Next Media Ltd.
Next Media Ltd.
8 Chun Ying Street
Tseung Kwan O I
Telephone: 852 2896 8688
Fax: 852 2247 4154
Web site: http://www.nextmedia.com
Sales: HK$2.5 billion ($277.20 million) (2003)
Stock Exchanges: Hong Kong
Ticker Symbol: 0282
NAIC: 551112 Offices of Other Holding Companies; 323110 Commercial Lithographic Printing; 511120 Periodical Publishers; 541820 Public Relations Services
One of Hong Kong's leading newspaper and magazine publishers, Next Media Ltd. has been making a push into the highly competitive Taiwan market in the early 2000s. The company, headed by controversial founder and Chairman Jimmy Lai, publishes Next Magazine, Hong Kong's leading weekly magazine with a circulation of more than 450,000, and Apple Daily, the city's second largest selling daily newspaper. The company also produces a number of other titles in Hong Kong, including the "bundled" magazines Sudden Weekly and Eat & Travel Weekly, and the youth-oriented Easy Finder, which became bundled with a special teen edition of Eat & Travel Weekly in 2003. Taiwan's population, more than four times the size of Hong Kong, offers a potentially major market for Next Media, which began publishing a Taiwanese edition of Next Magazine in 2001. Faced with more than 6,000 magazine and newspaper competitors, and difficult entry into the island's distribution market, Next has managed to install itself as a new force in that market, a position underscored by the launch of a Taiwanese edition of Apple Daily in 2003. Next Media also has its own printing operations and a limited Internet presence. The company-is listed on the Hong Kong stock exchange, and posted HK$2.15 billion ($277 million) in revenues in 2003.
From Rags to Riches in the 1980s
The formation of Next Media at the end of the 1990s represented a new chapter in a true rags to riches story. Lai Chee Ying, known as Jimmy Lai, was born into poverty in mainland China's Guangdong province during the early years of the Cultural Revolution. Lai started working when he was just nine years old, carrying bags for passengers at the Guangdong railway station. Lai also began selling goods on the black market, telling Success: "It was a good education. I learned about human nature and how to anticipate people's reactions."
Lai also learned about the world outside of Guangdong and, especially, Hong Kong. One of Lai's first contacts with the British-controlled city came when he was given a piece of imported chocolate, a rarity amid Chinese austerity of the time. Working at the train station also brought Lai in contact with wealthy Hong Kong residents visiting the mainland. By the time he was 12, Lai had become determined to flee to Hong Kong.
Lai's family put together the smuggler's fee, the equivalent of nearly $500, and Lai made the crossing hidden in the bottom of a boat. In Hong Kong, Lai's uncle helped him find a job as a laborer in a textile factory earning less than $10 per month. Yet Lai had no intention of remaining a simple laborer. Recognizing that success in Hong Kong required the ability to speak English, Lai, who had no formal education, began teaching himself the language, using money he had managed to save from his wages to buy an English dictionary and textbook.
Lai already displayed the character traits that enabled him to become one of Hong Kong's most successful businessmen by the late 1980s. As he explained to Success: "I spoke lousy English to other people, and eventually, they would correct me. I was never bashful. I always reveal my shortcomings to others. I let them criticize me, and then I eliminate the errors."
At the age of 20, Lai had fought his way to the factory's general manager position. Lai continued building up his savings, while focusing his ambitions on new areas. Lai decided to gamble his savings, padded by his first year-end bonus as general manager, on the Hong Kong stock exchange. Lai's speculations soon paid off, and by mid-decade, Lai had built up enough capital to start his own business. According to Success, Lai had parlayed his initial $3,000 investment into a fortune worth $750,000.
In 1975, Lai bought out the owners of a bankrupt garment factory, Comitex, and began producing sweaters. The company was a quick success, selling to J.C. Penney, Montgomery Ward, and others. As part of that business, Lai made a number of trips to the United States, where he was exposed to Westernstyle retail formats. By the beginning of the 1980s, restless for a new challenge, Lai decided to go into the retail market himself.
Then in the early 1980s, Lai formed a new business, Giordano's, named after a favorite New York restaurant, and began opening stores in Hong Kong. Over the next several years, Lai opened a number of stores in the city, attempting to target an upscale market. Yet, as Lai himself admitted: "The more stores we built, the worse we did. I was trying to show the world how great I was, instead of showing the customer how great our goods were."
Faced with shutting down the business, Lai instead decided to transform it, turning to other successful retailers for inspiration. As he told Forbes: "I gave up thinking I knew what the retailing business should be. I went out and picked the best in the market and stole what they had learned by trial and error."
Eventually, Lai settled on a new formula. As he described it to Success: "McDonald's was doing the best. It has a very basic menu, so I concluded that simplicity should be the core value of Giordano. But simple becomes boring very quickly. So I looked at Benetton. It gives items a fresh look by extending the colors, which costs nothing. From Marks and Spencer, I learned you can sell high-quality goods at a reasonable price." Other retailers also contributed to Lai's new retail visions, including The Gap and The Limited and their use of computerized ordering and production techniques. The changes at Giordano's also involved the company's staff, who were instructed to emphasize customer service—and who received motivation through a doubling of their salaries. By the beginning of the 1990s, Giordano's was one of Hong Kong's leading clothing retailers and had spread its network to more than 200 stores, including its first stores in mainland China.
Media Magnate in the 1990s
The 1989 massacre on Beijing's Tiananmen Square inspired Lai's next career move. By then, Lai had become restless for a new business venture, saying of Giordano's: "Everything was on track. I no longer felt motivated." In the face of the Tiananmen Square massacre, Lai discovered new motivation, and became determined to add his voice to the pro-democracy movement—by entering the publishing arena. Watching the Chinese government's actions at Tiananmen had, as Lai told the Washington Times, "made me realize information was the core of freedom. Just making money no longer motivated me. But if I could deliver information, which is freedom, and still make money at the same time… ."
In 1990, Lai launched his first magazine, Next Weekly. The title immediately became a success on the market, in part due to its outspoken opposition to the Communist mainland government. In addition, the weekly became noted for its hard-hitting investigative journalism. Yet the magazine also shrewdly blended in a more lurid mix of true crime, celebrity gossip, and sex, wooing increasing numbers of readers and advertisers. By 1993, the magazine had captured some 15 percent of Hong Kong's adult readers.
Lai's media wing, Next Media International, launched three more magazine titles, Sudden Weekly, Eat & Travel Weekly, and the youth-oriented Easy Finder, through the 1990s. The company also began preparations to enter the newspaper market in the early 1990s, seeking backers for the launch of a daily newspaper, to be called Apple Daily.
In the meantime, however, Lai had continued his outspoken criticism of the Chinese government. In 1993, he published a column in which he labeled Chinese Premier Li Peng, who had been responsible for the Tiananmen Square massacre, "the son of a turtle's egg"—one of the worst insults in China. The Chinese government retaliated by placing pressure on Giordano's. By then, Taiwan had become the chain's major market, while also growing into Singapore. Yet the fast-evolving Chinese mainland remained the single largest potential market for the chain. Some weeks after the Lai column, the government shut down its main branch in Guangdong. Soon after, Lai agreed to sell his shares of Giordano, including his control of its mainland subsidiary.
Lai's difficulties with Chinese authorities, in the face of the coming handover of Hong Kong to the Communist government, prompted investors to balk on the launch of Apple Daily. Lai was forced to put up $100 million of his own funds for the establishment of the newspaper.
First released in the summer of 1995, Apple Daily was a quick success. Despite entering a market crowded with some 60 newspapers for a population of just six million, Apple Daily soon climbed to the top of the pack, reaching a circulation of 300,000 before the end of the year. Part of the paper's success could be attributed to Lai's willingness to learn from others' successes, and, in the case of Apple Daily, the success of USA Today in particular. Featuring a similar reliance on graphics and shortened, highlighted text, Apple Daily also provided a strong lifestyles and gossip quotient to appeal to Hong Kong readers. By 1997, the paper had become the second leading newspaper in Hong Kong, with a circulation of 400,000.
In its corporate culture, Next Media strives for: A simple hierarchy. Direct communication, and a high degree of transparency. A challenging working environment where employees are encouraged to tackle challenges through trial and error, as well as assume responsibility for their actions. Flexible working practices that provide room for creativity and the development of individual capabilities. An attitude that "This is My Company," and the sharing of profits among employees. Encouragement to stay abreast of changes and run ahead of the media.
Lai hoped to bring his newly focused media group to the Hong Kong stock exchange in the second half of the decade. Yet Lai's apparent vulnerability in the face of the 1997 handover caused bankers to back off from a listing. Even Lai recognized his vulnerability, admitting to the Washington Times in 1997: "If we survive the next two or three years, we can survive forever." Nonetheless, Lai remained defiant, stating: "As the free market expands, their power will erode—time is on our side."
Unable to find backing for an initial public offering, Lai made it to the market through the back door in 1999, acquiring Paramount Publishing Group in October of that year. Lai added the magazine title Easyfinder and other holdings to Paramount and the company name was changed to Next Media. For the time being, Lai kept both of his major titles, Next Weekly and Apple Daily, private and separate from the publicly listed company. Yet Next Media became the vessel for Lai's latest business interest, the Internet, including the company's own Internet provider service, nextmedia.com, as well as an online travel service.
Swept up in the hype surrounding the new Internet and hightechnology markets, Lai decided to take on Hong Kong's retailing elite, Hutchison Whampoa and Jardine Matheson, which controlled most of the colony's retail sector. Lai determined to attack these leaders by setting up an online grocery and home delivery service, Admart. That business quickly expanded its range of offerings far beyond grocery. Yet distributors proved unwilling to supply Admart for fear of offending Hutchison Whampoa and Jardine Matheson, and Admart was forced to buy goods, often of inferior quality, on the gray market, in order to meet customer orders.
Admart started out losing money and its losses only deepened through its first year. By 2000, after just 15 months in business, Admart's—and Lai's—losses had topped $120 million. Lai pulled the plug on Admart, and drastically scaled back his other Internet ventures.
New Horizons for the New Century
Lai's Internet failure forced him to leave Hong Kong. As he told Time International: "Hong Kong has no place for me." Lai transferred control of Next Weekly and Apple Daily to Next Media and turned toward a new horizon: Taiwan. With a population of nearly 30 million, Taiwan offered new opportunity for growth for the company. In 2001, Lai teamed with local partner PC Home Publishing to launch a Taiwanese edition of Next Weekly. Despite intense competition from some 6,000 magazines and newspapers on the island, and despite the company's inability to enter the market's distribution channels beyond newsstand sales, Next Weekly successfully found a market among Taiwan readers. By 2002, Taiwan Next had already begun to turn a profit.
Buoyed by this first success, Lai and Next Media began preparing for the launch of a Taiwanese edition of Apple Daily as well. Back in Hong Kong, in the meantime, the company had been developing a new "bundling" concept of combining complementary magazine titles into a single format. In January 2002, the company debuted its first bundle, combining Sudden Weekly and Eat & Travel Weekly. By March of that year, circulation for the new concept had already topped 200,000. In April 2003, Next Media launched a second bundled magazine for the Hong Kong market, adding a specially edited teenager version of Eat & Travel Weekly to the youth-oriented Easy-finder magazine.
Next Media debuted the Taiwanese edition of Apple Daily in May 2003, backed by a strong promotional campaign and a low introductory sales price. The launch of Apple Daily sparked a price war among Taiwan's newspaper leaders, yet by the beginning of 2004, Lai had once again revealed his magic touch. With a circulation of some 435,000, Apple Daily had claimed a spot among the island's top five newspapers. Jimmy Lai promised to remain a force in the region's media market in the new century.
- Lai Chee Ying (Jimmy Lai) buys a bankrupt garment producer and redevelops it into a successful manufacturer of sweaters for department store customers.
- Lai enters retail, setting up Giordano's clothing chain.
- After the Tiananmen Square massacre, Lai decides to enter the media sector.
- Next Weekly, which grows into Hong Kong's leading weekly magazine, is established.
- Lai sells the stake in Giordano's and launches Apple Daily, which becomes Hong Kong's second largest daily newspaper.
- Lai acquires the publicly listed Paramount Publishing Group, which is renamed Next Media.
- After an attempt to enter the Internet retail market, Lai moves to Taiwan to set up media titles there; Lai transfers ownership of Next Weekly and Apple Daily to Next Media.
- A Taiwan edition of Next Weekly is launched.
- The "bundled" magazine concept is launched, combining Sudden Weekly and Eat & Travel Weekly, for the Hong Kong market.
- The second bundled magazine, EasyFinder/Eat & Travel Weekly, is launched; the Taiwan edition of Apple Daily is launched.
- The Taiwan Apple Daily circulation tops 435,000, placing it among the island's top five daily newspapers.
Apple Daily Limited; Apple Daily Online Limited; Apple Daily Printing Limited; Cameron Printing Company Limited; Database Gateway Limited; Easy Finder Limited; Easy Finder Hong Kong Marketing Limited; Easy Media Limited; Eat and Travel Weekly Company Limited; Next Magazine Advertising Limited; Next Magazine Publishing Limited; Next Media Group Management Limited; Next Media Hong Kong/Publication Publishing Limited; Paramount Printing Company Limited; Rainbow Graphic & Printing Company Limited; Sudden Weekly Limited.
Oriental Press Group Ltd.; Ming Pao Enterprise Corporation Ltd.; Global China Group Holdings Ltd.; Dai Nippon Printing Company Hong Kong Ltd.; Midas International Holdings Ltd.; Culturecom Holdings Ltd.; Jessica Publications Ltd.; Sino United Electronic Publishing Ltd.; Asia Magic Hong Kong Ltd.
Balfour, Frederik, "A Thorn in China's Side," Business Week, July 28, 2003.
Barnathan, Joyce, "Readers Take a Shine to Hong Kong's Apple Daily," BusinessWeek, October 2, 1995.
Clifford, Mark, "The Humbling of Jimmy Lai," Business Week, October 23, 2000.
Jacob, Rahul, and Swee Lin Ho, "A Talent for Shock Tactics," Financial Times, February 25, 2000, p. 12.
Meredith, Robyn, "At It Again," Forbes, January 12, 2004.
Stein, Tom, Katherine C. Allan, Drusilla Menaker, and Christopher Brown-Humes, "The King of Hong Kong," Success, June 1996, p. 34.
"Taipei's Next," Time International, January 22, 2001, p. 26.
Tanzer, Andrew, "Studying at the Feet of Masters," Forbes, May 10, 1993, p. 43.
Witter, Willis, "Hong Kong Paper Not Easing Up on Tiananmen Attack," Washington Times, June 13, 1997, p. 17.