In an investment that extends its reach in traditional media and echoes moves by Western business tycoons, China’s largest Internet company has taken a stake in an independent business magazine that has a reputation for pushing the boundaries of the country’s authoritarian leadership.
It was announced yesterday that Tencent bought a stake in Caixin, rumored to be 20 percent for about $8.9 million (RMB56.5 million). On hearing the news, the first question that sprung to my mind was, “What on earth could Tencent want in a business mag like Caixin?”. In the US, that would be like Google investing in Forbes.
As it turns out, there’s a lot about Caixin that Tencent might be attracted to. For a start, it could be that Tencent has a genuine interest in helping to build up a respected business news network in the style of CNBC or Bloomberg, reckons Bill Bishop, a Beijing-based analyst who co-founded, and later sold to Dow Jones, the financial news service MarketWatch.
TV financial media in China is “all crap,” says Bishop, and Caixin has the editorial resources to build a credible offering. Tencent’s money and ability to connect with hundreds of millions of users would help that.
While Caixin’s primary product is a magazine, it has increasingly been moving into video, in both Chinese and English, as evidenced in a recent on-camera interview with the Guardian’s outgoing China correspondent, Jonathan Watts. If Tencent were to start distributing Caixin’s video content on its platform, that would give the media group “massive reach,” Bishop says.
Business content is also highly sought after by advertisers, says Bishop, and Tencent, which used to be a laggard in advertising, has in recent years become one of the largest display advertising companies in China.
While it is far from becoming a traditional media company, Tencent, which apparently has more money than it knows what to do with, is taking an increasing interest in business outside the immediate borders of the Internet. For example, it has already started investing in TV and film, most notably with a $69 million investment in film Huayi Brothers.
For its part, Caixin says Tencent won’t have a role in its business operations. “It’s just an investment,” says Zhang Lihui, Caixin’s vice president for public relations. “They hold some of our shares, but they will not interfere in our daily operations, including editorial.”
Zhang says Tencent already distributes some Caixin content through its portal, QQ.com. She says the publisher will have increased strategic cooperation in the future, but what form that takes hasn’t yet been decided. “They have a very big platform, a very big audience. We are very interested in that part. We may find a lot of ways to cooperate.”
It’s also possible that Tencent’s founder, Pony Ma, sees the investment as a prestige play. Caixin reportedly has strong support from a particular person high up in China’s government. Plus, there’s the added cachet of having a stake in a respected news title, which is why Rupert Murdoch pursued the Wall Street Journal for so long before acquiring its parent company, Dow Jones. In similar moves, Facebook co-founder Chris Hughes recently bought a majority stake in The New Republic, and Sidney Harman bought Newsweek (mind you, that only cost him a dollar).
Media watchers will be keeping a close eye on Caixin for any evidence of Tencent encroaching on its editorial independence. For now, though, it seems the magazine is better placed than most publications to resist any inappropriate overtures.
Caixin’s hard-driving editor, Hu Shuli – who has been profiled in the New Yorker – is a totem of respect in the international journalism community and is admired for her ability to push the limits on what the often heavy-handed government will allow. She started Caixin in 2009 after leaving her previous magazine – called, similarly, Caijin – following a dispute with the owners, who had come under pressure from Communist Party officials to temper its aggressive journalism, according to the New York Times. If anyone in China will resist any potential meddling in its editorial operations, it is her.