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By Root 5496 0

Jones and Reuters made up our strategy as we went along, relying on our instincts of how China operates and knowledge of what the country’s leaders want to accomplish. We also stayed carefully within one very basic parameter: When fighting battles and fixing problems in China, you can’t embarrass the system. If possible, it is helpful to portray your opponent as doing so. But your arguments, especially as a foreigner, must be wrapped around what is good for China, not what is wrong with the Chinese government. If you are looking for justice and fairness in China, remember that the Communist Party, like the two thousand years of imperial rulers who came before it, considers the ultimate justice in China to be whatever maintains the system and its stability.

Unfortunately, this story is not one for the history books. The vast Chinese bureaucracy will continue to have a Jurassic Park of bureaucratic dinosaurs plodding around for many, many years, all seeking ways to feast on foreign and local businesses. Intel, Broadcom, and other world chip giants recently won a protracted struggle over a completely bogus Chinese wireless communication standard that would have allowed twenty-four designated Chinese companies to gain access to their technology and business secrets. DHL, FedEx, UPS, and their counterparts in the courier business are fighting with the Chinese post office, which on a crisp December day in 2001 got the government to decree that the most profitable part of the international courier business would be handled by the post office in China.

My friends in those industries have asked me from time to time for advice on dealing with their struggles and adjusting their strategies. I tell them the story of our scrap with Xinhua and the lessons we drew from that. This chapter is an expanded version of that conversation.

Left in the Dust

The modernization of China was leaving Xinhua in the dust. In Mao’s day, the agency had been a glorious and powerful workplace. The nation’s best and brightest college graduates were sent to work for Xinhua. With more than ten thousand cadres, Xinhua crafted the propaganda that shaped the thinking of China’s masses. Its reporters also produced secret investigative reports that informed the party bosses about what was really happening in the country. Xinhua reporters stationed in Chinese embassies around the world filed news reports while also serving as intelligence agents and analysts. Money, or at least a profit, wasn’t a concern to Xinhua in its heyday. It was amply funded by the government.

As rigid Communist doctrine began to give way to economic reform efforts, Xinhua’s influence waned. Budgets grew tighter. The agency tried to bail itself out by getting into business. But the two hundred or so business entities it created, ranging from real-estate interests to the sale of Motorola pagers, were mostly money losers, created more to provide Xinhua officials with cars, expense accounts, and other perks than to generate profits. Still, the agency had gotten a taste of the money to be made in financial information with the advent of China’s stock markets. Xinhua created two successful stock market newspapers, the China Securities Journal and Shanghai Securities News, in the early 1990s. Companies listed on the two exchanges were required by law to publish their earnings announcements in the papers and the ads often ran to several full pages. True to its propagandistic heritage, Xinhua usually wrote glowing stories about the companies to accompany the ads.

Xinhua also had a profitable operation in Hong Kong. China Global Public Relations Co. employed Xinhua’s propaganda techniques and distribution network for commercial companies. The man who headed this business, a skinny, quick-witted Xinhua bureaucrat named Ma Yunsheng, was a rarity in the Xinhua bureaucracy, an entrepreneur. He inadvertently would lay the groundwork for Xinhua to come after Dow Jones’s business.

With the exception of its stock market newspapers and the public relations business in Hong Kong, Xinhua was on the sidelines