HK paper mogul unfazed by '97 prospect

HK paper mogul unfazed by '97 prospect

By Carrie Lee

HONG KONG (Reuter): The looming problems of Hong Kong's 1997 handover to China do not faze the territory's latest budding newspaper mogul.

Jimmy Lai, who made his fortune in the rag trade, believes the time is ripe for his new Chinese-language newspaper, Apple Daily, which hits the streets on June 20 and which he says will bow to no one.

"It's good timing because many people say the media now are exercising self censorship. I think many readers have become estranged from their once-favorite newspapers which have changed stance... that has created a vacuum for us to fill," Lai told Reuters.

Lai, who owns a weekly Chinese language magazine, is no stranger to controversy. Last year, he penned an outspoken article in the magazine, Next, criticizing Chinese Premier Li Peng in trenchant language.

Following the Tiananmen Square bloodshed of 1989, Lai's casual clothing chain Giordano launched a range of pro-democracy T- shirts carrying the faces of the Chinese student leaders. Some of the profits went to the democracy movement.

"Our newspaper will report honestly. I think we as Hong Kong people with such achievements and confidence have no reason to fear speaking out at this time," he said. Apple -- "named after Eden's forbidden fruit which after Eve's bite launched gossip and news in the world" -- faces cutthroat competition and arrives at a time of spiraling production costs.

Soaring newsprint prices have been held partly to blame for the closure of at least two papers recently and have forced others, including the wealthy South China Morning Post, to cut staff and overheads.

Lai said such problems mean little. He is prepared to invest some US$100 million in the first two years.

"We're sure not to make any profit in the first couple of years anyway. Our aim is not to make money but to establish market share. Two years later, newsprint costs may come down and then we may be able to make a profit," he said.

Lai, aiming at building a circulation of 300,000 in a market already crowded with about a dozen major Chinese dailies, is launching Apple with a bang. He is distributing coupons offering HK$3 (about 38 US cents) off the HK$5 (about US$0.64) cover price. Most Hong Kong papers retail for $5.

He has already employed 530 people. Editorial staff number 380, including former pizza delivery boys who will be armed with motorcycles and cameras and charged with being first on any news scene, at salaries about 20 to 30 percent higher than the market average.

Lai has already managed to upset some people.

"We've heard that many newstands and distributors will not dare to sell Apple because if they do so they won't be given other newspapers to sell," Lai said.

"We've also heard if our colleagues don't leave Apple by June 19 they will not be used by other newspapers again for the coming two years," Lai said. But he remains unperturbed.

"I don't think they can successfully boycott us, because Hong Kong has been a free market for more than a century. I don't think a handful of people can within days change the mechanism of a free market," he said.

Lai insists Apple will not tread the tabloid path. "We can't go with the tabloid style," he said, noting the folding of the tabloid Hongkong Today late last year.

"With serious news, we pay attention to credibility. With soft news and supplements, we care about the entertainment value," he said.

The paper targets educated readers in the 16 to 48 year range who grew up with television, Lai said.

Meanwhile, the flotation of Next Magazine, scheduled for last March, has been delayed again from September to November.

"We spent a lot of time preparing the newspaper and couldn't find time to contact merchant banks," he said.

In addition, many merchant bankers had proved unenthusiastic, a sentiment Lai attributed to his critical article on Li Peng. "We needed to wait for that sentiment to fade out," Lai said.