That's China dies, again
China Intercontinental Press (CIP) has once again bagged its That's China title. And along with it goes the magazine's entire staff.
The publisher, which is linked to the Chinese State Council, says they pulled the title for "restructuring." Yet one former employee holds a different view: "the real reason [for the shutdown] is we've begun making a profit and started building the brand; the press obviously does not want to share the cake with other investors," a former editor notes.
It isn't immediately clear who the other investors are.
Still, this has a familiar ring to it.
In 2004 CIP, the publisher of the That's series in Shanghai, Beijing and Guangzhou, sparked a legal battle with Mark Kitto, the then CEO of the three publications. Seeing the huge profits the monthly English language listings magazines were making, the Chinese publisher launched a rival title, That's China. That the new title directly infringed on the That's brand name and duplicated its content was of little concern to CIP. In an article titled That's China in Prospect magazine, the rightfully embittered Kitto explains what happened:
After seven years building up a magazine empire in China, I had it stolen by the state. I lived in the grey zone that is China's media business and, despite my commitment to the country, paid a high price.
The price does indeed appear to have been high. He later continues:
The three that's magazines I had built from an investment of $20,000 were turning over $4m a year, with annual profits from Shanghai alone of half a million, ploughed back into the business. Once Beijing broke even, I would be in the money. I was managing 120 staff and four offices, and printing magazines with combined circulations of almost 100,000 a month. But they existed only on their own paper. No one owned them. Not me, not one of the many publishers I worked with, none of the advertising agencies I put my business through, not even government agencies like Yangzhou news, which sheltered us. The publisher, now China Intercontinental Press, held the licences, which I rented from them. I owned the trademark to the that's name, my trump card, and I controlled the operation of the magazines from a grey zone between official sanction and popular appeal.
That's China continued publishing for a time, only later to fall off the radar. It appeared again as a direct mail magazine under the same name in the middle of 2007, this time without duplicating content.
Much of the CIP's influence on these publications has to do with it holding their publication licenses, called kanhao (刊号) in China. It is extremely difficult to obtain a legal license, leaving few options for those hoping to enter the business. Many operate without one, which usually doesn't last long. Another choice is partnering with an exiting title and renting their license, but this kind of arrangement often sours. Danwei has excellent posts about the kanhao system here and here.
Before its second wind faded, That's China was available at large hotels across the country for free. There were also plans to make it available internationally. Will the "restructuring" give That's China a Third Coming? Some things, it seems, are not meant to happen. Working with CIP is surely one of them.
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China's publishing industry is heavily restricted when it comes to foreign ownership and it is this that causes the bulk of the problems. Then again, when Carrefour first came into China, they were operating in an arena that was supposed to be excluded to foreigners and look where they are now. The key is that if you you are going to engage in a business prohibited to foreigners or even just engage in a busines that is otherwise illegal (for example, my firm has a client who profits from an office building that is on property that is to be used only for a hospital), you should be sure to account for the risk of getting closed down tomorrow when formulating your business plan.
Episodes like this illustrate the reason why so many talented people in this nation opt for the relative safety of the State’s teat, rather than bringing their badly needed skills into this crazy, crazy world.
The problem is, just like those kids the teachers wouldn’t leave alone, these bright folk leave college and take their enthusiasm and drive through the gates of the state-run media outfit, and there they meet the mincing machine.
Faced with a working environment that… (no need to elaborate here, I think)… the poor employees wind up in a situation where they count as the major achievement of their day a victory in the latest petty office squabble, getting away with watching an entire episode of “Lost” while on the clock, or the subsidized slop served up as lunch in the office canteen.
The sad result is that those without major management-inducing guanxi end up with the life blood sucked out of their previously sparkly souls, waiting till the age of 60 arrives, when they can go and play with their birds in the local parks and eat baozi on the State’s tab. What a great reward for a lifetime’s effort.
But hey, ain’t that better than that there predicament at that’s?
I regard Mark Kitto as a friend, and I definitely feel for him with what happened, but you're really only telling one side of the story here. To be fair, when they swapped backers they were given 4 publishing licenses and expected to do a national title along with the three city titles, but didn't direct put much into the national title, which if anyone remembers it was extremely thin, made up of recycled content, poorly distributed and had virtually nothing by way of advertising. Mark knew they were working on a national edition -- they even advertised for editorial people in the pages of that's Beijing -- and yes, it was a shocking surprise and a slap in the face when they unveiled the new title under the "that's" brand. (Yeah, it was pretty awful, and didn't do much for the brand!). I fully understand why he was pissed off.
But what he did next wasn't the brightest thing, in my opinion. Mark started sharing the story of his betrayal with the press (I recall Interfax ran the story first, though he shopped it to a lot of outlets). He had to know that he was poisoning his relationship with his publisher, and that, as he points out in the quote you use, they held basically all the cards. To make matters worse, he wasn't exactly discreet about discussions he was having with other publishers, like the Tom Group. CIP was bound to find out, and bound to start rounding up confederates within the that's Shanghai organization. When he was locked out by the coup plotters, well, as they say, that's China.