Tea Leaf Nation

Hard Target

A Chinese firm will need more than money and good intentions to buy a U.S. media company. 

It won't be the Grey Lady turning red. It may not be the self-anointed "capitalist tool" enduring a nominally Communist, and highly ironic, twist of fate. But while The New York Times easily shrugged off Chinese overtures, and Forbes may lend its hand to a different suitor, it's getting easier to imagine some Chinese firm eventually making an acquisition offer too rich to refuse. With the immense amount of Chinese cash sloshing onto foreign shores -- $14 billion in investment in the U.S. in 2013 alone -- combined with the generally precarious financial state of even respected U.S. print and web media outfits that enjoy worldwide brand recognition, it's no longer beyond the pale to envision some Western journalists collecting pay stubs issued by a Chinese company.

But money isn't everything. The planned purchase of such a U.S. media company by a Chinese buyer will inevitably provoke not only political scrutiny, but concerns among journalists and the reading public about the editorial independence of the targeted asset and the safety of the information it husbands. A Chinese purchaser would have to navigate all of these minefields in addition to shelling out the lucre.

For years, Chinese investors have been kicking the tires on financially beleaguered U.S. media companies. Most recently, on Jan. 15, the Financial Times reported that Shanghai-based investment shop Fosun International was among a slate of finalists to purchase Forbes, Inc., the company that owns Forbes' print and web outlets and which put itself up for sale in November 2013. (A Forbes spokesperson declined to comment.) It's eminently possible that Fosun's won't be the winning bid, but it isn't the first attempt. In June 2010, the Southern Media Group put in a losing bid for ailing Newsweek. And in December 2013, colorful tycoon and self-proclaimed "Most Influential Person of China" Chen Guangbiao made a short and mostly risible bid to purchase the Times, one he abandoned Jan. 8 under a wave of domestic and foreign ridicule.

In each case thus far, prospective buyers have withdrawn after some combination of public opinion and financial reality supervened. There's a reason for that; a Chinese purchaser of any media company will have to convince both readers and staff that it will be able to maintain its editorial independence, whether it's reporting from China or about China, in Chinese or in English -- all of which Forbes does. Bob Dietz, Asia program coordinator at the Committee to Protect Journalists (CPJ), told Foreign Policy via email that China lacks "a strong concept of separation of church and state" where "keeping business and editorial concerns apart" are concerned.

The facts bear that out. Although they don't yet have any direct influence on U.S. media, Chinese authorities have already shown themselves willing to put the squeeze on press elsewhere. That's not just true of mainland media, which has been under Communist Party authority for decades; reporters in both Taiwan and Hong Kong have told CPJ that they feel self-censorship has worsened in the last several years under pressure from Beijing. On Jan. 20, some staff at respected Hong Kong paper Ming Pao printed blank columns to protest the sacking of their editor in what they felt was a blow to editorial independence intended to please Beijing. China also hasn't shied from trying back-channel methods further afield, including the United States. An October 2013 report by NGO Freedom House describes a "transnational toolbox" that Chinese authorities use to influence China-related coverage abroad, including cyber-attacks and pressure via financially influential proxies like ad agencies, not to mention the old-fashioned phone call to bellyache about coverage. The Times has also felt Beijing's wrath, after publishing an October 2013 expose of the family wealth of then-Premier Wen Jiabao in both Chinese and English. Some Times journalists have since faced difficulty getting Chinese visas, with some being forced to leave the mainland.

This kind of interference is vexing enough when it comes from a Beijing bureaucrat, but potentially unbearable from an immediate supervisor. Times reporters chortled at Chen, and have shown their willingness to go to the mat for press freedom. Forbes' online outlet relies on an army of unpaid bloggers, but it also boasts on-the-ground reporters. The publication has also frequently reported on Chinese corruption, and according to one contributor, allows some writers to publish online before articles have been vetted. Any difference in this approach would register, and may cause the best practitioners to flee.

There's also the question of information security. To be sure, companies that peddle written words, influential as they may be, don't possess the same strategic import as atomic energy or banking, both industries in which foreign acquisitions have received review from a little-known Treasury Department body called the Committee on Foreign Investment in the United States, or CFIUS. Daniel Rosen, a partner and co-founder at New York-based advisory firm Rhodium Group, says "there's really no history" of CFIUS "having a problem with this kind of transaction."

But as Rosen also notes, media companies sit at the crossroads of a great deal of sensitive information, one likely reason Chinese hackers have previously struck at targets like the Times and The Washington Post. At major media outlets, government officials and well-placed anonymous sources frequently lodge off-the-record conversations that may find a home in a reporter's notebook or inbox, even if they never reach publication. Some outlets have a policy requiring reporters to destroy their notes, while others do not. But emails are a tougher case: They can remain stored on a company's servers for years, and are often retrievable even after a user has deleted them or left the organization. For their part, Chinese authorities have shown themselves willing to come down hard on leakers. In September 2013, award-winning Chinese journalist Shi Tao finally gained his freedom after serving over eight years in prison for leaking a propaganda directive to an overseas website. The evidence: emails sent from Shi to New York-based Democracy Forum, captured (and later shared with Chinese authorities) by provider Yahoo.

The buyer's intent is also significant, and here Chinese suitors differ immensely. Fosun, which did not return a request for comment, is almost certainly not participating in an expensive bid -- Forbes' asking price is reportedly in the low hundred of millions of dollars -- so that it can snag a bunch of old emails. In a July 2013 interview with The Wall Street Journal, Fosun CEO Liang Xinjun explained that his company acquires foreign firms if it thinks it can "improve their value by helping them do well in China." Fosun probably just thinks it can improve Forbes' performance there, particularly the magazine's vaunted list-making capabilities. Although Forbes' "rich lists" have brought it great attention, it has found itself behind the 8-ball in China, ceding mindshare to others like the upstart Hurun Report, founded in 1999 by a Luxembourg-born accountant.

But good intentions may not be enough. In June 2010, the same month state-owned Southern Media Group joined another Chinese bidder to attempt to buy Newsweek, the weekly's then-owner (then the Washington Post Co., now called Graham Holdings Co., which currently owns FP) rejected the offer without disclosing why. It wasn't enough that the bidder's flagship paper, Southern Weekend, was (and is) seen domestically as liberal and somewhat pro-Western. After the deal died, the paper's executive editor told a Chinese interviewer that the seller "genuinely does not comprehend the desires of Chinese media workers and institutions."

Even a future would-be purchaser that's privately held, avowedly idealistic, but also China-based will have to live life under the thick shadow of Chinese authority. So, to some extent, would the affected journalists. They would be compelled to wonder what would happen if a Chinese official, instead of deploying sophisticated hackers to finger a source, simply picked up the phone and called their boss.

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Tea Leaf Nation

China, LinkedIn Would Like to Add You to Its Network

Why it will be hard for the U.S. site to get comfortable there.

LinkedIn is now aiming its bow for the rocky shoals that have claimed Facebook, Twitter, Google, and even eBay: the Chinese market. On Feb. 24, LinkedIn CEO Jeff Weiner announced the launch of LinkedIn's Chinese-language site, still in beta, meaning it is a test edition subject to further improvement. LinkedIn has been active (and unblocked) in China for 10 years, but the move reflects an intention to apply for a business license there. LinkedIn, which raised $1 billion in a September 2013 stock sale partly to fund international expansion, is surely tantalized at the prospect of bringing in the additional 140 million users Weiner estimates China could provide on top of what it says are 277 million current users. But even if it gets the Chinese government license it needs -- and the smart money says the company would not have made its announcement without liking its chances -- LinkedIn looks to be in for some choppy sailing. 

At first glance, the platform looks well positioned to become the only major U.S. social network to succeed in China.Twitter, for example, has been blocked in China ever since July 2009 riots in the Western Chinese region of Xinjiang, when news of police violence there first leaked via tweet. Facebook started having problems earlier, in July 2008, after launching a Chinese-language version. (The Chinese government has never admitted to blocking either of them.) By contrast, the California-based LinkedIn bills itself as the "world's largest professional network," and doesn't appear to aspire to much more than fulfilling that core competency. Its sharp focus surely lends some comfort to Chinese authorities wary of speech-and-information-freedom advocates like Twitter. LinkedIn's emphasis on helping members make professional connections -- all communicated through a barrage of red status alerts and email invitations to congratulate a connection on tweaks to their profile -- seems a perfect fit for what many Chinese would agree is a status-obsessed society, some of whose members suffer from Internet addiction. 

That's why it's surprising to see that thus far, LinkedIn's China soft-launch does not appear to have been a hit on China's hyperactive blogosphere. Among those who have chosen to comment on the latest entrant, many have focused on the name, Ling Ying, which roughly means "pick out the elites." The moniker, it happens, is also an inauspicious (and probably accidental) near-homonym with another word, also Romanized "ling ying," which means "ghost child." (One Chinese legend holds that unborn children become spirits.) Another headache: Some Chinese dialects don't distinguish between the "n" and "l" sounds, meaning certain users may not know whether LinkedIn's new Chinese domain is indeed lingying.com, or instead ningying.com. (The latter is currently unclaimed; LinkedIn may wish to make the owner an offer.) On Sina Weibo, a Twitter-esque platform in China, one user complained, "One look at the name and you know LinkedIn's China entrance will fail." Another, also critiquing the new label, wrote, "It seems a tragedy is about to play out." Yet another sneered that LinkedIn is "already 90 percent" of the way to losing the China market because of its name. 

That's surely too harsh. LinkedIn's major obstacles are not of the linguistic sort, but rather the same that bedevil domestic networks. Popular Chinese tech blog Huxiu warned in a Feb. 25 article that LinkedIn, which had clearly "thoroughly investigated" the Chinese market before entering, nonetheless "certainly should not relax" in the face of what Huxiu calls "the curse" of foreign Internet firms who eagerly seek to enter China, only to discover keen competitors waiting on the other side of the Pacific. The site's analysis holds that LinkedIn is a "composite" of a social network and a job-seeking site, and perhaps better conceived as a competitor to Chinese native site Tianji, which claims 14 million users and likewise aims at an elite Chinese crowd, as opposed to larger Chinese jobs platforms like Zhaopin or 51job, which function more as massive classifieds sections. But the article noted that social networks suffer from some well-known obstacles, including the lack of what it calls "stickiness" among users -- that is, they are quick to migrate elsewhere -- and difficulty in monetizing among richer Chinese, who are often resistant to paying for online services. 

Then, of course, there's the omnipresent threat of censorship. In a blog post, Weiner avers his company will deal with inevitable official meddling by implementing government restrictions "only when and to the extent required" and "undertake extensive measures to protect the rights and data of our members" while being transparent about its China dealings. Such intentions are laudable, but hard to put into practice. Over the past several years, China's NASDAQ-listed Sina Corp., which runs the massive Weibo platform, soon to have its own spin-off IPO, has not exactly fallen over itself to obey Chinese Communist Party commands. When in March 2012 authorities required that Sina implement real-name registration, intended to encourage self-censorship among its members, the company executed an end-run by simply asking for users' cell phone numbers, which were linked to real names in theory but not in practice. But the party still ultimately got its wish, with political speech on Weibo seriously declining in the wake of -- and certainly partly as a result of -- a September 2013 crackdown that included new anti-rumor laws and the arrest or detention of hundreds of microbloggers. 

Of course, LinkedIn enjoys a heavy hand in setting the tone for its self-selected user community, from the site's branding and marketing down to its available set of user functions. But recent history is replete with examples of Chinese netizens repurposing major Chinese-language web platforms for what some would call more seditious ends. Douban, which has more than 50 million users, launched in March 2005 as a book and movie review site, but now hosts conversations about ethnic identity, home prices, and women's rights. Zhihu, a Q-and-A site which launched January 2011 and claims around 40 million users, sometimes hosts conversations about freedom or democracy, even as it admits to deleting sensitive content on an ongoing basis. In fact, LinkedIn itself has already seen some of that repurposing. Kai-Fu Lee, who used to head Google's China operations, has used LinkedIn's "Influencers" feature (currently unavailable on the Chinese version) to discuss censorship, Chinese reactions to the NSA's PRISM wire-tapping program, and Weibo's (heretofore unrealized) power to change China.

In short, LinkedIn surely hopes to protect the privacy and freedom of its users (a spokesman declined to comment). But it's also probably hoping that Chinese users stick to using the platform for the purpose for which it was intended -- finding jobs. China's government certainly feels the same way. Its unspoken bargain with its citizens since economic liberalization in 1979 has been that a largely unbridled pursuit of wealth subsidizes a continuing lack of political freedom. But the twain are not always easy to separate. A debate has emerged among influential Chinese entrepreneurs about whether to use their clout to affect political change. Some have given strident support, only to discover that their money did not insulate them from abusive treatment by authorities who felt the entrepreneur had crossed the invisible red line: Wealthy businessman Wang Gongquan was arrested in September 2013 for helping organize a Chinese protest movement, and released only last month after what Wang's lawyer has claimed were 92 rounds of interrogation. LinkedIn, whatever its intentions and its plans, could end up getting caught in the middle.

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