Finally the Prospect of Some Real International Action

BEIJING --- As usual, the December issue of CMM provides us with a chance to review the year in Chinese media and look forward to the year ahead. For many years, looking ahead has looked very much the same as looking back as the government controlled media structure continued to fail to provide reasonable opportunities for international companies.

Even the financial and creative input provided by the internet explosion failed to affect the core media structure inside China or challenge the prominence of state media players. In the end, it is the Chinese government that has been responsible for making this the first CMM editorial with positive news for long suffering international players.

It is a measure of the huge differences between western media groups and their new fledgling counterparts inside China that while several international companies recently decided to hype their commercially dubious deals with CCTV, little has been reported (outside CMM) about the internal mergers and corporatization of Chinese media. This is despite (or because of) it involving the transfer of billions of dollars of state assets into "private hands".

Although the moves towards group structures provides interested foreign parties with the first ever financial glimpse at some of the properties that are likely to be of interest in the coming years, there needs to be continued consolidation and continued corporatization before the full potential and pitfalls will be revealed in all their glory.

As may be expected, the situation will develop at different speeds in different places. The opening of parts of southern China to Hongkong-based broadcasters is sure to accelerate Hongkong investment into production resources as a Cantonese region develops further.

Shanghai is moving ahead aggressively with its own SMEG model while Oriental Pearl seems guaranteed to remain at the forefront of each stage of the transformation from state asset into vehicle suitable for foreign direct investment (please refer to 'Oreintal Pearl Buys Shanghai TV Guides for US$ 50 Million'). Beijing, meanwhile, is likely to take a more cautious route as the central government focuses on the newly formed China Radio, Film and TV Group (see 'State Media Giant Makes Formal Debut') and looks less favorably at creative solutions developing under its nose.

Elsewhere in the country, those provinces and cities like Zhejiang that fast tracked their operational re-organization will start the next stage (attracting domestic capital through sale of equity in corporatized entities) while the laggards like Sichuan will not have that option until they have completed Stage 1.

This time next year, CMM will be littered with stories of those that have gone too fast or too far, but at least there is now real movement on the inside. A trend that is designed, from the highest levels, to lead to rules of ownership and management that accord to international practices.

As always there is a gulf between the theory and the practice and we cannot ignore that for all the new found corporate enthusiasm at the senior levels, 2001 has been the year of entirely irrelevant superficial re-organization for almost everybody actually working in the field.

SARFT is praying that 2002 is the year of more than superficial accountability to them and to the new corporate ethic. If it is not, all the Oriental Pearls in the world will not help China deal with the true state of its fragmented low value industry.

Indeed, once the legal structures that allow foreign investment are established, foreign investors may well prefer to avoid corporatized options altogether. Digital technology certainly offers the possibility that current cable assets will become obsolete, while the cost of acquiring talent remains artificially low under little changed employment structures at the new groups.  

In all cases, there is now an end game in sight and, for the first time, this provides international companies with the chance to put detailed plans and strategies into place. It has been a long time coming, but now there is no time to lose.