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Media companies push into Asia

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Looking to take advantage of the booming economies in China and India, no fewer than four U.S. business media companies announced new forays into those two countries in recent weeks:

• On Jan. 22, Dow Jones & Co. said that later this year it will launch The Wall Street Journal in India in a joint venture with Bennett, Coleman & Co., publisher of The Times of India.

• On Feb. 4, CMP Media said it will license Dr. Dobbs’ Journal content, which is aimed at software developers, to Huazhang Co., a division of China Machine Press.

• In a joint venture announced Feb. 5, Reed Business Information and International Data Group will publish Reed Business titles Variety and Packaging Digest in China.

"There are huge opportunities and substantial risks," said Reed Phillips, managing partner of media investment bank DeSilva & Phillips, "but the opportunities are unbelievably large, to the point where they cannot be ignored."

On the upside are growing industrial and IT bases and populations of more than 1 billion people. On the downside are notorious bureaucracies, the necessity of partnering with foreign companies, and the uncertainty of how advertisers on either side of the Pacific will respond to these new publications.

The agreement between IDG and Reed Business builds on a previous pact between the two companies in which IDG licensed Reed Business content to produce EDN China, Electronics Manufacturing China and Control Engineering China. Led by Chairman Pat McGovern, IDG has maintained a powerful presence in China since the launch of Computerworld China in 1980. With its experience in finding the necessary Chinese partners, IDG has helped many other publishers, including Hearst Corp. with Cosmopolitan, break into the market.

Reed Business CEO Jim Casella, formerly COO of IDG, has set a goal of growing the Reed Elsevier unit’s annual revenue to $1 billion from $600 million.

Generating business from China is one of his tactics for accomplishing that goal. Reed Business hopes to launch as many as 20 publications, such as Design News and Construction Equipment, there in the next three years. The company believes these publications have the potential to produce $100 million in annual revenue.

Advertising dollars aren’t the only revenue source for magazines published in China. Subscribers pay a cover price, often approaching the equivalent of $30 per issue. "The Chinese respect knowledge," McGovern said.

Casella said his publishers are just beginning to talk to current advertisers in their magazines about the potential for buying pages in Chinese editions. Multinationals are the most likely candidates.

Kevin Arsham, a media strategist at OMD, who handles b-to-b media buying for General Electric Co., said he is researching such publications as Asian Chemical News, which is published by Reed Business’ U.K. sibling. Arsham said the familiarity of a Western media brand such as Reed had its advantages. "China is not an easy market," he said.

While Reed Business’ foray into China might have an upside for GE or E.I. DuPont de Nemours or other multinationals, a few smaller U.S.-based marketers advertising in Reed Business publications and on the company’s Web sites saw little immediate value in Chinese editions serving their markets. "We don’t have a presence in that region," said Steven Reisert, sales and marketing manager for packaging industry supplier ADP, which has a banner on the Packaging Digest Web site.

Similarly, Ufe, a manufacturer of plastic gears that advertises in Design News, said it was unlikely it would buy pages in, say, Design News China. "The business is going from here to China, not from China to here," said Ufe Marketing Manager Richard Boyum.

As it is in most IDG publications in China, local companies advertising to their home market will likely place most of the ad pages.

‘Dr. Dobbs’ visits Asia

CMP Media already had a presence in Asia through licensing agreements and joint ventures before announcing its plans for Dr. Dobbs’ Journal. For instance, it publishes EE Times Asia in a joint venture with Hong Kong-based Global Sources. It has also licensed its content to Indian partners that publish such titles as Network Computing India and CRN India.

"This formula has worked well for some," said Paul Woodward, principal of Hong Kong-based Business Strategies Group, a media consulting firm. Finding a reliable partner has proven more challenging for others in many markets.

CMP has found that a U.S. brand can have a certain cachet in India. "Specifically in the high-tech arena, CMP has found that the market is extremely eager to read how it is done in the U.S. and to use industry news and case studies to gain competitive advantage," said John McCaffrey, director of international sales and marketing for EMEA/India.

For all its success in China, IDG has struggled in India. The company currently licenses no titles in the country, although it is exploring partnerships to re-enter the market, said David Hill, president-CEO of IDG International.

Hill said India historically has placed many barriers in the paths of foreign media companies. Until 2002, foreign investment in Indian media companies was not allowed. That is why licensing was the only means available to Western companies seeking to participate in the Indian media market.

Market not as big as it looks

Despite the press India has received lately, such as Business Week’s "The Rise of India" cover story on Dec. 8, the Indian information technology market isn’t that powerful, Hill said. While the number of IT professionals is growing, they perform most of their work for foreign companies. "The market is not as big as it looks," Hill said.

Business Strategies Group’s Woodward agreed that the Indian market lacks critical mass. "We believe that the specialized press plus national general business magazines generate not much more than $20 million in revenues for their publishers," he said.

Nonetheless, The Wall Street Journal is attracted to the region. The newspaper has had a presence in the region since at least 1976 when it launched The Asian Wall Street Journal. "We were interested even before then," said Phil Revzin, the Journal’s VP-international, "but it just wasn’t legal."

When the laws changed to allow joint ventures, the Journal set in motion its partnership with the Times of India. Currently, the Journal owns 26% of the venture. In the agreement is a provision for the Journal’s ownership to climb to 50% should the regulations change to allow that. "We think [the regulations] will continue to loosen up," Revzin said.

The Journal will likely attract a mixture of international conglomerates and large Indian companies to advertise in its pages, but publishing a daily print product in a country as large as India and as lacking in infrastructure will pose significant challenges, industry observers said.

Despite the image of India as a nation with a growing middle class of English speakers, agriculture accounts for about 40% of the country’s GDP, according to Rick Rossow, director of operations for the U.S.-India Business Council. Most of the citizens still earn their living in agriculture, and many of them speak Hindi or one of dozens of other languages.

This economic landscape presents opportunities and challenges to a company such as Pioneer Hi-Bred International, a seed company owned by DuPont. When Pioneer advertises in India, it tends not to use national publications but local newspapers and magazines, said Curt Claussen, Pioneer’s regional director for Asia-Pacific.

Claussen sees the marketing communications future in India not carried on the printed page but via cellular towers. Wireless phones are increasingly common there, even in rural regions, he said. "PDAs and cell phones might be the revolution that will change the way we communicate with our customers," he said.

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