Such worries permeated the China Info-Tech Summit 2001, which ended last week in Shanghai, in which the hot topic was the Chinese media after WTO entry.

"The market is exciting; however, investors will be scared if no clear-cut rules come out to protect their interests," said one participant at the summit asking to be identified as Zhan.

He said the relationship between most media and their investors now is that of lending and borrowing, and is "not healthy for boosting co-operation between the media and capital".

Risky input

Traditional Chinese media are forbidden to establish shareholding companies, which means that no private investors can have shares in the media.

"Investors other than the government have no ownership of the brand name of the media and it is risky even for them to have a say in other operational departments of the media such as circulation or advertising," said Zhan during an interview at the summit.

Proof of the risk was supplied when a private software company lost its entire investment in two newspapers in Chengdu, the capital city of Southwest China's Sichuan Province, after local press authorities revoked their licences to the newspapers.

"The government still has the final say about whether the media can survive or not," he said. "In that case, it is quite risky for investors."

Since the amount of money injected into the media cannot be quantified into shares, it is difficult for the media to decide what would be a fair return for investors, said Zhan.

Private investors are not in the position of appointing management, which is done by the administrations.

Experts inside the industry said that the central press authority is now working on the rules for such business relationships.

However, they doubt whether rules will ever materialize.

Tightly controlled, the Chinese media has managed to maintain high revenue growth, as much as 15 to 40 per cent per year.

"It might be the last industry with staggering profits in the world," said Zhan Zhengkai, one media critic.

It is not easy for capitalists to resist such temptations.

Private capital has taken a roundabout way to inject itself into the traditional media.

"Since some private capital flowed into this emerging industry, there have appeared several dynamic outlets with better planning of content and marketing strategies," said Zhan, citing the new independent video production company Fortune China.

Fortune China, established last year in Hubei Province by the listed Hunan TV and Broadcast Intermediary Co Ltd Group with 8.6 million yuan (US$1.04 million), produces two hours of programming for various TV stations every day.

It was originally expected to show a profit after five years of operation. Now, however, the company's chief producer, Zhang Hongwei, predicted that it would break even next year and be in the black soon after that.

Fortune China's business model, which has a listed company injecting capital into a media outlet, is one of the three that Chinese media employ to co-operate with private capital.

Media outlets also can buy the shells of listed companies and become indirectly listed (like the Chengdu Business Daily), or co-operate with shareholding companies to establish an operating company for the outlet (such as Shanghai Qiangsheng Group's co-operation with the finance magazine Money Weekly).

Regardless of which model is used, the reporting and editing of news still cannot be managed by private investors.

Early birds

Shanghai media is also expecting a new opportunity at this critical stage.

Last year, Shanghai Qiangsheng Taxi Co Ltd, a listed company mainly engaged in public transportation, made an industry breakthrough when it invested 160 million yuan (US$19.28 million) to establish Shanghai Qiangsheng Mass Media Investment Company.

It then invested in Money Weekly in what was described as the opening through which Qiangsheng will enter the media industry.

Shanghai Bashi Industrial (Group) Co Ltd, another listed company in public transportation, followed suit by co-operating with Shanghai Business Daily.

However, insiders at the summit did not see much motivation on the part of Shanghai media to connect with outside capital.

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