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| Reading the Chinese Magazine Market |
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As readers' demand becomes richer, diversified and personalised, there are many emerging opportunities in China's magazine and media market. But there are also a range of issues that need to be addressed before the industry can blossom.
The magazine industry in China has been growing fast. For the first half of 2005 and 2006, magazine industry growth both amounted to more than 15%, two times higher than the newspaper industry's growth. Magazine advertisement sales currently account for 10% of the print media industry's total advertisement sales. Excluding those academic periodicals and subscription revenue-fed magazines, the following magazine categories are popular in the Chinese consumer market.
Industry magazines – They are dedicated to a specific industry, such as IT Manager World, China Petroleum. Most of them have close affiliation with their respective industry leaders.
Current affairs and news magazines – Southern People Weekly, Caijing, Lifeweek are those examples. Many of them have been successfully growing their readership, but they also involve relatively high political risks. And despite their high circulation, their advertisement sales are largely falling behind, mainly due to their vague audience targeting.
Pure commercial magazines – Their primary concerns are audience and advertisers, hence minimal political risks. It is also the biggest category in the magazine market, with successful examples such as Trends Magazine, Rayli, Life Style.
Chinese version of international magazines – Most are international contents from famous titles, supplemented with some Chinese domestic contents, such as Chinese versions of Harvard Business Review and Sports Illustrated. Advertisement sales are from both international and domestic markets. |
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Although China's magazine industry has made significant progress in the past 20 years, it is still at an early development stage with various issues.
Market disorder
Firstly, the lack of authoritative circulation measurement agencies has resulted in the common practice of exaggerating circulation numbers by individual magazines, therefore advertisers can only judge their campaign effectiveness from distribution outlets. This has prompted magazine operators to spend lots of resources on distribution channels, instead of content improvement. Many magazine companies even pay hundreds of yuan "shelf space fee" to individual newsagencies per month, in order for their products to be displayed at prominent positions.
Secondly, advertisement revenues for many magazines are also distorted. As undisclosed advertisement discounts vary significantly among magazines, most market research agencies can only rely on published or quoted prices for measurement purpose. Furthermore, there are some magazines being published without a legal serial number at all.
Non-market-based mechanism
China currently has more than 9,000 magazine titles, about 1,400 of which are publications by the Communist Party and political institutions. Among the 134 magazines with a national circulation above 250,000, government-work guidance or education-related titles account for 51.5%, while those that are voluntarily paid or chosen by readers account for 48.5%. As a result, circulation leaders are not necessarily market leaders in the Chinese magazine market. Many magazines are surviving on compulsory subscriptions within government organisations, instead of market acceptance.
A fragmented industry
The Chinese magazine industry has a large number of small players each with weak competitiveness, which can't be compared with their cashed-up international counterparts at all. Many magazine and media companies in China are still operated as "corporatised government enterprises", with weak development capability, performance and resources.
Short-sighted partnerships
As new serial numbers will no longer be issued in China, existing media companies are therefore occupying all the serial number resources. In such circumstances, new magazine publishers can only partner with existing magazine companies to operate their products. But such partnerships are usually unsustainable. This is because when new products are gaining performance, the partner with a serial number will usually want to take back the serial number, causing enormous damage to the real operating partner.
As a result, many companies are unwilling to publish magazines through partnership, hence the industry's difficulty to attract external capital investments. On the other hand, even though companies accept partnerships, many of them don't have an intention for long term operation. Without a long term perspective, few magazines can truly gain market prominence.
Unclear positioning
Advertiser and audience demand-driven, market-based positioning is a prerequisite for a successful magazine product, but most magazines in China are still more or less uncertain about their own market positioning. Many of them don't know who their advertisers and audience should be, let alone clear editorial policies and creative ideas.
Lack of quality professionals
Talent shortage is widespread in China's magazine industry. Due to the industry's closeness, high quality managerial talents are even scarcer than editorial talents, especially those professional media managers with strategic thinking abilities.
Circulation revenue dominance
China's magazine industry had advertisement revenue and circulation revenue of 2 billion yuan (RMB:USD = 7:1) and 12.9 billion yuan respectively in 2004. So we can see that advertisement revenue is still accounting for a small proportion of the industry income. But from another perspective, it also means that the Chinese magazine advertising market has huge potential for growth.
Outdated management
Firstly, legacies from the planned economy era are still obvious in China's magazine market. Most companies are still loosely managed, and few magazines have built up high quality reader databases. Therefore it is difficult to establish market strategies with informed research statistics. Secondly, many Chinese magazines don't have enough creativity, resulting in a large number of copycats. Thirdly, many companies don't have a clear understand of factors that influence readers' buying decisions.
Regulatory impediment
As there are little signs of relaxing serial number issuance, which is a pre-condition for a magazine's development, it is almost impossible for serious investors to come into the industry. In developed countries such as US, a new magazine can easily obtain an ISSN (International Standard Serial Number) from its regulators.
Scarcity of outstanding magazines
There are only a handful of influential players in the Chinese magazine market, and the majority of magazine products are found by non-professional publishers.
Produced by www.chinabizintel.com; Source: www.chinairn.com
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