Rupert Murdoch did everything in his considerable power to get into China. But he ran out of patience. Mike Hanley reviews.

Rupert’s Adventures in China:
How Murdoch lost a fortune and found a wife
Pan Macmillan, 2008

Advances in the technology of communications have proved an unambiguous threat to totalitarian regimes everywhere. Fax machines enable dissidents to bypass state-controlled print media. Direct-dial telephony makes it difficult for a state to control interpersonal voice communications. And satellite broadcasting makes it possible for information-hungry residents of many closed societies to bypass state-controlled television channels.

Murdoch later claimed he was speaking specifically about Eastern Europe, and that it never occurred to him that the Chinese might be listening and take offence. It is difficult to believe, though, with the speech taking place just four years after Tiananmen Square.

The Chinese were listening, and they did take note.

According to Bruce Dover, who headed News Corp.’s operations in China through much of the 1990s, Murdoch’s words were “akin to a declaration of war”. In response, Li Peng, Premier of China at the time, brought the matter to a meeting of the entire Chinese Politburo, and the nation’s security chief, Luo Gan, and the head of the country’s propaganda department, Ding Guangen, opened files on Murdoch and developed sophisticated strategies not only to prevent the media mogul from entering China with any great success, but also to exploit News Corp.’s expertise and technology to aid in the development of China’s own media capabilities.

The monument house speech was made just two months after News Corp. had bought STAR TV, the pan-Asian satellite broadcaster Murdoch hoped to beam into every home in China. Just four weeks later, Premier Li signed a decree banning satellite reception dishes anywhere in China. Murdoch was firmly on China’s black list.

The News Corp. chairman is well known for his chameleon-like political views, adapted according to the prevailing political winds of the day across the many territories in which he has business interests. But in the case of China, Murdoch got it dead wrong, not just this one time, but many times through the 1990s. In Rupert’s Adventures in China, Dover outlines in wicked detail Murdoch’s sincere attempts at ingratiating himself with the Chinese leadership, and how, either through bad timing or bad luck, the mighty sun king was brought down by the Chinese leadership.

President Jiang, meet my wife, Wendi
Through the 1990s, the world’s biggest media companies frantically tried to outplay each other in their efforts to enter the China market. Besides Murdoch and others, the Chinese leadership was courted by Viacom’s Sumner Redstone and AOLJerry Levin, each throwing literally hundreds of millions of dollars and all their charm to convince the Communists they were true friends of China.

Murdoch’s Monument House speech meant that he started from behind, but his courting was the most assiduous, and his kowtow the deepest.

Over the next decade, Murdoch did everything in his power to try and work his way out of purgatory with the Chinese authorities. He banished the BBC’s news service from STAR’s broadcasts. He personally put the publication of Chris Patten’s (anti-Chinese) memoirs as the last Governor of Hong Kong on the spike. He entered into loss making business ventures with the sons and daughters of succeeding generations of Chinese leaders and bureaucrats, and installed his own son, James, as the boss of News Corp.’s Asia operations.

He even went as far as to marry into the country – divorcing his wife of 30 years and marrying a vivacious 29-year old Chinese woman.

Wendi Deng was an attractive young executive at STAR TV who had made her way from a modest background in Guangdong to Yale University. According to Dover’s account, she was quick-witted, at times disarmingly charming, and unafraid of confronting important people. Murdoch took an immediate shine to her, getting her to show him around the grittier parts of Beijing, Shanghai, and Hong Kong eventually disappearing with her for a week-long “walking tour of Wales” – unheard of for the 68-year-old workaholic.

Wendi, for her part, had been upfront about her ideal man, older and wealthier. Murdoch fit on both counts, but her previous relationships with Americans, which had helped her get out of China, also fit the mould.

As Rupert and Wendi’s relationship and eventual marriage blossomed, so did Wendi’s involvement in News Corp.’s China strategy. According to Dover, she was complicit in the January 2000 departure of the head of News Corp’s Asia operations after he over-promised and under-delivered in China. And she helped James Murdoch with an Internet shopping spree – just prior to the bursting of the Internet bubble – for investments worth $45 million, all of which were later written off as total losses.

Having a beautiful Chinese wife on his arm did not do Murdoch any harm in his campaign to convince the leadership that he meant the country no harm. And in fact by the turn of the century, Murdoch had more or less managed to get himself transferred from the bad books to the good, even developing a good relationship with his former nemesis Ding Guangen. By the end of Jiang Zemin’s Presidency, News Corporation was in pole position to start making money from the billion or so dollars it had poured into the country over the previous decade.

In the end
But in China as elsewhere when the regime changes, so do the favoured courtiers. Murdoch’s guanxi, so painstakingly developed, was less valuable under the stern gaze of President Hu Jintao. Hu was determined to both clamp down on what he viewed as an unhealthy opening of Chinese media to decadent outside influences, and also stamp out the worst excesses of the corruption that had flourished under Jiang.

Coincidentally, it was at this point that Murdoch’s patience failed him. He allowed STAR TV to overstep the mark, to do what many western businesses are forced to do – operate in the ‘grey’ market between what is legal in China and what is not. But it did so clumsily, without the requisite humility and discretion. It was the perfect excuse for the officials under Hu to stomp on News’s ambitions. Even Murdoch had to admit that he had ‘hit a brick wall’ in China.
Rupert’s Adventures in China is a great read, not just for the excellent anecdotes and juicy insider gossip about the sun king, but also because it provides real insights into how to do business in China, and how not to. First and foremost, China is, and will remain, for the Chinese. Those who seek to profit from the country’s dynamic economy and stunning development will do so to the extent that they contribute to Chinese social and economic prosperity.

Equally, “Giants who seek to walk in China need to learn to tread lightly”. Had Murdoch’s operations stayed under the radar and not drawn attention to themselves, News Corp. might still be leading the opening of China’s media markets. But pragmatic as he is, Murdoch succumbed to western impatience, and his business interests suffered for it. For Murdoch as much as anyone, China is a life choice, not a short term project.

Dover speculates on the future of News Corp. in China under Wendi. If Rupert’s Chinese adventure is over, Wendi’s perhaps, is just beginning.