting of confirmed cases and home isolation ended in March last year, while the mask mandate at hospitals and healthcare facilities stopped in May. However, the CDC last week said the number