Hong Kong entrepreneur Jimmy Lai knew he was asking for trouble by starting a newspaper this summer. Lai had already angered Beijing after publishing an article blasting Chinese Premier Li Peng in Next magazine, Lai's top-selling weekly (BW--Dec. 5, 1994). Wary of offending China, investors developed cold feet and banks declined to lend him startup funds. Lai committed $100 million of his own fortune to put his new Apple Daily on the streets.
Despite the long odds, Apple Daily is looking like a success just three months after its launch. According to Lai, the 290,000 issues printed each day sell out. To keep up with demand, Lai's printers are purchasing another press that will allow him to add another 100,000 issues a day by next April. Lai expects the paper to break even in November, when it rakes in $168,000 a day in advertising revenue. Of the $100 million Lai earmarked for the paper, he has spent about $32 million. Lai predicts that annual revenues from his media group, which consists of four publications, will surpass those of Giordano Holdings Ltd., the $370 million retail chain he founded, in just four years. Lai is selling his 37% stake in Giordano to concentrate on his media business.
It remains to be seen whether Apple Daily will be able to challenge market leader Oriental Daily News. There are 60 Chinese-language newspapers in a territory comprising 6 million residents. Hong Kong's Audit Bureau of Circulations doesn't yet have figures to release for Apple Daily, but Anthony Lau, ABC's chairman, says that "early indications are that it is firmly established in the market--and that's quite a miracle."
Lai's reputation as a proponent of freedom of expression certainly wins him points with some readers. Lai publishes exposes on everyone from criminal gangs to the wealthiest tycoons. And unlike most newspapers, which have shunned consumer news, Apple Daily runs six pages of it. Sensational stories have also run, but after a gruesome picture of a dead child created a public outcry, Lai now promises to be "very sensitive about children who are victimized."
MOB THREATS. Unlike Next magazine, Apple Daily has yet to take on China--and Lai is not going out of his way to stir up trouble with Beijing. "If nothing is happening, why irritate them?" he says. Still, on any given day Lai has an average of 24 reporters in China, traveling on tourist visas since Beijing won't provide them with journalist credentials. Recently two Next reporters were arrested in Fujian province. To Lai's relief, China released them in a few days. "I tell them, `If you guys get caught, I can't help you,"' Lai says. "But they like the risk."
Apple Daily offers its 800 employees other rewards as well. It pays reporters 30% more than the competition, and senior staffers get stock options. That's a good incentive given the headaches they face. Mobsters have been making threatening noises, and some corrupt business executives have tried to bribe news editors. Lai remains undaunted about that--and about Beijing's takeover of Hong Kong in 1997. "I don't think the Chinese are going to come here and break us down, because they need stability," he says. Lai's goal is to make his paper as strong as possible as he braces for the rough ride ahead.