Cash for comment in China's murky media world

Alibaba's decision to go public with the news that it was being blackmailed by a Chinese media group is the first step in tackling the widespread corruption in the industry.

Chinese e-commerce giant Alibaba revealed late last week that it was facing “an organised attempt at blackmail” by an unnamed media organisation that runs a business magazine. According to a post on the company’s official Weibo microblog, the would-be blackmailers have demanded $US300,000 to suppress a negative report about the company.

The decision to make the threat public is an unusual but welcome response in a decidedly murky media environment in which PR firms and the media collude to squeeze money out of companies seeking lucrative listings. Alibaba’s listing on the New York Stock Exchange, rumoured to be in September, is poised to be the biggest initial public offering in living memory.

The company is hoping to raise $US20 billion in the float and it seems the bottom-feeders of China’s media world are eager to extort as much out of them as possible. Refreshingly, Alibaba is standing up to the threats.

“When faced with utterly baseless accusation and unscrupulous threats using public opinion, we will not give in!” Alibaba’s Weibo post read.

While it’s shown its willingness to cast the first stone, it seems Alibaba is not without sin. In late December last year, Alibaba’s main rival Tencent posted a message to its Weibo account accusing Alibaba of planting negative articles in the media in an attempt to smear the group. To back up its claims, Tencent posted screenshots of internal Alibaba emails that showed drafts of the hit-pieces they were feeding the media.

In 2010, Mengniu Dairy apologised after investigators found evidence that they had drafted the help of a PR company to slander rival dairy group Yili. The campaign, which cost 280,000 yuan and went for a month, involved smear posts on blogs and news sites and even included fake complaints from concerned mothers who claimed Yili products caused “precocious puberty”.

Corruption in China’s media industry is rife. It’s standard practice for companies to give out “taxi fares” in red packets to low-paid journalists in return for good coverage. Last summer the Chinese government launched a widespread crackdown on so-called ‘black PR’ firms that delete negative news stories about people or companies from the internet for hefty fees.

It was China’s state broadcaster CCTV that first uncovered the murky ‘black PR’ industry with an investigative report into Yage Times, one of the worst perpetrators, in 2010. At the time, the authorities took no action and Yage’s business boomed following the publicity. But in China’s murky media world, nobody is squeaky-clean.

In the past few weeks, it has emerged that senior executives at CCTV could also be caught up in dodgy dealings. Just a couple of weeks ago, Rui Chenggang, the young host of a financial news program, was dragged away from CCTV studios by prosecutors just before his show was to go to air. Reports have since surfaced that Rui and his family had been running a public relations firm that sells access to senior officials and charges interviewees for airtime. Some claim Rui’s company was charging between 10 and 20 million RMB an interview. 

At least five other people at CCTV have been detained since May, including the head of the financial news channel and Rui’s long-time patron Guo Zhenxi. It’s alleged Guo used his position to blackmail companies and reward those who offered him bribes.

“It’s normal practice, he [Rui] has a PR firm, lots of politicians have paid him” a CCTV employee, who wished to remain unnamed, told Business Spectator.

Speaking to The New York Times, journalism professor Zhan Jiang said it’s common for Chinese media executives to charge “open mouth fees” to get news organisations to praise a company or “shut mouth fees” to make sure there’s no coverage at all.

Rui shot to fame in 2007 when he took on Starbucks, criticizing the American coffee chain for setting up shop in Beijing’s historic Forbidden City. For foreign companies in particular, avoiding the Starbucks treatment is worth paying big bucks for.

Late last year, Hu Shuli, the pioneering editor of China’s most esteemed investigative business magazine Caixin argued that journalists should practice self-restraint as their corruption was weakening the media’s role as an adjudicator in Chinese society. Acts of corruption by Chinese journalists was akin to “rent-seeking” and needs to be stamped out, she argued.

She also put forward the view that corruption in China’s media world is endemic and is unlikely to be uprooted completely without systemic reform. But instead of freeing up the media to take on a more independent role, Beijing has been tightening its control over media since Xi Jinping took power last year. Perversely, the crackdown on the media is doing the opposite of what was intended.

As a result of President Xi’s unprecedented anti-corruption campaign, business has been booming. Many of these dubious outfits were leveraging resentment at official corruption for commercial purposes. Local officials who are keen to get off the radar of the feared Central Commission for Discipline Inspection and are prepared to pay anywhere between 1000 and 10,000 yuan to delete a post.

As China’s companies go out and become more enmeshed in the global economy, the need for more transparent independent and accountable media within China becomes even more pressing. It’s no longer a question of Chinese people being duped by a mercenary media system that has gone to the dogs, it’s foreign investors too.

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