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July 27, 2015

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Print plagued by more than just new media

chinese VIEWS

IN the world of journalism, people come and go. For veteran editor and newspaperman Qin Shuo, high turnover is part of the business.

One of the founders of China Business News, a leading business newspaper, Qin remembers a conversation in May last year when a young proof-reader submitted his resignation and told of his plan to start his own business — open a store that sells fresh juice. As usual, Qin sent his best wishes to the departing employee, yet he didn’t think much of the juice business, for good reasons. Juice and news, they are worlds apart.

The proof-reader-turned-business-owner surprised his former employer though. He opened his first store in a 2-square-meter storefront in Shanghai. His selling point is to label juice cups with witticisms such as “to a sweet guy or a confidante.”

This simple gimmick proved popular. Business prospered. He soon opened another five or six stores and planned to expand his operations to another city. Perhaps even more jaw-dropping, he got funding from venture capitalists.

Qin recounted this tale at a recent forum held by Fudan University, concluding that “When young generations of business owners try to network with consumers using smart communications, they will likely create a profitable niche somewhere along the way.”

According to Qin, the winning formula of the juice business is its ability to connect with customers. This ability, he went on to point out, is seriously lacking among many Chinese industries today, including the one in which he finds himself. Few enterprises spend much time studying the market and instead produce a plethora of goods that increasingly fail to meet demand. As a result, entire industries are weighed down by overcapacity and inefficiency.

Plight of newspapers

Although talk of overcapacity has long been associated with Chinese industries, as a matter of fact the real economy isn’t the sole victim of overcapacity, said Qin. Citing a recently released report on the profitability of print journalism in Shanghai, Qin explained that a statistical pool of 100 newspapers in Shanghai earned a combined 241 million yuan (US$39 million) in profits last year. This represents a year-on-year slump of 5.49 percent. But unlike those who tend to blame the rise of new media, Qin asked: “Doesn’t this (dwindling profits) signal that newspapers are producing content that is out of tune with market norms and standards?” Qin asked.

He went on to say that several of China’s art troupes are also suffering financially because of a gross mismatch between their performances and audience expectations, as evidenced by half-filled theaters. “Overcapacity has spilled over into wider segments of the economy and is the heaviest burden on the Chinese economy today,” Qin explained.

The problem with traditional model of production is its slowness in adjusting itself to new developments in consumer behavior. Instead of being satisfied with identical products, consumers long to see their personal preferences reflected in their purchases — for example, the juice cups bearing different witticisms — and even become involved in the manufacturing process. In a word, it is “experience” that sells, said Qin.

Traditional businesses don’t offer such experiences and continue to compete on an antiquated model centered on homogeneity, which no longer makes sense to today’s consumers.

Innovation is key

Of all industries, print journalism has born the brunt of the new media onslaught. Before 2010, the challenge from the PC-based Internet was still manageable, said Qin.

Print journalism was dealt a severe blow thereafter, with the mobile Internet turning the entire business model upside down. In the past, newspapers monopolized news production, channels of distribution and the audience.

But in the new media era, print journalism has to compete for readers — not to mention advertisement money, which tends to flow where there is the biggest audience. To observers like Qin, this suggests “a complete overhaul of the old value chain.”

While most newspapers are struggling to stay afloat, he said it is time to “ditch the established modes of operation and self-pride altogether, otherwise, newspapermen will only turn more often to the government for help.”

It has become a cliche to say the future belongs to those with the most innovative spirit. In more direct terms, said Qin, the true strength of enterprises will lie in their ability to improve product quality and connect with customers rather than acquire land, warehouses or equipment.

Slowly — and somewhat reluctantly — traditional industries like journalism, retailing and finance are learning to embrace the spirit that social media embodies. These players ought to be convinced of the merit of taking on established ideas and practices. “What helps you get there won’t guarantee that you’ll stay there for ever. One must think anew in order to break from concepts, procedures and methods that one has come to take for granted,” Qin added.




 

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