Commentary

Alibaba Buys 'South China Morning Post,' Plans More Positive China Coverage

Chinese e-commerce juggernaut Alibaba is taking a page (get it?) from its American rival, Amazon, with Friday’s announcement that it is buying a newspaper.

As rumored for several weeks, the company is snapping up the English-language South China Morning Post, based in Hong Kong, in what Alibaba describes as an effort to counter negative portrayals of China by foreign media outlets.

Alibaba paid around $100 million for the media property.

The 112-year-old SCMP has a relatively small print circulation of around 100,000, but wields outsized influence because of its privileged position as a Hong Kong newspaper, which allows it more editorial independence than mainland papers. And, due to its English-language content, gets a wider reach online.

SCMP has a reputation for hard-hitting investigative reporting on things like political corruption and human-rights abuses within China, and Alibaba says it has no plans to tamper with its editorial operations. Of course, that raises the question of how the SCMP will produce more positive news coverage of China without sacrificing its editorial independence.

The best spin you can possibly put on it: Alibaba will invest in expanding SCMP’s editorial operations and bolster its reporting capabilities, naturally producing more balanced coverage.

According to Financial Times, which first reported the news, Alibaba executive vice chairman Joseph Tsai explained that more balanced coverage of China will benefit Alibaba: “Our business is so rooted in China, and touches so many aspects of the Chinese economy, that when people don’t really understand China and have the wrong perception of China, they also have a lot of misconceptions about Alibaba… What’s good for China is also good for Alibaba.”

SCMP has a challenging mission, to say the least.

The most positive story out of China over the last few decades has been its unprecedented economic expansion, making it the world’s second-largest economy, widely expected to overtake the U.S., at least until recently. However, the economic slowdown in 2014-2015 showed that the government’s strategy of investment-led growth is played out, requiring a shift to an economic model powered by consumption.

Separately, public and private debt has soared to over 240% of gross domestic product, partially reflecting indiscriminate stimulus measures following the 2008 downturn. Also, the government’s ham-handed intervention in the stock market earlier this year raised questions about its vaunted ability to manage the economy.

Just this week, The Wall Street Journal reported on the “IPO logjam” resulting from the government’s stock market intervention, and the damage likely goes far beyond that. Foreign investors will remain leery of an unpredictable marketplace, where government rules prevent them from cutting their losses or short selling.

Worst of all -- and most challenging for SCMP when it comes to molding foreign opinion -- nobody knows whether the Chinese government’s data on economic growth is trustworthy. (Many observers, both in China and abroad, assume they are massaged for political purposes.)

For example, there’s no way to know what proportion of China’s public and private debts are going bad, but given the volume of “sweetheart” loans to government-owned enterprises following the downturn, it’s reasonable to think it may be very high.

Thus, SCMP faces a dilemma. In keeping with its editorial traditions, it can try to cut through the government smokescreen, but this isn’t likely to produce positive news stories that attract investors to China -- Alibaba’s stated purpose in buying the newspaper -- and may indeed incur official wrath.

Conversely, it can toe the government line, running the risk of being dismissed by foreign readers as just another official mouthpiece and sacrificing its hard-earned reputation. The best bet is probably something in between.

1 comment about "Alibaba Buys 'South China Morning Post,' Plans More Positive China Coverage".
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  1. Richard Clifford from McGladrey, December 12, 2015 at 9:19 p.m.

    This is bullshit!  The South China Morning Post has been a champion for truth in the Hong Kong Special Administrative Region, and now it's gonna become a government mouthpiece for the cronies in Beijing!

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