media – Another That’s story
A cover of That's

Former That’s Shanghai-owner Mark Kitto was last week again the talk of the town as the Financial Times published his story (here republished by Danwei) on how he was forced out of the media business in China. Maria Trombly asked Kitto’s former business partner Kathleen Lau about her take on the story. Lau sold her share in the company in 2001 to Kitto. Here a short excerpt of their email exchange.
Lau is very critical about the media coverage up to now: “Unfortunately, the western press has chosen only to talk to Mark and not seek out anyone else that was involved. The third business partner, whose name is still on the company formed with Mark that signed the contract with the government partner, has never been contacted by any journalists. Everyone simply bought into the story that Mark founded the magazine by himself. Notone person thought to check this out. This is false.” And about what happened after the conflict emerged and much of the staff walked out: “None of the people left with Mark. After working alongside his staff for years, they all picked off the spoils of That’s Shanghai. This is extremely sad.”

Q: Was Mark Kitto badly treated and forced out of That’s Shanghai?
Lau: In the case of That’s Shanghai, the government partner owned the publishing permit for That’s Shanghai, and Mark's company wrote, produced, sold ads and made the money. They paid the government a monthly fee for the use of the name. There is an exclusive contract.When the government partner used the That’s Shanghai content to produce their own [new publication] That's China, it is….. a violation of their trust. Unfortunately, there was no clause in the contract to this affect – a loophole. Stilll, this is bad business practice on the part of the government and Mark had the right to pursue his grievance.However, he chose instead to pursue a covert deal with Tom.com. Secret memos were sent to senior managers asking their support to stop producing the magazine under the That's name, and to produce it under another magazine name. No changes in content or format, just a change in the name ….. This too is in violation of the contract….
(Word leaked out and that was reason for the government partners to oust Mark Kitto.)
Lau: The story could have gone another way. Had Mark succeeded, the government partners would have suddenly found itself without a magazine, and another magazine with the exact content and format appear under a different name. In this case, could you say they were badly treated?To me, this was a case of one bad business maneuver being out-maneuvered by another. It was a race to see who could outdo whom first and Mark lost. Didthe government partner have an unfair advantage? Probably. In any business fight you have to access your opponent. In this case, the gov't was much bigger than him.If Mark were fighting with Tom.com or any other company, he would probablyhave lost too.Q: Was his later business venture unethically undermined?Lau: Unfortunately for Mark, Voyage magazine did not have a magazine permit. … In China, publishing a magazine without a permit is illegal. Is this governmentcontrol. Yes. Is it unethical? No…In the U.S. one cannot walk down the street with an opened liquor bottle, in China, it is legal. The laws in the two countries are different. Whatever your feelings about them, they are still law that has to be abided by if you live in that country.
Q: Is there reason for foreign parties to fear investments in this sector where government control and interference is the primary issue?
Lau: There is not one industry in this country that did not start out with a required "joint-venture" set up. Even 5-star hotels used to require that 100% ownership revert to the Chinese partners after 5 years!!! Today, there are foreign wholly owned hotels. China "releases" every industry carefully, seeing what can go wrong and how to maintain growth without losing control. The media industry is in transition. Contrary to what the article states, publishing in China is getting easier, not harder. Witness the numbers of other English magazines coming onto the market. Now, there's even a Spa magazine. This does not even include the Chinese magazines being published by foreign companies. Their numbers will only increase.

Books on media in China