Newspaper Could Help Rebrand China Abroad
They say money can't buy you happiness. Though really, the atmosphere on that spring evening in 2017 was already quite good. First, there was a drinking contest, like there always was at the annual South China Morning Post staff dinner. But this time, it really was about the money. The table with the hard-drinking journalists won the equivalent of 150 euros, someone who was in attendance would later say.
A raffle followed. And parent company Alibaba gave away not one, but two, main prizes during the course of the evening. And it did so simply because the raffle was so popular with its employees.
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Internet giant Alibaba bought the newspaper at the end of 2015 -- and it's not just any old rag. The South China Morning Post, founded in 1903, is the oldest and most important English-language daily in the former British crown colony of Hong Kong. Traditionally, it has been a bastion of free press in a China that otherwise isn't all that free. The paper is read by diplomats and bankers, and it's an institution among foreigners living in Hong Kong.
But like so many other newspapers, it too had been struggling with shrinking circulation and falling revenues in recent years. That is, until Alibaba showed up and bought the publication from Malaysian entrepreneur Robert Kuok for $266 million.
What's In It for Alibaba?
Since then, many have been scratching their heads over the logic behind Alibaba's decision to buy the newspaper. Why would a company that generates annual revenues of 32 billion euros through e-commerce and financial services be interested in a local Hong Kong newspaper with a modest circulation of 100,000?
Some suspect that Alibaba founder Jack Ma may be seeking to emulate another internet billionaire: Amazon founder and CEO Jeff Bezos, who is also the publisher of The Washington Post. Others speculate that the Chinese government is behind the deal. They claim Beijing wants to tame a critical voice in rebellious Hong Kong. A third interpretation is that the South China Morning Post is part of a Chinese public relations offensive. The country, long focused primarily on itself, is increasingly looking beyond its own borders. And Beijing is starting to make investments that go beyond foreign companies and ports. It is now seeking to polish its international image. China wants to be liked and better understood.
Whatever the case may be, the reorientation of the South China Morning Post offers a textbook lesson on the clash between the old and the new. Alibaba wants to turn the newspaper into a model digital company that demonstrates how media transformation can succeed.
Staff at the South China Morning Post first learned of the sales rumors through other media and the mood initially fluctuated between fear and relief. Employees were concerned because their newspaper would belong to a Chinese company for the first time. Despite all the difficulties, they were proud of "SCMP," known as it is for reporting on issues that are taboo for the mainland Chinese media: issues like the Tiananmen Square massacre in 1989, the death of dissident Liu Xiaobo, Tibet and Taiwan.
Beijing Exerting Increasing Influence
The staff feared the South China Morning Post would be subjected to the same fate as Hong Kong. Since it was handed back to China in 1997, the vast city has been granted a number of special rights. The internet isn't censored, the people can hold protests and the press can report freely. But many of these freedoms are being eroded. After protests in 2014, Beijing began exerting increasing influence over Hong Kong.
But the editorial staff was also relieved when they heard that Alibaba would be taking over the paper. Because everyone working there knew that things couldn't continue going the way they were.
A number of employees had fled to better-paying jobs, leaving the newsroom understaffed and the remaining team overworked. Some described the editorial offices as a lightless "shithole." One prankster even taped a photo of a rat on the wall, which apparently felt quite at home.
Two years later, at least one thing is certain: No one need worry any longer about the South China Morning Post's financial condition. The editorial operation has been flush with cash since the company's acquisition by Alibaba.
It's a Tuesday in July, and Gary Liu, 35, collapses into the sofa in his corner office. Liu, a youthful, somewhat slight man, has been the South China Morning Post's CEO since 2017. His office, a glass box, resembles an island in the middle of the stream of news.
SCMP just moved offices in February. The new newsroom extends over open floors, connected by a flight of wooden stairs. There's a TV studio, a podcast studio and a coffee bar that looks like a branch of Starbucks. The newspaper has hired more than 300 people since the beginning of 2017 -- many of them journalists but also dozens of techies.
Turning SCMP into a Global Media Brand
Gary Liu, a native of California and former Spotify executive, says it's his job to turn the South China Morning Post into a global media brand, the platform that explains China to the world -- that's the mission Alibaba has given him. Liu doesn't see it as a problem that people in mainland China can't even read the news site legally because censors have blocked it. After all, he notes, there are more people living outside China than in it. That's the order of magnitude in which the staff at SCMP is now thinking.
Given the difficulties of financing journalism on the internet through advertising alone, a growing number of news sites are now demanding money for their articles. But Alibaba has instead bucked that trend by pulling down SCMP's paywall. Since 2017, the website's international reach has quadrupled, says Liu. Its largest market is now the United States, which is home to every third reader. Only one out of five readers is located in Hong Kong. SCMP still isn't profitable, but it doesn't have to be either given that Alibaba has also bought something else for the paper: time. Executives at the e-commerce giant say the company gives new platforms up to seven years before they are required to turn a profit. Until then, it wants the newspaper to focus on developing new products and revenue models.
Shortly after the purchase, Alibaba assured readers in a letter that the newspaper pledged to provide "objective, accurate and fair" journalism. The letter stated that editorial decisions would continue to be made in the newsroom and not by the supervisory board. It also claimed that Jack Ma would stay out of SCMP's operations altogether. So far, Ma has only visited the offices once. And he only did so because he had been in town for another appointment.
Still, it remains unclear what the future holds for the South China Morning Post. The paper still reports extremely critically on issues that the Chinese state media avoids. When the widow of Nobel Peace Prize winner Liu Xiaobo was allowed to leave the country for Germany in early July, the newspaper dispatched several correspondents to Berlin.
On the other hand, comments made by Alibaba executives after the acquisition were jarring. Executive Vice President Joseph Tsai, for example, has complained that the Western media reports on China in a biased and one-sided way because they disagree with communism. He has said that the South China Morning Post should report on things "as they are."
Critics Say Paper Has Changed
Many observers in Hong Kong say the newspaper has changed since Alibaba issued that journalistic mandate to SCMP. They say it now provides more space for pro-government editorials and at times seems to violate its own self-imposed principles of transparency and independence on hot-button issues.
One such instance involved Shirley Yam. For 11 years, she was one of the newspaper's best-known columnists, writing about machinations in the business world each week. Such intrigue was also the focus of her column on July 18, 2017, in which she described the connections between the daughter of a confidante of President Xi Jinping and an investor. The story was complicated, but it had a clear message: A high party official may have secretly transferred his assets to Hong Kong.
The South China Morning Post printed the article and posted it online until its sudden disappearance from the website at night. It had been replaced with a statement from the newspaper claiming Yam's column hadn't met its standards for publication and contained "multiple unverifiable insinuations."
If you ask Executive Editor Chow Chung-yan about possible attempts by China to interfere, you get a remarkable answer. The newspaper has excellent relations with all kinds of governments, Chow says. "If they feel misrepresented, they call us and ask for a meeting." It's only Beijing that we never hear from, he says. He adds that he wishes that were different.
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China's government is concerned about the country's reputation. It has taken a beating, and not just since Donald Trump's declaration of a trade war against the country. That's why Beijing is now pumping billions into a state-steered media apparatus that is supposed to spin the story of China's miracle to foreign audiences. It wants to have a significant voice in the debate as to whether the world should fête or fear China's rise.
Although the South China Morning Post is a privately owned company, it would still suit its owners well if the world had a better opinion of China. Alibaba currently generates the lion's share of its revenues in China. But the company would like to conquer foreign markets in the future and become a global player. The most plausible explanation is that Alibaba acted out of a mixture of patriotism and self-interest when it acquired the newspaper.
Describing the ideal relationship between companies and the government, Jack Ma has said something along the lines of: "Go ahead and flirt with it, but don't marry it."