JANUARY 22, 2001 VOL. 157 NO. 3

Taipei's Next
Bankbook bloodied but ego unbowed, Hong Kong mogul Jimmy Lai has packed up and shipped out to build a new empire in Taiwan. Can he master the intricacies of becoming a media mandarin?
By ISABELLA NG Taipei

ALSO
'Taiwan is the Future of China'
Jimmy Lai on feeling lucky -- and why he's committed to the island state

Jimmy Lai is back. from his temporary office in downtown Taipei, far from his home in Hong Kong, Lai is briefing his business team for a final round of negotiations with Taiwan's PC Home Publishing Group. Lai, tall and chunky, is launching a Taiwanese version of his popular Hong Kong magazine, Next, and he desperately needs a partner. "I don't care how much I have to pay to get the deal," he tells his staff in his deep, firm voice. "I want to do business with this guy." A few hours later, the deal is done—and Lai has negotiated a new life for himself.

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For more than a decade, Jimmy Lai was the ultimate maverick of Hong Kong business. In his first incarnation, during the 1980s, he proved himself a manufacturing and marketing whiz kid, creating from scratch a major apparel brand, Giordano (he took the name from a New York Italian restaurant napkin). After a media makeover, he bounded into the muckraking business in 1989, timing his move perfectly. The Cantonese-language Next magazine was up and running just after the Tiananmen Massacre. Next would own that story in Hong Kong, making the magazine a must read. (In one famous issue, Lai wrote an editorial branding Li Peng, the Chinese hard-liner commonly blamed for the killings, as a "turtle egg," which in Chinese has a provocatively pejorative meaning.) Readers loved his irreverence, while foreigners called him the democratic conscience of Hong Kong. The Elite had a different take: Beijing viewed him as a disloyal troublemaker, while Hong Kong's establishment largely felt he brought the level of discourse into the gutter.

But a disastrous foray last year into the e-tailing business—Lai lost $140 million in six months trying to sell groceries over the Internet—pulled Lai's star from the firmament and soured him on his own hometown. "Hong Kong has no place for me," he mourns.

Perhaps he's right, for in Hong Kong, nothing fails as thunderously as, well, failure. "A lot of people hate him in this town. He has failed. That's why he has to leave," says Albert Cheng, the fiery commentator of the daily radio show Teacup in a Storm. A recent cover of rival magazine Eastweek put it this way in a headline: fat man Lai is running away. Lai himself prefers to say he is chasing a new opportunity. First, he says, the depressed Taiwanese stock market presents a good investment opportunity. Second, and this is Lai the maverick speaking, the election of Chen Shui-bian as President last year transformed Taiwan. "Suddenly Taiwan becomes the dangerous idea to China," says an excited Lai. "It will be the catalyst of China's political reform. It's good for publishing. I want to be part of it."

Lai has been taking risks all his life. At 12, he was smuggled from Guangdong to Hong Kong to escape poverty and communist control and sent by an uncle in Hong Kong to a garment factory as a child laborer, earning $8 a month. "I knew I would get away from being a worker," he recalls. And he did, embarking on string of ever more ambitious jobs, investments and start-ups. When he landed a gig as a garment factory manager, he took his year-end bonus of $1,000, set-up a brokerage account and speculated his way to $39,000, enough to open a factory of his own. With his profits, he started Giordano. Polo shirt earnings led in 1989 to the launch of Next. Lai eventually became the king of Hong Kong media: Next and Apple Daily, a brassy, working-class broadsheet that was founded in 1995, became the most popular publications in town.

Lai's media success was due in part to his ability to appeal to the lowest common denominator: sex, crime, scandal. Lai hasn't met a papparazi shot or gory crime scene photo he wouldn't publish. The public laps it up, and his staff is exceedingly loyal to their Hearst-like master. "You won't find any other company that gives such a free hand," says Peter Kuo, general manager for Apple Daily and Next Media.

But in a town where respect depends on the bottom line, many now view Lai as a loser. Admart, his idea of an online grocer, was ill-executed. Phone lines were always jammed, goods arrived late and the groceries were mostly second-rate, off-brand products. Lai says distributors were worried that their cooperation would provoke the ire of the two biggest supermarket chains, owned by Li Ka-shing's Hutchison Whampoa and Dairy Farm. The bottom line ended up a red ink bath. "It was an expensive lesson," Lai concedes. "I was caught in the Internet frenzy and I was wrong."

Now, the tycoon has bolted his home turf—he will still be chairman of his media group and both Apple and Next will continue to publish in Hong Kong—to bring his brand of journalism to Taipei. It's a big move. The local language is Mandarin, which Lai has difficulty speaking, and in-depth analysis has always sold better in Taiwan than tabloid-style stuff. Taiwan may have a larger population than Hong Kong—21.5 million potential readers versus 7 million—but it's already oversaturated with nearly 6,000 magazines. That's why Lai feels he needs a local partner. Since April, he has sought connections with top journalists and publishers in Taiwan including Antonio Chiang, former editor-in-chief of the respected Taipei Times. (Chiang accepted a job, but then turned it down to take the position of deputy secretary general of Taiwan's National Security Council.) Last week Lai clinched his deal with Jan Hung-tsi, ceo and publisher of PC Home Publishing Group. Lai will control 70% of the $45 million venture but agreed to serve only as deputy chairman. "You go to a strange place," he explains, "you have to have humility, not just ability."

He had better be humble. Taiwan's media have tended to be friendly to Lai—as long as he stayed off their turf. Direct competitors like Scoop Weekly are already bashing Lai and vowing all-out war. "I don't care if he is Jimmy Lai," says Shen Yeh, Scoop's publisher. "History has taught us that Hong Kong Chinese can never make it in Taiwan. It will be his Waterloo, trust me."

Many worry that Lai will repeat his Hong Kong tactics, attracting readers while dragging Taiwan's journalism into the gutter. But some locals would go for that. "I don't know who Jimmy Lai is," says Amanda Chiang, a 20-year-old Taipei saleslady. "But if the magazine he publishes is gossipy, I will buy it." And although that might be good for business, it could be disastrous for the newcomer in a country where muckrakers have yet to take on the government, business tycoons and a whole lot of powerful gangsters. "If he is going to use the Next approach to news in Taiwan," says Hong Kong radio personality Cheng. "He'd better hire a bodyguard or he may be killed one day." Lai is not afraid, "I don't need a bodyguard," he says, "sometimes those closest to you are your worst enemy."

With reporting by Wendy Kan and Jen Wei Ting/Hong Kong

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