By now, most Hong Kong tycoons have made their peace with China. With the transition to Chinese rule less than three years away, they have cut huge business deals on the mainland while refraining from criticizing Beijing's aging cadres in public. Not so Jimmy Lai. Decked in his hallmark jeans and suspenders, Lai flaunts his antipathy to communism: In his successful magazine, Next, he even described Chinese Premier Li Peng as "a turtle's egg with a zero IQ."

Now the budding media mogul intends to broadcast his independent voice even louder. He's busy planning the June, 1995, launch of Apple, a newspaper with an easy-to-read format and a generous dollop of investigative and political reporting. It's a risky move, especially since Lai has already angered plenty of influential people. But the 45-year-old, who made a fortune by founding the fashion retailer Giordano Holdings Ltd., smells a moneymaking opportunity. While other Hong Kong newspapers "go into self-censorship" as 1997 approaches, he says, "they're going to create a vacuum for us to go in."

Much more than Lai's fortunes ride on his new venture. In Hong Kong, Lai has set himself up as one of the communist regime's most vocal critics. After the 1997 takeover, Beijing's treatment of people like Lai will indicate how committed the Chinese are to upholding press freedom in Hong Kong. Moreover, if China cracks down on Lai, it may also endanger the city's role as Asia's information capital.

One of Lai's most powerful vehicles may be Apple, which he hopes will appeal to a young audience raised on TV. Modeled partly on

USA Today, it will be "more light, more visual, more convenient, more reader-friendly," he says. Lai already has a winning, youth-oriented formula in Next, the flagship publication of his Next Media Group, which generates $65 million in revenues. Next combines sensationalist stories on lifestyle and entertainment with hard-edged coverage of Hong Kong gangsters and China's rulers.

Lai's candid style has paid off. "Jimmy Lai is gutsy and courageous, but he's also a very shrewd and competent businessman," says John Schidlovsky, director of the Freedom Forum Asian Center, a branch of the Arlington (Va.) media foundation. The numbers bear this observation out: Circulation of Next has jumped from 130,000 last year to 188,000 now, making it the largest weekly magazine in Hong Kong. Lai also expects profits to grow from $12.8 million this year to about $21 million in 1995.

Lai has been honing his business skills for more than 30 years. Born in Guangdong province, he fled across the border to Hong Kong at age 12, starting off as a child laborer in a glove-knitting factory. He rose through the apparel industry and in 1981 created Giordano, the Asian answer to The Gap. Giordano now rakes in $300 million annually selling T-shirts and jeans in more than 250 boutiques. After the flap last summer over his insult of Li, however, Lai gave up his voting rights and stepped down as chairman, although he still owns a 36% stake in the retailer.

That has given Lai more time to concentrate on his passion: publishing. His interest in the business dates from 1989, when the Tiananmen massacre galvanized him into entering the media world. Despite the killings, he concluded that China would have to keep opening to the mutside world, allowing information to flow in.

Since starting Next, Lai has made a point of being outspoken--and has paid a price. After he exposed extortion rings at Hong Kong parking garages, Next's newsroom was trashed, a Molotov cocktail was thrown in Lai's front yard, and windows were smashed at some Giordano stores. His July "open letter," in which Lai denounced Li Peng for defending the Tiananmen crackdown, prompted retaliation as well: A Giordano store in Beijing was shut down twice (though Giordano executives say it was because the franchisee's license wasn't yet approved). China Resources, a Chinese company that held 10% of Giordano's stock, sold down its stake to less than 1%.

In a substantive setback to his media ambitions, Lai says the furor over the Li article scared Wardley Corporate Finance Ltd. into dropping a public stock offering planned for Next Group. Wardley's spokesperson says it is "general policy" not to comment on such matters. Lai may have trouble finding other merchant banks eager to list the company. "Given the politically sensitive environment, there are risks involved," says Constance Wong, media analyst for Smith New Court Far East. "He has so many enemies--and a lot of lawsuits pending."

One of the biggest involves T.T. Tsui, a Hong Kong tycoon, who has sued Lai over a story on his marriage. A Chinese government office also is suing for libel over a story alleging that funds raised for a charity failed to reach the organizations involved. Lai remains confident he will prevail in those and other cases: "We haven't lost a lawsuit yet."

SHAKEN. Like Wardley, Giordano executives also want to distance themselves from the company founder. "Whatever he believes in is not what Giordano believes in," says Terry S. Ng, the company's director of business development. "We have no interest in political activism." For business reasons, that approach makes sense. Although Giordano is successfully expanding throughout Asia, China is its most enticing market.

Lai admits to being shaken by the furor he created over his criticism of Li. "It's the first debacle in my learning curve," he says. Ever the optimist, he figures he still has funds to go ahead with the publication of Apple. After the paper's launch, he plans to take Next Group public in September. By then, he hopes that the flap over his insult of Li will be just a memory. Moreover, he says that the new newspaper will be so successful that he will be able to interest underwriters.

When it comes to China, Lai says he will try to be more "circumspect" in his publications without losing his investigative flair. There's good reason to be careful. "The nearer they are to death, the more insecure they are--so they strengthen their reaction to any criticism," he says of the communist leaders.

And Lai intends to be a force in Hong Kong beyond 1997. "I love this place," says Lai, who does have the protection of a British passport. "I want to qurvive, and I don't want to go to prison. But I don't want to kowtow." His big hope is that after 1997, Beijing will quickly learn that it can't tinker with the media if it wants Hong Kong to prosper. "Once they stop the free flow of information, they stop the normal function of the market," he says. Jimmy Lai will soon discover whether Beijing sees things that way.

      45, born in
      Guangdong, China
      Chairman, Next Media
      Group, publisher
      of three Hong Kong
      Made millions
      as founder of retail
      chain Giordano
      Holdings Ltd.
      Establish Apple, an
      independent new daily
      newspaper geared to
      the young generation
      Believes a free flow
      of information will
      hasten the demise of
Before it's here, it's on the Bloomberg Terminal. LEARN MORE