A Thorn in China's Side

Publisher Jimmy Lai is riding the wave of Hong Kong dissent

Talk about in-your-face journalism. On the eve of the July 1 pro-democracy protests in Hong Kong, the cover of Next Magazine, the city's muckraking weekly, featured a photo mock-up of Hong Kong Chief Executive Tung Chee-hwa taking a pie right in the kisser. The caption exhorted readers to "take to the streets." During the days leading up to the demonstration against a proposed anti-subversion bill known as Article 23, Next's sister publication, Apple Daily, distributed cartoon stickers calling for Tung's ouster and distributed posters on the big day.

Sure, other factors helped get a half-million Hong Kongers into the streets, but there's no denying that the two publications helped. Indeed, their parent company, Next Media Ltd., has been leading the crusade against the controversial bill since it was introduced ten months ago. Next's chairman, 53-year-old Jimmy Lai, an outspoken critic of China's leadership, sees the protests and resulting concessions by Tung as a defining moment. "Hong Kong will be forever changed by this new democracy of people power," Lai told BusinessWeek in an e-mail message. "So will China, which inevitably will be both intimidated and inspired."

The success of the protest is also a milestone for Next Media. Although its role as a champion of democracy hasn't given the company much of a circulation or advertising boost, the company has gained an enormous amount of goodwill, which could well translate into more ads in the future. "This helps us in an intangible way -- in the sense of feedback where people say, 'Well done,"' says Liu Kin Ming, general manager of Apple Daily.

Next Media's stand against Article 23 is also a vindication of sorts for Lai. A self-made tycoon who fled mainland China for Hong Kong at age 12, Lai built his fortune by launching Giordano, a Gap-like clothing retailer that is one of Asia's top brands. But even when he was in the rag trade, he never shied from controversy. He once called former Chinese Premier Li Peng a "son of a turtle's egg," and during the Tiananmen Square demonstrations in 1989 he distributed pro-democracy T-shirts in Hong Kong. Then in 1990, he founded Next Magazine to give himself a platform to continue his anti-Beijing bombast. The magazine featured a sensationalist blend of tabloid staples such as celebrity exposés and grisly murder stories, but added a good dose of serious, hard-hitting political and business reporting.

Next soon became Hong Kong's most successful weekly -- which didn't sit well with China's leaders. In 1994, after the turtle's egg remark, Beijing shuttered some Giordano shops on the mainland. Lai then sold his stake in the clothing company. But the publishing ventures have flourished. In 1995, Lai founded Apple Daily, taking on Hong Kong's entrenched newspapers in a fierce price war. With an editorial mix similar to that of Next, Apple has become the territory's second-largest daily. Today, Next Media is a money machine. For the year ended Mar. 31, the company earned $47.1 million on sales of $276 million. Investors like the story, especially lately: Hong Kong-traded Next has gone from 23 cents (U.S.) a share in early May to a recent 37 cents.

Now, Lai is exporting his mix of sleaze and anti-establishment journalism. In 2001, he launched a Taiwanese version of Next, ignoring critics who said an outsider could never crack Taiwan's highly competitive media market. Today, Next's press run is 160,000, making it Taiwan's largest weekly, and it is turning a profit. In May, Lai launched a Taiwan version of Apple Daily. He's still treated as an interloper. His publications rely almost entirely on newsstand sales because his competitors have cut cozy deals with distribution companies that deliver to subscribers. But analysts say Lai will eventually get the upper hand. "He always shakes up the market and destroys the old rules," says Jimmy Lam, a media analyst with Kim Eng Securities Hong Kong Ltd.

Lai's big ambition, of course, is to launch a magazine or newspaper on the mainland. That could take a while. But if he succeeds, China's leaders had better get ready for a pie in the face from this Hong Kong maverick.

By Frederik Balfour in Hong Kong

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