This case is about a magazine publication issues. This company is founded by three journalism graduates who initially intended to publish a city magazine in Hong Kong. The three partner of this company are Greg Duncan, Steve Freeman and Gretchen Worth. This magazine will have a concept of entertaining, off-the-wall and controversial issues which may attracts selected groups of people in Hong Kong. In their finding they believed that Hong Kong people would want this type of magazine as there are growing numbers of young professionals which are influenced by the western trends and lifestyle in Hong Kong.
Moreover at that time there is no magazine that caters such needs for that particular target market. Therefore they have left their jobs and started a company known as Asia City Publishing Ltd. Based on their observation, they have selected the target market as for well educated, middle to upper income, working in the 25 to 40 age group. This magazine concept appealed both the expatriate and the English-speaking Chinese communities. The content includes comprehensive coverage of the local arts and entertainment, artists’ profiles and exhibitions, restaurant reviews, comments on topic of local interest, consumer product and service tips.
This magazine would be written in informal language with youngster style of language. They have test the idea on their expatriate and Chinese friends and the response was quite positive. They have adjusted some of the contents based on the feedback given to them. For a better survey, they have hired professional moderators to conduct interviews to independent public to get a greater objectivity opinion. The overall response was clearly positive. In September 1989 they have mailed “Special Charter Offers” to a mailing list of 10,000 names.
The original subscription offer was a free premiere issue plus 12 monthly issues for HK$188. They got reply from 7% of the mailing list names which encouraged them to proceed with publishing the magazine. They started to approach investors to invest in the business. Many of them were interested with the concept but the high start-up cost had been the main issue for them to invest. After failing to have a deal ACP revised the physical size and the appearance of the magazine from a high quality and semi-glossy tabloid-style publication, to a middle spectrum of quality tabloid which would reduce the production cost of the magazine.
In June 1991, After two years of discussions, research, planning and revisions, HK Magazine was published under ACP name with Duncan as the Publisher, Freeman as the advertising Director and Worth as the Editor. The first 15,000 free of charge copies of 24-page magazines were distributed with 7 pages of advertising with a rate of HK$8,500 for one fully colour page. The cost for a copy is HK$8. 75. After six month the circulation of 15,000 copies had quickly become a fact and the page has been increased to 28 pages with 14 pages of advertising with a fee of HK10500 per page.
Total cost per copy had increased to HK$9. 40 per copy. By the end of March 1994 the start-up costs were fully recovered. HK magazine achieved a circulation of 25,00o copies in about 150 outlets. By early 1995 the company was solidly profitable and the publication was averaging about 40 pages per issue, 20 pages of the magazine are for advertising with an average fee of HK$19,000 per page. Total cost per copy was HK$12. In June 1993, they had launched another publication on HK Bazaar on general shopping, sourcing and services to Hong Kong consumers.
But they had to discontinue the publication as advertisers reluctant to renew their advertisements. In 1994, ACP began searching for potential location for starting a city magazine in Asia. ACP identified Singapore as the target as the place had some similarities with Hong Kong. ACP would have to face indirect competitor from 8 Days magazine which focused on TV listings with additional celebrity news and some restaurant and entertainment listing. It had an audited circulation of 80,000 and was targeted the 15 to 20 age group with a price at S$1. 20.
One of the main factors of the search for the potential location is the schedule of take-over of Hong Kong by the People’s Republic of China. ACP might have to face the unfavourable changes impose on the industry. However the environment in Singapore is not totally the same in term of the race composition, religion composition, the regulations and so on. ACP has to consider the limited experience and exposure to Singapore. They need to consider the possibility of only one of them would be available to set-up the company in Singapore as the two need to focus on the Hong Kong Market. This is where the dilemma needs to be solved.