SCMP Buy Brings Political Risks for Alibaba

Last week, struck a $266 million deal to purchase the Hong Kong-based South China Morning Post and other associated media assets. The company’s stated intentions to boost China’s image while preserving editorial independence have raised eyebrows abroad, but The Wall Street Journal’s Gillian Wong writes that the deal also risks jeopardizing Alibaba founder Jack Ma’s hitherto mostly cozy relationship with Beijing:

The deal gives Alibaba control of a that is a significant news source about China for English speakers globally. It also comes as China looks for ways to get its message out to the world.

It adds to Alibaba’s growing portfolio of media holdings as it is competing with its Chinese rivals for news and programming. 

But it also puts Alibaba in the politically sensitive area of . Analysts have said Beijing seeks to indirectly influence media there.

Alibaba would draw criticism if it sought to curb the paper’s editorial independence to please Beijing, said Scott Kennedy, a business expert at the Center for Strategic and International Studies in Washington, D.C. If Alibaba tried to boost the paper’s independence, it would risk displeasing China. “Why would one want to intentionally put themselves between a rock and a hard place?” he said.

[…] “Entrepreneurs in general have to be both ambitious but also mindful of not flying too close to the sun,” said Duncan Clark,chairman of consulting firm BDA China, an early adviser to Alibaba and the author of a book about the company coming out in the spring. “The line is never clear how far they can go.” [Source]

Alibaba so far shows little sign of inclination to step on Beijing’s toes, The New York Times’ Chris Buckley and Jane Perlez report:

[…B]usinesses such as Alibaba that throw their spending power behind the government’s message can also win points with policy makers, said Chen Ping, a mainland-born media investor and businessman in Hong Kong. “Doing this will enhance his standing in the eyes of the Communist Party,” Mr. Chen said of , the shrewd founder of Alibaba, who is the chairman of the company.

China’s government has long been testy about its image in the West. In recent years, it has tried to influence coverage by blocking websites and restricting visas for journalists of news outlets deemed too negative, and also by spending heavily on the international expansion of state-run outlets like China Central Television and China Daily.

The most recent tactic has been recruiting Chinese corporate support, said Mareike Ohlberg, a researcher on Chinese propaganda policy in Heidelberg, Germany. Similarly, Chinese corporations investing aggressively abroad are seeking favorable coverage for China as they work to overcome regulatory hurdles they see as rooted in biased reporting on China and suspicion of its rising economic clout.

Alibaba’s purchase comes as the Chinese government has staked out more ambitious positions abroad, from hosting the summit meeting of the Group of 20 leading economies next year, to establishing a new international development bank, to extending its military power, all subjects for which the government covets positive spin. [Source]

At Bloomberg View, Adam Minter writes that serving the Party’s perceived interests too bluntly would likely prove counterproductive:

[…] “What’s good for China is also good for Alibaba,” Tsai insisted.

That’s a fairly convoluted rationalization for a multimillion-dollar acquisition. And it’s unconvincing for one simple reason: The market for neutered coverage of China is exceedingly small and is becoming smaller. If Ma is really serious about revising perceptions of China and his company, then he’s going to have to have the confidence to present the country in all its aspects, good and bad.

[…] How far Alibaba will go to change the ’s editorial focus remains to be seen, of course. The paper is currently censored online in China. If it wants access to mainland readers, it’s going to have to accept the same low standard for coverage as China Daily and its brethren do. At that point, the would have little comparative advantage over its mainland rivals, who are likely to dominate the few scoops the regime sees fit to dispense. And in the meantime, foreign readers who count on the paper for insight into China are almost certain to abandon the paper in droves.

The better option would be for Ma to offer the paper’s editors and writers the resources and freedom to pursue the China story wherever it leads — and to count on mainland readers to continue to find a way to access its stories. Such an approach would inevitably lead to some uncomfortable moments between Ma and Party officials. But the benefits of defying expectations and showing that both China and one of its most high-profile companies are open to a freer press would be enduring and profitable. For Ma, a noted risk-taker, it’s a bet worth taking. [Source]

The alternative, Charles Custer argues at Tech in Asia, could backfire not only on the Post, but on Ma’s wider business:

The problem – and this is the big mistake Alibaba is making – is that now Alibaba becomes the scapegoat for any and every instance of pro-Beijing bias found in the paper. The next time somebody like Li Wangyang gets arrested or turns up dead and the paper buries the story, people aren’t going to be saying the SCMP is biased. They’re going to be saying Alibaba is biased. They’re going to be saying Alibaba is whitewashing political repression. They’re going to be saying that Alibaba is trying to hide China’s sins from the world.

[…T]he real issue here is how that PR loss can get compounded, repeated, and multiplied. A little bad press for buying a newspaper with a political agenda in mind? That’s the sort of thing Alibaba can shake off pretty easily. But this is a newspaper that covers China every day, and there are already lots of people watching it and comparing its coverage with that of other news media. Every time the SCMP runs a pro-China fluff piece or glosses over some negative piece of China news, people are going to blame Alibaba for it. It’s the PR gaffe that has the potential to keep on giving.

[…] Jack Ma is a man who’s known for making gutsy calls that turn out to be correct, and this could be one of them. But I fear that instead, it may become a black mark on Alibaba’s reputation that the company will have trouble shaking off as it continues to expand outside of China’s borders and into places where the pro-China narrative simply doesn’t sell well. [Source]