Competition in Chinese Newspaper Industry
What was the point of the economic reforms in
China? A central premise must be that competition is good, because it
brings out the best elements by the process of natural selection. In the
newspaper industry, the forces of the market are released and the successful
newspapers will be the one who have bigger circulation and more advertising
How do you get bigger circulation? Having
better editorial content helps, but there are other things that can be
done. In The
Beijing News (September 11, 2005), some other ways are listed:
- Low prices. A newspaper with 60
pages may cost 3 RMB to print, but it is being retailed at 80 cents.
The newspaper kiosks also push the newspapers by offering package deals: 50
cents for two newspapers; one RMB for four newspapers. Some newspapers
offer fifty percent discounts on subscription. Other newspapers
increase the number of pages without price increases: 32 pages to 64 pages
to 80 pages to 96 pages or even 100 pages. Some newspapers offer
special rates, such as an annual subscription price between 45 RMB and 55
RMB with about 70%-80% going to the distributor. The newspapers
themselves get very little. The most extreme case is a provincial
newspaper which advertises "Zero RMB for subscription: news for
- Promotional gifts. These come
in a variety of forms: free rice, free noodles, free wine, free tea, free
cash, free coupons and raffles for cars and apartments, but the value of the
gifts has been going up. Ordinarily, the gift value for a 50 cent
newspaper may be as high as 1.50 RMB. On the fourth day of the debut
of one provincial newspaper, it announced: "Sign up for one subscription
and you will receive a gift package valued at 128 RMB." That gift
package included white wine, drinks, tea seeds, etc. Other newspapers
send flyers that say: "Why receive rice or cooking oil when you can get
cash instead?" and claim that a newspaper subscription will earn a 100
RMB coupon at a certain large shopping mall.
- False information. In order to
attract readers and advertisers, the newspapers play with their circulation
numbers with exaggerations. They even publicly show false numbers to
mislead readers and advertisers. In addition, many newspapers
increased the number of advertising pages but without monitoring the
contents, causing a lot of scams and false advertisements to appear.
- Mutual Attacks. In the streets,
the distributors disrupt the competitors, sometimes even getting into
physical fights. The editors and managers scrutinize the competitors
and look for errors. They even mobilize public opinion against the competitors.
So, was all this for the good?
Alas, the invisible hand of the market is going
to be cut off. On August 24, the Central Propaganda Department, the State
Council's Office of Rectification and the General Administration of Press
and Publication issued a joint "Notice concerning the development of rules
and regulations on newspaper distribution procedures." The notice
demands the various departments to implement steps to regulate the distribution
of newspapers. The newspapers themselves are asked to discipline
themselves, to maintain the orderliness in distribution, to monitor and inspect
and to develop long-range effective systems.
How does a true free market (say, Hong Kong)
deal with these problems?
- Low prices. Well, three
newspapers (AM 730, Headline Daily and Metro) are given away for free.
Each newspaper has its own business and bottom line. If a newspaper
can continue to make a profit by free distribution, then why not?
There is nothing that says consumers must pay for newspapers. After
all, broadcast television is distributed for free.
- Promotional gifts. Same as
above. If a newpaper can continue to make a profit with promotional
gifts, why not?
- False information. In Hong
Kong, there is an independent Press Council, which promotes professional and
ethical standards of the newspaper industry and deal with public complaints
against newspapers. In addition, the government may also step in
to invesigate violations of the Control of Obscene and Indecent Articles Ordinance.
Beyond that, private citizens can sue for libel. Similar laws must
exist in mainland China with respect to false information, but the
enforcement does not seem vigorous and consistent. Self-discipline is
not going to work unless it is obvious that there are consequences with
certainty and no ambiguity -- if you won't do it yourself, someone else will
do it to you and so you are better off doing it yourself.
- Mutual attacks. It is a bad
thing to see fist fights in the streets every morning for sure, but that has nothing
to do with newspapers per se. This might also occur with
restaurants, for example. There are criminal laws to take care of
that. As for opposition research, if the media act
as the monitor of the government, then who can act as the monitor of the
media except itself?