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Media Convergence Asia-Pacific is happy to send you this CONFIDENTIAL newsletter about recent developments in the region. This regular newsletter will be sent to media companies' CEO's and senior executives.

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Didier Guérin
President

Inside this issue:

According to the International Monetary Fund, the ”global slowdown has bottomed out” and ”most economies in the Asia-Pacific region are now showing signs of a turnaround”. In its recently published World Economic Outlook, the IMF predicts real GDP growth in the 12 largest economies of the region (with the exception of Japan) will be larger this year than in the U.S. and Europe. In 2003 - again with the exception of Japan which will return to a modest positive growth - the trend will increase. Next year, the IMF expects the Asia Pacific region to grow - and create wealth - about twice faster than the ”old world” economies. In most countries, magazine advertising spending - which normally stands at about 1% or 2% ahead of GDP growth - does not appear yet to be on line with these projections. However it normally takes four to six months for advertising bookings to catch up with economic market demands.

Real GDP Growth
The Asia-Pacific Region	2001	2002	2003
China	7.2%	6.9%	7.4%
India	4.3%	5.5%	5.8%
South Korea	3.0%	5.0%	5.5%
Philippines	3.4%	4.0%	4.2%
Australia	2.4%	3.9%	4.0%
Indonesia	3.3%	3.5%	4.0%
Singapore	-2.1%	3.2%	5.1%
Malaysia	0.4%	3.0%	4.0%
Thailand	1.8%	2.7%	3.5%
Taiwan	-1.9%	2.3%	4.8%
Hong Kong SAR	0.1%	1.5%	3.6%
Japan	-0.4%	-1.0%	0.8%
Compared with the ”old world”	2001	2002	2003
United States	1.2%	2.3%	3.4%
United Kingdom	2.2%	2.0%	2.8%
France	2.0%	1.4%	3.0%
Italy	1.8%	1.4%	2.9%
Germany	3.0%	0.6%	0.9%
Source: IMF, April 2002

 

Whereas China has issued recently a new regulation for print media (see story below), magazine publishing remains ”prohibited” to foreign investment. Furthermore, local authorities have forbidden the use of new foreign magazines' name and logo until further notice. The restriction does not affect long established titles like Cosmopolitan or Madame Figaro; however, no new magazine is currently allowed to have a non-Chinese name on its cover. Although there are some exceptions, this restriction has forced some publishers to postpone their launch, like L'Officiel. Other publishers have decided to launch their magazine using a Chinese title, but not the original name and logo. This is the case for Primedia's Seventeen, Hearst's Good Housekeeping and Harper's Bazaar, who hope to be able to print their original logo on the cover at a later date. The regulation is supposed to be lifted by April next year, when China's new head of State - most likely Hun Jintao who will be chosen this October - takes over from president Jiang Zemin.

Click here to see article published in the FIPP Magazine

The IT industry which has fueled the Asia-Pacific growth over the last decade has already seen positive signs of recovery in the first quarter this year. According to IDC (www.idc.com), PC shipments in the region (except Japan) reached 5.4 million units during the first three months this year (this is a 3.6% increase over Q1 2001). Whereas the Hong Kong and Singapore markets remain sluggish, IDC expects the PC market to grow by 11% in Asia-Pacific this year when ”both consumer and commercial purchasing patterns are expected to pick up”. The markets leading the recovery are believed to be China, South Korea and Australia.

In Thailand, Seventeen will be launched as a monthly magazine with the November 2002 issue, under a license agreement between Primedia and Media Transasia Thailand Ltd. Based in Bangkok, Seventeen's local publisher (www.mediatransia.com) already produces about 20 magazines, mostly in-flight or B-to-B titles. Separately, in both Malaysia and Singapore, Primedia has concluded a license agreement to publish its young women's magazine with MPH Limited, the publicly traded company in Singapore (www.mph.com.sg). The local Seventeen editions will appear in each market with the September issue. These three launches will bring to six the number of Seventeen editions published in Asia (www.primedia.com).

In China, the partnership SCMP Haymarket Publishing launched with Shanghai Technology Products Magazine Agency the two local editions of Autocar and Stuff, the automotive and lifestyle technology titles, which have a circulation in the UK of about 70,000 and 55,000 copies (UK Audit Bureau of Circulations). The Hong Kong-based 50-50 joint venture between the South China Morning Post group (www.scmp.com) and Britain's Haymarket Magazines (www.haymarketgroup.co.uk) entered into ”a co-operative and licensing arrangement” with its local Chinese partner, who has circulated the Chinese editions of Autocar and Stuff since last January.

Out of Hong Kong, but distributed in China, CFO China was launched by The Economist Group as a quarterly magazine, with a controlled circulation of 10,000 copies targeted to Chinese ”finance professionals” in Shanghai, Beijing and Guangzhou. This is the fourth local edition of the publication (after the US, Europe and Asia) but the first one with a quarterly frequency (www.cfochina.com).

In Australia, the local edition of the Official Australian XBox Magazine was launched by Derwent Howard Publishing under a license agreement with Microsoft and The Future Network who is Microsoft's master licensee outside the US (www.futurenet.co.uk). The monthly magazine (which includes a free game demo disk with every issue) was launched with a 30,000 copy print-run and a A$14.95 (US$8.00) cover price. Derwent Howard also took over the license from ACP to publish the Official PlayStation 2 (also priced at A$14.95), the local Australian edition dedicated to Sony's video-game console (www.derwenthoward.com.au).

Many countries in Asia are investing heavily in their internet infrastructure and South Korea is leading the region in wireless and broadband internet service. Currently 55% of all Korean households have broadband access and the number is expected to reach 70% by the end of the year. In the U.S., broadband penetration is estimated at 21% of total households. According to the Yankee Group (www.yankeegroup.com), Japan is in the second place in the region, followed by Taiwan.

”I believe in the power of magazines and I believe in the future of magazines in Asia” Richard Smith Chairman and editor-in-chief Newsweek FIPP Conference - Seoul, April 2002

The graph below shows the performance of the 13 largest financial centers in the Asia-Pacific region for the first four months of this year compared with the same period in 2001. Whereas in New York, the Dow Jones was down by .25% and the NASDAQ fell by 13.2% in the same period, most stock markets have experienced a comfortable growth this year (with the exception of Shanghai and Shenzhen which experienced a three-digit growth last year). As quoted in Forbes Global, Marc Faber, publisher of The Gloom, Boom & Doom, explains: ”Asian stocks (…) are sensitive to global growth but, because of their low valuations, have less risk than the U.S. market”.

Time Inc. recently published both of them. Fortune (April 29, 2002) showcases a superb picture of an Indian farmer holding a PDA as a symbol of a country between tradition and modernization. Also in that issue, a not-to-be-missed article about the 20 best versions of ”Stormy Monday Blues” by a rare jazz contributor, Norman Pearlstine, the company Editor-in Chief.

In the South-Pacific, where (like in most countries in Europe) the month comes in second position in the date, people wondered why Time (March 11, 2002) asked about stopping the next 9th November.