Chinese Party Publicity Inc.' conglomerated: the case of the Shenzhen Press Group

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DOI: 10.1177/0163443706065031 2006; 28; 581 Media Culture Society

Chin-Chuan Lee, Zhou He and Yu Huang Press Group

‘Chinese Party Publicity Inc.’ conglomerated: the case of the Shenzhen

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‘Chinese Party Publicity Inc.’ conglomerated: thecase of the Shenzhen Press Group

Chin-Chuan LeeCITY UNIVERSITY OF HONG KONG

Zhou HeCITY UNIVERSITY OF HONG KONG

Yu HuangHONG KONG BAPTIST UNIVERSITY

In contrast to the pathways of post-Communist transformation in Centraland Eastern Europe as well as in the former Soviet Union (Downing, 1996;Sparks, 1997; Splichal, 1994), China seems to be turning itself intosomething akin to what O’Donnell (1978) described as a bureaucratic-authoritarian regime. O’Donnell was referring to right-wing capitalistdictatorships in Latin America that were intent on using economicdevelopment to quell political participation and to make up for the lack ofa mandate. The authoritarian Asian regimes of South Korea (Park et al.,2000), Taiwan (Lee, 2000) and Singapore (Sim, 2001) were noted forjustifying their suppression of press freedom and civil liberties on thegrounds that economic growth is predicated on social stability. Wemaintain that the concept of the bureaucratic-authoritarian regime isbecoming a useful concept for understanding China in its contested and notalways linear transition from a left-wing to a quasi-right-wing dictatorship.China’s officialdom has attached highly negative connotations of chaos andfailure to Soviet political reform, claiming that its own reform policieshave brought enormous benefits to people and are once again making theChinese nation mighty and proud in the world arena. Yet China’simpressive record of economic growth is achieved at the expense of socialjustice: peasants and unemployed urban workers have been deprived of asocialist ‘safety net’ in terms of jobs, housing, education, medical care and

Media, Culture & Society © 2006 SAGE Publications (London, Thousand Oaksand New Delhi), Vol. 28(4): 581–602[ISSN: 0163-4437 DOI: 10.1177/0163443706065031]



a decent income. Coterminous with China’s embrace of the global capitaliststructure and the rise of nationalistic sentiment, more and more domesticcapitalists have been ordained as new Communist Party members. Preser-vation of power has become the end of the Communist Party, rather than ameans to achieving Communism.

It is generally assumed that marketization goes against the establishedpower, but in fact it may either work with or against the established powerin shaping the function of the media. With major state institutions beingbureaucratized to regulate, accommodate and partake of selective elementsof capitalism, official Chinese media have transformed themselves frombeing propaganda instruments to being what He (2000: 143–4) calls ‘PartyPublicity Inc.’:

The new ‘Inc.’ is oriented more toward political publicity – promoting theimage of the Party and justifying its legitimacy – than toward ideologicalbrainwashing and conversion. More important, as an ‘Inc.’ that is financiallyresponsible for its own survival . . . subject to as much economic pressure aspolitical influence. It needs to attract the ideologically disenchanted audience bysoftening its publicity messages . . . and providing a wide range of informationto respond to market demands. Although such an ‘Inc.’ owes its existence to theaffiliation to the Party and is directed by Party-appointed executives, it isincreasingly staffed by ‘hired’ technocrats whose ideology, interest and loyaltymay differ from those inherently demanded by the Party press.

In sum, the media have abandoned their Maoist role as ideologicalbrainwashers but continue to be vital ideological managers on behalf of theparty-state. Moreover, in the past decade these ‘Incs’ have evolved fromburgeoning quasi-business enterprises into large-scale operations, often inthe form of monopolistic conglomerates. This article attempts to examine,through the case of the Shenzhen press, how conglomeration affects theformation and function of these Party Publicity Incs and the variousimplications of this process.

The making of Party Publicity Inc.

China launched massive social transformation in the late 1970s to savethe Communist Party from its legitimacy crisis in the wake of theCultural Revolution. The collapse of Communism worldwide and theaccelerated globalization process in the 1990s have made media trans-formation seem more urgent (Lee, 2003). In searching for a new sourceof legitimacy, the Chinese leaders have found a partial answer in the‘modernization’ project by opening China up to the outside world andimporting foreign capital and the market economy. The aim of thiseconomic drive is to retain the support of the disenchanted Chinesepopulace for the maintenance of Party rule. In the place of Communism

582 Media, Culture & Society 28(4)



has arisen a globally based ideology of developmentalism, emphasizingeconomic growth to promote social stability and national unity. Thepolicy is nonetheless dualistic, pragmatic and paradoxical: while importingselective elements of capitalism (especially capital, technology and man-agement) to ignite economic growth, the Chinese authorities are deter-mined to prevent challenges to their power and ideology.

After the failed political reform in the 1980s, the Chinese party-state hasbeen pursuing new growth-based legitimacy since the 1990s. In thisprocess, as Zheng (2004) observed, the Chinese leadership has adjusted thepolitical order to accommodate a rising interest-based social order, and hasrebuilt the state bureaucratic system and economic institutions to promotecapitalistic economic development and nurture a nascent market economy.This massive modernization project approximates a crude type ofbureaucratic-authoritarian state capitalism that preaches developmentalismas a new ideology. Bureaucratic capitalism is hardly a novelty in the worldhistory; it is particularly prominent in both traditional and modern China(Meisner, 1996: 300). But the contemporary version is marked by tightcontrol over the economy by a Communist party-state that monopolizesbureaucratic apparatuses, maintains a very close relationship between statebureaucrats and businesses, and results in widespread corruption. Wangargues that, in China, capital is not external to the state; there iscomplicitous coexistence between the two, and the regime has transformeditself ‘from coercive to systemic regulatory instrumentality’ (2001: 98).The party-state owns a vital part of the economy and sets up developmentpriorities and national projects. It controls major resources and the financialsystem; any change in the pricing of these resources and in the allocationof capital may affect entire economic sectors. The state regulates alleconomic activities and can turn economic issues into political issues. Statebureaucrats turn into businessmen or collaborate with them, profitingthrough their connections with the apparatus. The party-state has con-solidated its power and control by way of a fast-growing economy, whichconceals deep distributional conflicts, widespread corruption and othersocial ills.

The extraordinary wealth of today’s media conglomerates contrastssharply with the abject poverty of yesteryear’s Party press. The evolutiontook place, ironically, when budgetary constraints forced the party-state tocut off media subsidies in the early 1980s, thus pushing the media to strivefor financial autonomy. By the end of the 1990s, the majority of mediaoutlets had become not only financially self-sufficient but also profitable.This financial accomplishment came about chiefly because of the phenome-nal growth of advertising revenues – in a monopoly market. Commerciali-zation has depoliticized the media and made them more responsive to theneeds of the audience in an environment of fierce competition (He andChen, 1998). Consequently, the emerging prototype of ‘Party Publicity

583Lee et al., ‘Chinese Party Publicity Inc.’



Inc.’ has become more attuned to business pressure and political demands.Under no circumstances do the media undermine the party-state’s ideologi-cal premises, but, within limits, they have attempted to enhance theirmarket appeal by resorting to softened publicity messages. How is thisseeming contradiction resolved? Based on her fieldwork, Lu (2003: 21)sums it up like this: within a press group, the ‘parent’ papers are, bydesign, oriented toward the wishes of the Party bosses, while the ‘off-spring’ papers cater to the wants of the masses. Likewise, some pages of anewspaper serve the Party while other pages please the market. Partymessages coexist with, but are clearly demarcated from, non-Party mes-sages. This institutional ‘innovation’ can be viewed as part of the statecorporatist policy in which power marries money in a tacit manner.

Besides commercialization, the driving force behind the formation ofParty Publicity Inc. is the fact that the Party leadership seems to havegradually come to view Maoist ideological indoctrination as a lost battle,incompatible with economic reforms. While the party-state retains tightcontrol of the media, it seems to demand only overt compliance frommedia workers; whether they identify with Party objectives or internalizeParty values appears to be of secondary importance. Moreover, the mediaactively profit from the market and their connection with the legitimizingpower of the Party ideology: the media frame enterprising projects interms of Party rhetoric, co-opt the anachronistic propaganda line intomarket and professional logics, and shape media discourses around theoscillating cycle of state control (Pan and Lu, 2003). The Chinese publicis propaganda-weary and deeply suspicious of (or at least apathetictowards) Party ideology, save on the issue of nationalism that harks backto historical memories of collective victimization. Not only are youngergenerations unaccustomed to heavy brainwashing thanks to the reducedemphasis on ‘thought work’ in schools, they also actively pursue theconsumerist culture that has been in the ascendancy since the 1990s. Forthem, the ‘correct’ political line seems less relevant than entertainmentand lifestyle information.

Media conglomeration

Several years before China’s entry into the World Trade Organization(WTO), which was seen as a symbol of China’s coming of age in theglobalizing world, Ding Guangen, then Minister of the Propaganda Minis-try of the Communist Party Central Committee, had forewarned theprotected Chinese media that the good old days would soon be over.Similar warnings were repeated by various officials. The party-state tookthe initiative to absorb the perceived forces of globalization by organizingdomestic media conglomerates, which were made ‘bigger and stronger’ to




pre-empt the anticipated foreign competition. The first conglomerate, theGuangzhou Daily Group, was launched in 1996. Others soon followed.China’s media conglomerates benefited from skyrocketing media advertis-ing revenues, which increased 20-fold to RMB 80 billion (around US $10billion, the exchange rate being US $1 to RMB 8) in the 1990s, with anannual growth rate of 35 percent – a more profitable investment thantobacco (Yu, 2002). In 2004, China had 38 press groups, eight radio andtelevision groups, six publishing groups, four distribution groups and threemotion picture groups. The state policy is moving unmistakably towardfurther media consolidation.

Various accounts have been given of the trajectory of the formation ofpress conglomerates in China (Cao, 1999; Chen and Lee, 1998; Tang,1999; Zhao, 2000); here a few salient points germane to this discussionwill be noted. First, the internal diversification of media organizations,especially within major Party newspapers, has laid the foundation forconglomeration. As the state severed its subsidies to the party-state mediain the mid 1980s, the media were under intense pressure to generateincome so Party organs began to sidestep official restrictions and publisheditorially soft supplements such as ‘weekend editions’.

Second, there was such a serious (in retrospect, perhaps exaggerated)concern over competition from outside in the post-WTO era that mediamanagers rushed abroad to learn how Western conglomerates operate. Theyreturned to echo the official slogan that only by making their own pressgroups ‘bigger and stronger’ could they compete successfully with theWestern media. Having long scorned Western media conglomerates,Beijing suddenly argued that these state media conglomerates, if armedwith sufficient economies of scale, would pre-empt post-WTO foreignchallenges. Foreign trips became so fashionable and glorious that all of themore than 20 newspaper anniversary publications or historical accountsdevoted special chapters to overseas visits of newspapers’ top leaders,while the Chinese Journalism Yearbook listed such foreign trips as animportant item (Cao, 2002).

Third, much of the media conglomeration is fostered by administrativefiat. The most notorious case is the forced merger of the lucrative andpopular human-interest tabloid, Xinmin Evening News, with the party-controlled Wenhui Bao in Shanghai. Elsewhere the party-state sought toreincorporate the core and wealthy Party papers into the state system, andthen shift part of the state’s financial responsibility by forcing them tosubsidize publications that were considered socially important but finan-cially unprofitable (Chen and Lee, 1998). These core outlets profited fromcapital accumulation by crowding out or taking over a chaotic array of‘small papers’ that had repeatedly defied state orders. Furthermore, asmajor units and enterprises rushed to own newspaper licences in hopes ofmaking profits, the total number of papers rose from 1666 in 1992 to 2163




in 1996. Many ‘enterprise newspapers’ were internal publications circu-lated within work units, reliant mostly on forced subscription imposed onemployees to sustain small circulations. In the next three years (1996–9),the party-state launched a project to rationalize the nationwide allocation ofpress resources, and the first order of business was to take control of theperceived fragmentation (san) and chaos (luan) in the press structure. Nonew licences would be issued. An estimated 15 percent of the totalpublications, many of them ‘enterprise newspapers’, were to be dismantledor merged into press groups. Press groups, with Party organs at their core,saw this either as an opportunity for expansion or as a political duty toabsorb failing operations.

Media conglomeration is a hallmark of China’s bureaucratic-authoritarian state capitalism at work. The state is the largest capitaliststakeholder and has a monopoly on the majority of resources, authority andpolicy-making. Media conglomerates’ economic interests are subordinatedto their ideological mission; only by serving the party-state’s politicalinterests would they be granted economic privileges (ranging from taxbreaks and resource allocation and utilization, to political and monetaryrewards). They are editorially and managerially controlled by Partycommittees and are not open to private or foreign investment. But, as longas the media profit enormously from a protected, distorted and anti-competitive market, they have no reason to challenge the party-state’ssupremacy. Media conglomerates are preferred to non-conglomerates, withthe privileges of expanding through takeover and venturing into non-mediabusinesses. The media market has favored the rising constituencies of theaffluent ‘buying’ population in ways that match the logic of globalcapitalism and deviate from the Communist rhetoric of serving theproletariat (Zhao, 2003). The extraordinary profits of Chinese pressconglomerates have come largely through state protection, not through freemarket competition.

The microcosm of the Shenzhen Press Group

To examine the evolution of Party Publicity Inc. in its conglomerate form,we have studied the case of the Shenzhen Press Group. Set up as a specialeconomic zone in 1979, Shenzhen pioneered Deng Xiaoping’s laboratoryexperiment with bureaucratic-authoritarian state capitalism. The success ofShenzhen gave Deng so much confidence that he vowed in 1988 to createseveral more cities like Hong Kong on the mainland. The Tiananmencrackdown in 1989, however, brought the Party to the edge of anotherlegitimacy crisis. As a way out of stagnation, Deng decided to rekindlenational fervor for marketization in his famous southern tour of 1992,during which he used the Shenzhen Special Zone Daily to promulgate his




views, thus propelling the paper to national prominence. Shenzhen owes its‘miracle’ to the full support of national resources and policy, and itsgeographical proximity to Hong Kong gives it privileged access to capitaland technology. Shenzhen draws in a massive and active inflow ofinvestments from Hong Kong, overseas and major Chinese provinces. Itranks with Shanghai as one of China’s two leading export bases and hometo one of China’s two stock markets. Boasting the highest GDP per capitain the nation, Shenzhen has established itself as a major financial center,brimming with strong computer, high-tech and electronic industries. Thecity is also the country’s fourth largest advertising market (6% of thenational total), after the national centers of Beijing (25%), Shanghai (10%)and Guangzhou (10%). Although the newspapers in Shenzhen are notparticularly daring or innovative, the fact that they are situated in the areathat served as the first laboratory for the most daring experiment with themarket economy puts them in a pace-setting position with regard to marketliberalization and structural reforms.

Doing research inside China’s media organizations is undoubtedlydifficult. This article involved the use of two research methods. The firstmethod was extensive in-depth interviews. He (2000), one of the authors,conducted a comprehensive study of the Shenzhen Special Zone Daily inthe mid-1990s, which serves as a benchmark for our longitudinal investiga-tion. For the present study, we interviewed dozens of editorial andmanagerial staff at various levels in the press group, focusing on thedevelopment and impact of press conglomeration. We approached somekey interviewees through personal connections (with whom we havemaintained contacts over the years); others were referred to us by ourfriends or by their colleagues. In all cases, the promise of anonymity wasessential. Furthermore, inasmuch as China is now seeing the emergence oftwo divergent ‘zones of discourse’, in which private conversation can beless inhibited whereas public pronouncement is definitely rigid, we tapedinterviews only when the interviewee was comfortable with this. If tapingwas seen as too intrusive for a candid conversation, the interview teamwould recall the flow of the interview immediately after each session; thereconstructed texts were taped and transcribed. Besides, to gain furtherinsight, we also observed news operations inside the press group.

The second method was based on documentary research. We examined asample of Shenzhen’s papers. Short of having access to ‘confidential’documents (China regards almost everything as ‘confidential’) or internalpublications, however, we resorted to the Internet and downloaded morethan 30 articles written about the Shenzhen Press Group. The first type ofarticle consisted of transcripts of Internet chat sessions attended by thepress group’s top managers to answer questions. Though couched in self-glorifying terms, such texts revealed the top management’s mindset andoutlook. The second type of article was the work of whistleblowers from




within the press group, attacking what they saw as the top management’shigh-handed and unfair policy. The third type of article was analyses ofShenzhen’s press ecology by external observers. All these articles, albeit ofuneven quality, provided useful background leads for framing our interviewquestions, but none was taken for granted. We tried to cross-check factsand identify discrepancies among different stories. Since Chinese statisticson circulation or advertising tend to be unavailable or exaggerated, weasked insiders to provide what they considered to be the most ‘reliable’estimates (Table 1).

In the previous study, He (2000) thoroughly examined how the politicalforces and economic forces stood in relation to each other, and how theyinfluenced various aspects of the Special Zone Daily, including itsmanagement, competition, advertising operation, content and journalists. Inadvertising operations and competition mechanisms, market forces evi-dently prevailed. In management, although political control remained tightat the top level, market forces were gradually pulling the system toward aprofit orientation, as manifested in financing, the hiring and firing ofemployees and the internal incentive system. Individual journalists werefound to be psychologically, physically and ideologically mobile, havingdeveloped a nascent professional norm in tandem with the market forces,while seeing themselves as ‘hired’ Party publicists. Even though politicalconsiderations, vis-a-vis market forces, were an overriding determinant ofthe news content, gradual changes were visible. The scope of coverage wasbecoming broader, while some news frames were beginning to break awayfrom the orthodox Party view. Note that, at that time, the Shenzhen SpecialZone Daily was a newspaper on its own, but now it is part of a larger pressgroup. In the following, we shall compare the structure and function of theParty Publicity Inc. before and after conglomeration.

Conglomerating the Shenzhen press

When the Special Economic Zone was established in the early 1980s, theShenzhen Special Zone Daily was the only paper in town, owned and runby the Shenzhen Municipal Party Committee. This small newspaper cateredto the needs of a fledging city built from a tiny fishing village. As the citygrew, so did the newspaper. From 1982 to 1997, the paper’s advertisingrevenue increased from US $50,000 to US $39 million, making it one ofthe five most profitable papers in the country. In 1991, the MunicipalPeople’s Government launched the Shenzhen Commerce Daily to cash inon the lucrative market. It was positioned almost exactly against theSpecial Zone Daily and targeted an identical readership. The CommercialDaily soon grabbed a sizeable market share to become one of the top 20revenue earners in the Chinese press (He, 2000). By 1997, the city of




Shenzhen had 11 newspapers, 28 magazines and journals, two televisionstations and at least two radio stations with several channels (Cao, 1999).

In 2002, the Shenzhen party-state authorities decreed that the two majorpapers be merged to form the Shenzhen Press Group, presumably to ‘solvethe problems of duplicated efforts and unruly competition’ as well as tomeet the post-WTO challenges with ‘bigger and stronger’ media outlets.The Shenzhen Press Group currently controls eight newspapers and fourmagazines; its total assets and capital are worth about US $625 million,making it among the richest press groups in the country. It is, strictlyspeaking, a single-location press chain supplemented with non-mediaventures, rather than a horizontally and vertically integrated conglomerate.Of the eight papers in the group, four are in the core, and four others aretoo new or too inconsequential to be included in this study. Of the fourcore papers (see Table 1), the Evening Daily used to be a subsidiary of theCommercial Daily, and the Sunshine Daily a spin-off of the Special ZoneDaily. The new group structure puts this quartet on an equal organizationalfooting without the old parent–offspring relationship. The power of theSpecial Zone Daily and the Commercial Daily is thus centralized at the topof the press group hierarchy. A top manager, who has to balance thefinances of the entire press group, described this process as undesirable.

TABLE 1Shenzhen Press Group, 2003

Yearestablished

Circulation(inthousands)

% officialsubscription

Adrevenues(in millionUS $

% in thepressgroup’s adrevenues

ShenzhenSpecial ZoneDaily

1982 320 61% 92 49%

ShenzhenCommercialDaily

1989 270 64% 45 24%

ShenzhenEvening Daily

1994 300 50% 25 13.5%

Sunshine Daily(Jing Bao)

2001 400 49% 25 13.5%

Hong KongCommercialDaily

2002* 130 24% 7.5–10 Inapplicable

Source: Informants.* This pro-Beijing paper in Hong Kong was first forced to close down due to financial hardshipbut then bought by the Shenzhen Press Group.




‘Both papers had an elemental form of conglomeration, why mess themup?’ he asked.

The glistening landmark skyscraper of the Special Zone Daily, over-looking a lush golf course and Shenzhen bay, in tandem with the tallbuilding of the Commercial Daily 2 miles away, symbolizes the marriageof Communist power and capitalist wealth. The Special Zone Dailybuilding is a 46-storey-high glass tower (worth approximately US $100million), one-third of which is used by the paper, while one-third is leased,and the other third has been sold. The imposing grandeur of these buildingsconceals an acrimonious tug of war fought within the press group,particularly over who should get what. All incoming revenues flow into thegroup’s central treasury before the group returns 10 percent of eachnewspaper’s revenue as an editorial fee, while the central group pays for allother expenses. Thus the Special Zone Daily receives an editorial budget ofUS $9.2 million, the Commercial Daily US $4.5 million and the EveningDaily and the Sunshine Daily receive US $2.5 million each. A top managerfrustratedly recounted that, although the Commercial Daily lags five yearsbehind the Special Zone Daily in management, a culture of egalitarianismrequires that the gap in benefits to staff of the two papers be wiped out,thus creating frictions.

Management change

He (2000) described the management of the Shenzhen Special Zone Dailyin the mid-1990s as operating in a mode of ‘political dominance withmarket momentum’. He meant that the Party firmly controlled the topmanagement and the general institutional structure, leaving the marketeconomy to influence the incentive system and financing. After conglom-eration, the Party’s control seems to be stronger at the top. The press groupis managed by a seven-member Communist Party Committee, with threemembers from the Special Zone Daily and three from the CommercialDaily to reflect a balance of power. The seventh member comes from theMunicipal Party Committee to oversee ‘Party discipline’. The committee isheaded by Wu Songying, former director of the Special Zone Daily. HuangYanglue, who headed the Commercial Daily, is next in line to Wu. In atwist, Huang has also been made the chief editor of the press groupincluding his former rival, the Special Zone Daily.

Before the merger, only the Special Zone Daily was the official Partynewspaper. The press group has since brought a variety of publications,ranging from Hot Travel to Autonews, into the expanded Party family. Wehave found evidence that consolidated ownership has exerted a strongmarket impact on other aspects of management. In staffing, the old-timersremain on the cadres’ payroll but new recruits are hired on a contractual




basis. The bonus system, which started in the late 1980s, is now a well-established incentive accounting for a preponderant portion of employees’income relative to their meager fixed salary.

In terms of institutional structure, the Special Zone Daily used to be ledby a team of three, with the director at the helm assisted by a chief editorand a general manager. In the new press group, the managerial side hasexpanded to nine departments, including an operation and managementoffice, a financial center, an advertising center, a development center and alogistics management center. All these departments are supervised by thePress Group Operation and Management Committee, equal in rank to thePress Group Editorial Committee. In the mid-1990s the editorial side ofthe Special Zone Daily was seen as more important than the managerialside. Now the staff on the administrative and managerial side (2000 staff),and the circulation side (2000 staff) outnumber the editorial staff (1200).The group editorial committee, comprising chief editors from the con-stituent papers, meets about once every other week to transmit Partyinstructions and coordinate the overall editorial policy. In April 2004, theEvening News and the Sunshine Daily each carried a story about theoutlawed Falun Gong; the reporter in the former was forgiven but the latterwas arrested. At once, the group assigned ‘watchmen’ to the printer toprevent similar incidents.

More important, the seven-member Party committee of the press groupcares about the bottom line as much as about the Party line. Wu Songying,who heads both the Party committee and the press group, is said to spendthe bulk of his time and energy thinking about profits. It goes withoutsaying that he has thoroughly internalized the political line, but it is equallysignificant to note that he need not devote himself fully to handling whatused to be the exclusive job of a newspaper director: propaganda. If theSpecial Zone Daily strove for financial autonomy in the 1980s, the pressgroup now pursues ever-larger profits. The press group’s first-anniversarybrochure compares advertising revenue profiles of major media conglomer-ates in China, specifically highlighting in bold type its own achievement:RMB 1.9 billion (US $240 million) in 2002, ranking third in the nation.The brochure does not mention any journalistic awards, nor key historicalevents such as Deng Xiaoping’s well-known southern tour in 1992 thatreignited national fervor for marketization after the interruption caused bythe Tiananmen crackdown. The success of the press group appears to bemeasured only in terms of advertising revenues.

The press group claimed it had made US $240 million in advertisingrevenue in 2002, up by 24.8 percent from the previous year. It hasdeveloped a bundling policy: to advertise in either of the big two, amatching ad has to be placed in either of the minor two. Our informantsbelieved that this figure might be inflated. Based on their estimates, thetotal advertising revenue was around US $190 million. Table 1 provides a




breakdown as of summer 2004: the Special Zone Daily garnered an annualtotal of US $94 million, followed by the Commercial Daily at US $45million. Even the Evening Daily and the Sunshine Daily each made aroundUS $26 million. Combined or separate, the flagship papers are still moreprofitable than most commercial newspapers in the neighboring capitalisticHong Kong.

Obviously, conglomeration has consolidated Party control over theownership of the Shenzhen press and the managerial elements of an ‘Inc.’,making it a more controllable, sophisticated and profitable publicity/business establishment. One mid-level manager observed:

Some newspapers play the ‘edge ball’.1 They want to please a handful ofreaders and encourage individualistic heroism among some journalists. Theymisguide public opinion, offend the leaders, and suffer from punishment theydeserve. We don’t. We adhere to the political line and maximize our economicreturns.

He was referring to the Southern Weekend and the Nanfang Metro Daily,which are widely seen as models of courageous reporting but often findtheir chief editors purged.

From duopolistic competition to monopoly

Before the merger, the two major newspapers in Shenzhen were locked inone of the most intense cut-throat competitions in the country. Bothemployed numerous ethically dubious tactics, offering kickbacks andadvertising space, running prize-draw gimmicks, and imposing compulsorysubscription on school children and their parents through the educationalbureaucracy. To boost circulation figures, they printed a large volume ofexcess copies that were given away at a 30 percent discount or even at nocharge (He, 2000). This vicious competition came to a head in 1994–5when the Commercial Daily took on the evening press market, a step aheadof the Special Zone Daily.

The merger has quelled this sibling rivalry in circulation and advertising,while putting the conglomerate in a monopoly position in the Shenzhenmarket. One immediate impact of the consolidated ownership has been toenhance its price-fixing ability. Each of the two papers previously out-smarted each other by offering large discounts to advertisers, in the rangeof 40–50 percent and sometimes up to 75 percent of the cover price. Thediscount is now offered, without exception, at 10 percent, although the unitprice varies with the size of circulation (the Special Zone Daily, unsurpris-ingly, being the most expensive). Six months after the merger, the grouphad already raised the level of its real circulation to 80 percent of theprinted copies, up from 50 percent. Instead of racing to print thicker and




thicker papers, the group imposed a 40-page limit on weekdays and 56pages on weekends.

Moreover, monopoly due to conglomeration has enhanced the group’srevenue-generating capabilities. Half a year after the merger, the group’soverall advertising revenues rose by 20 percent to 30 percent, and, in fact,all four papers saw vast growth in revenues. The first year into the merger,the group reaped an additional US $6.25 million in advertising revenue andUS $5 million in circulation. A top manager noted with pride, ‘In China,only 30 to 40 newspapers have garnered more than 100 million yuan (US$12 million) in advertising, and we are the only group in which each of thefour papers surpasses this mark.’ Shenzhen provides an annual pool of US$312 million in media advertising, 60 percent of which is accrued by theShenzhen Press Group’s four constituent papers, 30 percent goes totelevision, and less than 10 percent to the Nanfang Metro Daily. Thedominance of the Shenzhen Press Group is all the more evident if weconsider that Shenzhen TV probably ‘steals’ half of its advertising incomefrom the popular Hong Kong-based Phoenix channel by inserting its ownads whenever Phoenix breaks for commercials.

Conglomeration has also strengthened the hand of the local press inwarding off outside competitors. A recent incident graphically illustratesthe group’s deployment of protectionist maneuvers against the NanfangMetro Daily, which began to encroach into the Shenzhen market in theearly 2000s. Two factors worked in favor of the Nanfang Metro Daily.First, because the Party exercises less stringent control over the metropapers than the flagship Party organs, the Nanfang Metro Daily can affordto be journalistically more aggressive. Second, there is a well-understoodrule in China prohibiting papers from criticizing any officials at the sameor a higher organizational level. Since the Metro is a member of theprovincial-level Nanfang Press Group, it has greater latitude in criticizingShenzhen’s local authorities, while Shenzhen’s papers can only sing thepraises of their local bosses. The Nanfang Metro did not hesitate to exploitthese advantages. As a result, its news-stand sales quickly soared to a pointwhere they exceeded sales of all the retail copies of Shenzhen paperscombined. It lured away a significant roster of major advertisers. In May2001, a year before the merger, the two Shenzhen papers collaborated withthe Shenzhen Publications Distribution Bureau, a government office underthe Ministry of Postal Service, in imposing a ban on more than 1000 news-stands (which they owned or supervised) selling the Metro. The noticewarned these news-stands against ‘selling any non-Party newspapers fromoutside the city’, or they would have to pay extra taxes. The two papersalso blacklisted more than 100 advertisers for having carried ads on theMetro. The Metro immediately protested, waging a high-pitched publicrelations campaign that caught national attention. The dispute ended onlyafter the Metro apologized for its ‘emotional’ and ‘sensational’ coverage




of, and reaction to, the event; it also made other concessions to retain theright of the paper to be sold in Shenzhen. A year after the merger, in April2003, the Shenzhen Press Group further prohibited advertisers from placingads in the Metro, stating that advertisers would be denied a discount offeron the first offense, deprived of positive media portrayal on the secondoffense, and face negative attack on the third. The Metro waged anotherround of protest campaigns, but to no avail. The Shenzhen Press Groupdismissed the allegations as ‘rumors’. Priding itself on ‘reflecting themainstream thought with an alternative approach’, the Metro had attractedloyal readers and angry foes. Its aggressive expose of several controversialtopics (such as official coverage of the SARS epidemic) infuriatedprovincial leaders, who finally retaliated by sending its top manager andchief editor to jail on flimsy charges of embezzlement. The paper has thusbeen blocked from making further inroads into Shenzhen.

Hidden subsidy: state office subscription

It is misleading for the media to claim that they have attained full financialautonomy without state subsidies. They enjoy a variety of overt or hiddenprivileges. In addition to preferential taxation, the media are entitled toprotectionist policies and land grants – and, it should not be overlooked,state office subscription. Within the Shenzhen Press Group, 6 out of 10subscribers to the two flagship papers, and 5 out of 10 to the two eveningpapers are government offices (Table 1). This dependence level seemshigher than the national average, which had declined from around 50 per-cent in the mid-1990s (Tang, 1999:142). In Beijing, state office subscrip-tion dwindles to 27 percent and home delivery accounts for 14 percent ofthe circulation, whereas the news-stands sell 60 percent of newspapercopies (Yu, 2002: 47). In general, the Party papers are heavily subsidizedby state office subscription, home delivery is popular with ‘softer’ eveningpapers, and news-stand sales are the major outlet for entertainment-orientedpapers (Huang and Ding, 1999: 149).

In Shenzhen, inasmuch as state bureaucracies, organizations and workunits earmark a newspaper budget, they habitually subscribe to both Partyorgan papers without discrimination to avoid embarrassment or offense.Although the Shenzhen Press Group reaps 90 percent of its revenues fromadvertising, it is the institutional subscription that provides the flagshippapers with a stable, affluent and influential clientele whom advertisersseek to reach. For this reason, the two Party organ papers charge foradvertising at considerably higher rates than the other two evening papers,despite their comparable circulations. The big advertisers are from realestate, automobile, IT and electronic products, and pharmaceutical prod-ucts companies.




To maintain revenues, journalists within the press group have been arm-twisted to solicit circulation and advertising on top of their journalisticduties. Each employee has a ‘responsibility quota’ and is rewarded formeeting it. Some institutional clients reportedly subscribe to the papers enmasse; they seek to repay personal guanxi (connection), get choiceadvertising space, or bargain for favorable coverage – but definitely not forthe pleasure of reading. Despite protestations and criticisms, the practicecontinues unabated.

Journalistic norms

Ten years ago, journalists in the Special Zone Daily were found to bemobile and restless. The opportunities to make windfall profits in theburgeoning capitalist market proved too tantalizing for many talentedjournalists. Stories about how several of them left their news career tostrike quick money were passed around as legends. Ideologically, journal-ists spread across a wide spectrum, perceiving their occupational rolesdifferently but all beginning to think of themselves as ‘hired’ Partypublicity officers (He, 2000).

Much has changed since then. Most of the journalists within the groupare no longer restless, for it has dawned on them that not everybody canswim in the dangerous ‘commercial ocean’. Because of their own sub-stantially improved material status, many have come round to identifyingwith the goal of developmentalism as promoted by the Communistleadership. Typical is a remark made by a mid-level editor:

I don’t have any particular belief. I am struggling to climb the social ladder. Iam a realist. I just want to make a secure living in Shenzhen, where I have nopolitical connections. I don’t care about justice or any such grand causes. Nomatter what happens, we benefit from staying with the system. Whether it isJiang Zemin’s theory of ‘Three Represents’ or Hu Jingtao’s new ‘ThreePeople’s Principles’, the most important thing is to maintain stability, promotedevelopment, and improve the standard of living.

Indeed, Chinese journalists, especially those in Shenzhen, are bene-ficiaries of national developmentalism. A beginning reporter within thepress group makes an after-tax salary of US $500–1000 per month, a seniorreporter or editor US $1620–2000, a chief editor US $3750–5000, and thetop managers US $6250–10,000. In addition, all journalists enjoy subsidiesfor car purchases of up to half of the sale price, free housing or housingallowances, and free medical and other fringe benefits. By China’s orShenzhen’s standard, this income is extraordinarily attractive, and it isalmost comparable to the income levels of Hong Kong journalists, whosecost of living is about four times higher. A mid-level manager told us,without exaggeration, that he makes more money than he can spend. There




was disparity in income and benefits among the different units before themerger, but the conglomerate has largely leveled the ground by raising theincome of those in the less profitable divisions. The creation of the newsgroup has not led to the downsizing of its workforce; since few people arewilling to resign from their well-paid jobs or to take attractive earlyretirement packages, it is difficult to recruit new blood. Prospects forinternal promotion are also not bright.

Editorial division and creation of a two-tier Publicity Inc.

In 1994, a top manager of the Special Zone Daily described his paper as a‘socialist face with a capitalist body’. He intimated that the front pageswere devoted to party-state publicity, whereas the inside pages catered toan audience trying to live with a burgeoning capitalist economy. Zhou He(He, 2000) found the paper content something of a mosaic, with coverageof Shenzhen’s economy making up 21 percent of the total. Other majorparts of the mosaic included international events and China’s diplomaticendeavors (14%); sports (11%); activities in science, technology, education,arts and culture (9%); and events in Hong Kong, Macao and Taiwan (7%).Political activities accounted for only 6 percent of the items, but they werelonger and were placed more prominently. More than half (56%) of thestories took orthodox Communist ‘frames’. Coverage of corruption wasconspicuously absent; the paper abounded with themes of law, disciplineand heroism.

A decade later, after conglomeration, a careful inspection of the twomajor papers seems to reveal little substantive change in content, notwith-standing the improvements made in layout, graphics and typography.Despite constant calls for more distinct role differentiation, the SpecialZone Daily and the Commercial Daily remain quite homogeneous, whilethe Evening Daily and the Sunshine Daily seem to be copycats of eachother. The merger of the two competitive outlets has created further inertia.As an informant put it, ‘It matters little who wins, because you are onlylosing to one of your own.’ Most of our informants did not hesitate toconcur that the big two are too straitjacketed and timid. As one informantnoted, ‘Are the two papers competitors, or not? Their relationship isawkward and ambiguous.’ The group has managed to foster a balance ofpower among various forces rather than to encourage journalistic innova-tion. Several top officials from the press group’s flagship papers partici-pated in Internet chat sessions with readers. When asked about theireditorial timidity, they defended themselves by saying that a ‘responsible’Party organ should provide nothing but ‘correct’ and ‘accurate’ reportage,and hence should refrain from pursuing ‘hot’ stories.




By default or by design, conglomeration has bought under the rubric of‘subordinate newspapers/publications editorial committee’ an array of ‘soft’publications: the Shenzhen Times, Shenzhen Week, Autonews, ShenzhenYouth and Hot Travel. Together with the Shenzhen Evening Daily and theSunshine Daily, they form a second tier of the press group that caters toreaders’ interest in entertainment, travel, automobiles and human-intereststories. As the chief editor of one of the core newspapers explained:

Conglomeration has the advantage of providing diverse content. As Shenzhengets increasingly diverse, readers’ tastes vary. In the past, we thought we couldsatisfy different interests in one paper. That idea did not work. We tried to meetvarious interests but ended up meeting none particularly well. Now, the pressgroup is like a super Wal-Mart, providing everything for everybody – be it agovernment official, a professional person, or a migrant worker. We can runanything that is politically safe and financially viable. We did not realize thisadvantage before, but now we do.

The ideological implications are twofold. First, this illustrates how theideological division of labor within the press group takes place (Lu, 2003).Second, having softened ideological purity and fervor, the party-state isextending its ‘capitalist body’ to cover areas it had never before reached(or, in fact, it had once denounced as ‘bourgeois liberal’) through ampleprovision of an assorted diet to the divergent audience members.

Overseas expansion

As a city adjacent to Hong Kong, Shenzhen provides the local newspaperswith unique access to ‘overseas’ media markets. In the mid 1990s, theSpecial Zone Daily experimented with a joint venture with Hong Kong’sSing Tao Daily in setting up the Shen Sing Daily, aimed at both Shenzhenand Hong Kong markets. That venture failed. In 1999, the Special ZoneDaily bought the defunct Hong Kong Commercial Daily from the pro-China United Newspaper Group. The first offer had been made to, and wasdeclined by, the Guangzhou Daily. The Beijing authorities’ intention tokeep such a pro-China voice alive in Hong Kong coincided with theSpecial Zone Daily’s business ambition to be the first paper to establish anoverseas stronghold. Later incorporated as part of the Shenzhen PressGroup, the Hong Kong Commercial Daily has continued to operate indeficit. Despite internal opposition, the press group’s top brass treats it as a‘pet project’ and continues to pour money into the paper. The officialjustification is to fulfill the political mission of bolstering the Beijing-appointed, unpopular chief executive in Hong Kong; by China’s rigidlyassigned roles, however, this high mission is hardly the business of a ‘local’paper. The seemingly unwise investment can be seen as the first step in theplan, as a group manager said, to ‘borrow a ship to sail overseas’. The group




leadership wants to gain experience for future overseas reach and expansion.But some characterized its overseas plan as ‘aimless’.

The ship has been ‘sailing’ back to China instead of overseas. Having amarginal presence in Hong Kong, the paper sells most of its copies in thePearl River Delta area. Because it is based in Hong Kong, the paper isallowed to carry lottery gambling and horse-racing tips, the latter beingbanned in the mainland. On a given Hong Kong horse-racing day, thepaper may double its circulation from 150,000 to 300,000 copies, cateringto mainland fans who make bets through underground dealers. The centralgovernment occasionally provides funds to support the paper’s perceivedpolitical role; in 2002, for example, it gave US $2.5 million to upgrade thepaper’s facilities and equipment. Treating it as a special operation, theShenzhen Municipal Party Committee also decided in 2003 that the pressgroup should continue to support the Hong Kong Commercial Daily bypumping into it an additional US $1.25 million. In 2003, the paper brokeeven for the first time, but immediately went into the red. A staff membernoted, ‘We will make money someday because we have a lot of things thatother mainland newspapers do not have. Even if we lose money, we willcontinue because the paper serves a special political function.’

A top manager quotes Lenin, saying that external expansion is the bestmedicine to heal the internal dissension resulting from the merger. Eventhough current policy forbids private and foreign investment in the media,he is optimistic that this restriction will eventually be lifted. ‘As long as theCommunist Party has a controlling interest and editorially holds the finalsay, the more private or foreign capital, the better,’ he concludes. The cash-rich Shenzhen Press Group has been exploring options to buy a ‘shell’company and list itself on the stock market. In fact, when speculation twicehinted that the press group was taking active interest in a particular ‘shell’,the named company saw its stock value double overnight. Neither overseasexpansion nor stock listing seem within reach at present. The group isinvesting heavily to build a fourth printing plant, which is expected tobring in greater returns by servicing other clients.

Conclusion

The post-Mao media transformation can be divided into two phases: thefirst was in the 1980s when the media began to introduce elementarycomponents of advertising into their operation; the second was after 1992,when they plunged into the deep ocean of commercialism amidst the Party-orchestrated march toward marketization. The dialectic of the political andthe economic has transformed the party-state from an omnipotentlycoercive apparatus into a less intrusive administrative instrument that seeksto manage its interests, images and national consciousness in different




guises. The motif has been ‘marketization of political management’.Marketization does not trigger political reform but pre-empts pressure forpolitical change in China. In absorbing the cross-pressures, the media as a‘Party Publicity Inc.’ possess ‘a capitalist body’ with ‘a socialist face’ (He,2000). Preserving the ‘face’ is a precondition for enriching the ‘body’. TheParty Publicity Inc. is part of – not external to – the party-state, run by theParty committee and profiting heavily from market monopoly. But the Inc.is also identified increasingly as a profit-making business apparatus. As aninformant put it, ‘The party controls the press group, and the press groupcontrols the market.’ The Party pulls the strings and lets the press groupcontrol the market; consequently the media toe the Party line and maximizeeconomic gains at the same time.

The Party Publicity Inc. in its conglomerate form represents a complici-tous accommodation between power and money engineered by a post-Communist bureaucratic-authoritarian regime. The Shenzhen Press Grouphas enlarged its size and capital, and is waiting anxiously for furtherexpansion. The newspaper merger has engendered a monopoly market thatenhances the corporate entity’s price-fixing and income-generating capabil-ities. Having smothered what used to be a duopolistic competition, thepress group has no more challengers. It has taken a variety of predatorymeasures to dictate the terms of circulation and advertising, thus makingmore money without improving content. Moreover, it has flexed itspolitical/economic muscles to protect the Shenzhen press market fromexternal competition. Further representing a unity of contradictions, thepress group is organized around two tiers to absorb political pressure andmaximize economic interests. The first-tier flagship newspapers seek topublicize the Party’s policies, legitimize its mandate to rule, and contributeto the establishment of cultural and ideological hegemony. The second tier,made up of ‘soft’ publications, seeks to entertain and inform the readerswhile contributing to the social construction of human relationships andknowledge. Those two tiers function differently and serve differentpurposes. They alleviate the pains of packing a ‘socialist head’ onto a‘capitalist body’. This organizational ‘innovation’ illustrates that absorbingmarket logic has made the party-state apparatuses more differentiated in termsof functions and interest. Media discourses have become less totalizing, butthey do not question Party legitimacy or attack ranking officials.

This study confirms, however, what some critical Chinese scholars haveobserved: the huge media size translates into ‘scale management’ ratherthan ‘scale economy’, producing nothing but waste, inefficiency, duplica-tion of effort and cost burdens (Yu, 2002: 27). Organic integration withinthe Shenzhen Press Group remains problematic. In the 1980s, impoverishedjournalists nation-wide were disillusioned with a lack of professionalautonomy or momentum for political reform (Polumbaum, 1990; Yu andLiu, 1993). This study, in line with the result of a national sample survey




(Chen et al., 1998), shows that, as journalists in Shenzhen becameeconomically privileged in the 1990s, they became increasingly apoliticaland contented with the status quo.

Media conglomeration was promoted presumably as a pre-emptivestrategy to meet post-WTO challenges from abroad. Lee (in press) contendsthat media conglomeration is a weak response to forces of globalization butdomestically a strong facade for consolidating political control and reapingeconomic profit. The globalist claim provides a spurious but self-servingjustification for press groups to enrich themselves from their marketmonopoly and for the party-state to facilitate ideological and administrativecontrol. The overall goals of the party-state are highly overlapping with theinterests of press groups, but it is the party-state that decided that pressgroups should be among ‘the first to get rich’. Multinational media giants,despite their corporate-speak, have not made impressive advances intoChina’s market (Sparks, 2003) and, in all likelihood, may not wish to aimat ideological fields as their priority venture. Throughout the interviews,none of our informants displayed any concern about likely foreigncompetition because they know they will continue to thrive in a monopolymarket and under no circumstances would the party-state relinquish itseditorial power to private or foreign capital. Our informants often citedWestern examples to argue that the state should lift restrictions on cross-media ownership and their conglomerate reach across regions. They nevermentioned, however, that Western media conglomerates are not the productof market monopoly created by the party-state. Media conglomeration is, insum, a case of state corporatism in its post-Communist reincarnation.

Note

We gratefully acknowledge the Research Grants Committee of Hong Kong forproviding a generous research grant (CERG-CityU1246/03H) for a larger projecton which this article is based. Shi Lin worked ably as a research assistant. Thisarticle was presented at the conference on ‘Empire, Media, and Political Regimesin Asia’ sponsored by Asia Research Centre, Murdoch University, Perth, Australia,26–7 August 2004.

1. This is a metaphor from ping-pong, meaning that they try to stretch theirjournalistic freedom to the edge of the permissible, like hitting the ball to the veryedge of the table without going out.

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Zhou He is Associate Professor of Communications at the City Universityof Hong Kong. His research on mass communication has appeared in threebooks/monographs and such journals as Communication Research, JournalismQuarterly, Journal of International Public Opinion, Media, Culture & Society,Journalism Studies and Journal of Intercultural Communication Studies.Address: Department of English and Communication, City University of HongKong, Kowloon, Hong Kong. [email: [email protected]]

Yu Huang is Associate Professor of Journalism at Hong Kong BaptistUniversity. His interests include media and social transformation in post-Mao China. Address: Department of Journalism, Hong Kong BaptistUniversity, Kowloon, Hong Kong. [email: [email protected]]




Chinese Party Publicity Inc.' conglomerated: the case of the Shenzhen Press Group

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