Why did Jack Ma acquire SCMP?

Jack Ma, the founder of the renowned Alibaba Group, successfully completed the acquisition of South China Morning Post (SCMP) on 5 April 2016, which ignites intensive debates on his motive behind. The ultimate goal for Jack Ma, an incredible entrepreneur, would definitely be expanding his business to increase the revenue of his business chain. However, the fact is that acquiring SCMP will not bring significant impact to the valuation of the Alibaba’s Group as the profit of SCMP is minimal comparing to the enormous business size of the Alibaba’s group. Without immediate and sizable incentive, why did Jack Ma acquire SCMP?

Jack Ma’s relationship with China

To begin with, it is important to note that Jack Ma has close business relationship with the Chinese government as they are gaining benefits from each other, like a mutualism relationship in the natural environment. On one hand, Taobao, a Chinese online shopping website under the Alibaba’s Group, encouraged the mushroom of small and medium enterprises in China which effectively foster the economic transformation of China. On the other hand, the Chinese government provides ample opportunities for the Alibaba’s Group to expand its business. As a result, it would definitely be a great opportunity for Jack Ma to further enlarge his business scale by promoting the economic development of China.

Sustainable development of China

To evaluate the strength of a nation, both hard power and soft power should be considered as both of them are equally important for a nation to be competitive. Hard power is the use of military and economic means to influence the interests and behaviors of other political bodies. In terms of hard power, China has been developing at an unprecedented rate to become the second large economic body in the world throughout the past 30 years. However, the rapid economic growth creates numerous deep-rooted problems with the deteriorating environment and the widening wealth being the most severe. It is inevitable for China to change her growth model to a more sustainable way in order that the worsening problems can be eased and China can grow steadily in the long term. For long term sustainable development, the strengthening of soft power will be a great solution. The soft power of China is lagging behind her hard power because the Chinese government only focused on the numerical economic and military growth in the past. China needs to promote her soft power, in other words, the cultural, political values and international image, in order to achieve sustainable development in the future.

Jack Ma’s acquisition of SCMP is an ambitious move to promote China through the media and to improve the image of China. Therefore, in long term, Jack Ma can get more opportunities and bargaining power to expand his business to the west by reshaping the media of China.

Stereotype of China

Acquiring the SCMP would definitely be a strategic approach to promote China’s image by reporting China in a broader and deeper way so western people can see China from more angles and perspectives. According to Walter Lippmann’s (1922) Public Opinion, he introduced the concept of ‘stereotype’, in order words, he believes that there are pictures of the world in our heads, which we believe them to be the reality. The main sources of those pictures in our heads are mainly sourced from the news media but those pictures cannot truly represent the reality. News media takes an irreplaceable role in creating the pictures of foreign countries especially for people without the ability to travel around. The role of the news media is to get people informed so they can be self-governed, in other words, make their own decisions. However, news reports are selective as reporters only highlight the important and eye-catching events. It is important to note that medias are even more selective on foreign news, in other words, there are only limited news reports on China by the western media and they only focus on the important and international events on China. For example, the news on the recent smog in China and the dictatorship in China are news that the western media would highlight. As a result, western people are usually biased towards China as a heavily polluted and severely censored country as they only view China through the limited news reports. Therefore, most businessmen in western countries are reluctant to cooperate with China enterprises or expand their brand in China due to their stereotyped image of the country.

Opening up of the economy

For China’s future vision for 2020 described in the 13th Five-Year Plan, one of the approach for the sustainable development is “Opening-up” which means attracting more foreign investments. Therefore, Jack Ma would like to acquire SCMP in order to deepen the world’s understanding of China and break the stereotype of China. It would assist the opening up of China as a more comprehensive and positive image of China would lure more investments into China. Jack Ma, owning the largest online shopping website Taobao which is comparable to Amazon and Ebay, would definitely be the best choice to acquire SCMP owing to his positive image as a successful young entrepreneur being selected as the cover Forbes. Jack Ma can also benefit through this acquisition because opening up of China would help the expansion of his business to the world.

Why SCMP?

SCMP is undoubtedly the best choice for Jack Ma to achieve his goal of promoting China’s image because of the following reasons:

Credibility

According to independent surveys conducted by The Chinese University of Hong Kong, South China Morning Post is the most trusted newspaper throughout the past decade. With more than 100 years of history, SCMP has high credibility among the public. It is a cornerstone for SCMP to transform into a global platform for news in China. Although its circulation (100,000/day) is relatively small comparing to other newspapers, it is highly trusted and read by a lot of foreign businessmen so it is known as the New York Times of Hong Kong. Therefore, the positive image of SCMP would increase the trustworthiness of China’s news reports, which provide neutral and objective information for western businessmen.

Freedom of press

Further to its high credibility, the basic law of Hong Kong ensures the freedom of press of SCMP, which prevents its reports to be censored by the Chinese government. We can see that SCMP has always been aggressive towards the Chinese government like the political scandals and human-rights cases because SCMP is protected by the freedom of press. Therefore, SCMP can achieve Jack Ma’s goal to ensure the paper’s journalistic independence and integrity.

Natural advantage

SCMP’s English language format is a huge advantage to become a global news platform as English is the international language, which is used by most of the western countries. Therefore, being an English newspaper is a major requirement to spread the information around the globe. In addition, the headquarter of SCMP is located in Hong Kong with close proximity to China. Its geological advantage allows reporters to travel to China and gather first-hand information. Therefore, more comprehensive news can be provided for the readers to know more about China.

Future development of SCMP

Jack Ma’s acquisition of SCMP is surly an amazing step to reshape the media coverage of China and provide more perspectives for the western people to view China. This can improve the image of China and change the stereotype of China, which, in long term, can open up China’s economy by attracting more foreign investments so as to achieve sustainable development. The Alibaba Group can seize this opportunity to expand its business to the international aspect and Jack Ma, as a businessman, can earn more revenue. However, the Chinese media is notorious for its censorship and being biased so it will be a long road for Jack Ma and the SCMP to break this stereotype and truly provide a neutral and objective global platform for China news. SCMP will need to maintain its independence and integrity by reporting from a neutral perspective instead of favoring the Chinese government. By reporting without bias, SCMP will be able to ease the doubt of being pro-Beijing after Jack Ma’s acquisition. Jack Ma’s objective of this acquisition will only be achieved if SCMP continues to be impartial and balanced. Time will tell whether Jack Ma’s acquisition is successful or not.

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