Bottom line: Reuters decision to put its Chinese-language website on hold is partly a surrender to Beijing, but also acknowledges that new approaches are needed to succeed in the nation’s restrictive media space.
No one else is writing about the latest strategic shift at Reuters’ (NYSE: TRI) Chinese language news site in Beijing, probably because the actual number of headcount reductions is quite small, at less than 10. But the move has huge symbolic significance, since it looks like an admission of defeat to Beijing censors who blocked the site in China more than a year ago. At the same time, the move also represents a certain realism, and the fact that Chinese consumers increasingly get their news via other channels anyhow, most notably social media.
I can’t link to any stories detailing what happened at Reuters, because I couldn’t find any Internet reports on the story. But according to buzz I’ve heard from knowledgeable sources, my former employer is cutting all of the staff except for 2 people that service its decade-old cn.reuters.com website. The team was steadily shrinking over the years, even before the site was blocked last March for unspecified reasons. (previous post)
Before that, Reuters had been one of the few major foreign-owned Chinese-language news sites that successfully avoided being blocked in the country they were designed to serve. Bloomberg and the New York Times were blocked several years earlier, and 3 of the last remaining accessible sites in Chinese are ones run by London’s Financial Times, Japan’s Nikkei and US magazine Fortune, all financial publications.
In terms of jobs, it appears that most or all but 2 of the team members who serviced the website will be redeployed to other areas within Reuters, most like as translators and editors for its core Chinese language news service for institutional investors. The remaining pair will act as a skeleton team to continue feeding the Chinese-language website, though one of their tasks will be automating that process as much as possible.
Here I need to disclose that I previously worked for Reuters for 10 years, and had a close relationship with their website team for 4 years as they translated and published many of my online commentaries. But that relationship steadily shrunk over the last 3 years and eventually ended about a year ago, due to their dwindling resources.
From a business perspective, this major “slim-down” of the site team certainly makes sense. The site enjoyed a brief period of profitability around the time of the Beijing Olympics in 2008, but quickly fell into the red after that and was rumored to be losing money even before it was blocked last year. A shutdown had been rumored for years even before the blockage, and a visit to the site now reveals just 2 advertisers on the homepage, including 3 ads for the Red Cross that were likely sold very cheaply or even given away.
While Reuters’ putting the site on virtual “hold” looks like a surrender to Beijing, its maintenance of the URL implies that it hopes to someday relaunch the page if and when it becomes unblocked. Getting a license to operate a news site in China is no easy feat for a foreign company. Accordingly, I suspect that Reuters had to lobby hard and probably pay big fees for permission and doesn’t want to completely throw away that investment.
At the same time, Reuters also says it will continue trying to tap the China consumer news market using other channels. One of the most obvious of those is Weibo (Nasdaq: WB), the Chinese equivalent of Twitter (NYSE: TWTR), where most foreign media already have accounts. But a search on Weibo fails to return any results for Reuters former main site. Instead there are 2 verified Reuters specialty sites, one on financial markets and the other on intellectual property, though neither has very many followers. The company also has an official account on Tencent’s (HKEx: 700) popular WeChat mobile messaging platform.
At the end of the day, other foreign media may look down on Reuters for its decision, saying it represents a surrender to Beijing and censorship. That’s certainly true to some extent, though perhaps it’s not the whole story. Doing business in China has never been easy for foreigners, especially in the media space. This move by Reuters reflects that fact, and perhaps that it’s time to try a different approach that yields better results in the nation’s highly restrictive media environment.
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