=By MICHAEL FORSYTHE and NEIL GOUGH June 12, 2014
Jimmy Lai of Next Media Limited, which is known for its strong advocacy of democratic freedoms in Hong Kong.
Alex Hofford/European Pressphoto Agency
HONG KONG — In what may be a major escalation of pressure by mainland China on Hong Kong’s independent-minded news media, two major British banks have stopped advertising with one of the city’s biggest newspapers, a top media executive said.
The executive, Mark Simon, of Next Media Limited, said two London-based banks, HSBC and Standard Chartered, ended longtime advertising relationships late last year with the paper, Apple Daily, after being told to do so by the Chinese government.
“The government is running their business now,” Mr. Simon said in an interview. “HSBC and Standard Chartered don’t have to do what they did.”
Both banks said their advertising decisions were commercial.
The charge that politics may have played a role in the pullout illustrates the increasing power of the Chinese government to influence the behavior of not only its state-owned companies, but also global companies, using the strength of its huge domestic market as a tool. It also reveals the hard-nosed tactics China’s central government will take to muzzle the relatively free news media in Hong Kong, the former British colony that was able to keep a high degree of autonomy and civil liberties as part of the terms for its return to China in 1997.
Next Media Limited, a newspaper, television and Internet company based in Hong Kong and Taiwan, is known for its strong advocacy of democratic freedoms in Hong Kong. Mr. Simon, the company’s commercial director, said a representative from HSBC told him that the decision to stop advertising came after the deputy director of the central government’s liaison office in Hong Kong, Yang Jian, told the bank to end its advertising relationship.
A representative for the liaison office was not available to comment. Under its owner, Jimmy Lai, Next Media has been sharply critical of the Beijing government. On Wednesday, for example, an animated video on its website excoriated a policy paper on Hong Kong issued by China on Tuesday. Called “High Degree of Autonomy Becomes Total Rule From Beijing,” the video warned of increasing control by the Communist Party in Hong Kong.
“A new round of Sinification of Hong Kong has begun,” the narrator says. “The white paper is just the beginning.”
Anson Chan, who served as the chief secretary — the second-highest-ranking official in Hong Kong — under the colonial government and in the new administration, has been asking the banks in recent months about the advertising pullout. Ms. Chan is an advocate for news media freedoms and for universal voting rights in Hong Kong.
In letters reviewed by The New York Times, senior executives at the two banks replied to Ms. Chan, emphasizing that advertising decisions are commercial. Neither of them refuted Mr. Simon’s contention that the decision to end the advertising relationship was politically motivated. “They certainly did not provide the assurances I was seeking,” Ms. Chan said.
“An international bank like HSBC and Standard Chartered, if you act this way, it is the first step down a very slippery slope,” Ms. Chan said in an interview. “What happens the next time they call up and say we don’t like you doing business with certain clients? Are you also going to cave in?”
Hong Kong media organizations critical of the mainland have said for years that the central government was pressuring advertisers to pull sponsorship. But the government’s targets in those cases were Chinese companies, many state-owned, that had little choice but to obey Beijing.
Such was the case in January, when Shih Wing-ching, the founder of one of Hong Kong’s free newspapers, AM730, said in a radio interview that the Beijing government had pressured “mainland-backed companies” to stop advertising with the paper, according to a report in The South China Morning Post.
Losing HSBC and Standard Chartered, which were until last year among Next Media’s biggest financial advertising clients, has hurt the Hong Kong-listed company. The two banks had spent a combined $3.6 million in 2013 on Next Media advertising before HSBC’s spending ended in August and Standard Chartered’s ended in December, Mr. Simon said. Neither has advertised since.
“Our decision-making regarding deployment of marketing is based on commercial considerations with respect to the purpose of the campaigns involved and target segments,” Gareth Hewett, an HSBC spokesman based in Hong Kong, said in a statement.
Gabriel Kwan, a spokeswoman at Standard Chartered, said, “It’s a marketing decision.”
Hong Kong’s newspaper advertising market has been declining slightly, but nowhere near as much as in other markets, including the United States, said Alex Ko, the general manager of the business department at Ming Pao, a Chinese-language newspaper in the city.
Mr. Ko said that the newspaper’s advertising had not been affected by political pressure and that Standard Chartered and HSBC banks remained advertising clients. “I don’t feel any reasons apart from the business considerations,” he said of advertising volumes.
In Hong Kong, print circulation and advertising have been weakened by the growth of the Internet, Mr. Ko said. The territory supports 12 paid newspapers and four free papers, he said.
“The advertising is a little bit declining,” Mr. Ko said. But in Hong Kong, “the newspaper market, the advertising market, is not so declining as in the Western countries.”
He added: “In Hong Kong, business considerations still dominate.” Mr. Ko declined to comment on reports about Apple Daily’s losing advertisers because of political pressure.
Mr. Ko said many of the main companies order ads through the major advertising companies. He said, “We do trust their professionalism to assist the clients to place the ads to suitable media.”
HSBC and Standard Chartered’s advertising covered not just the group’s flagship Apple Daily newspaper print edition, but also magazine and Internet ads. Apple Daily’s website is one of the most widely visited in Hong Kong, with 1.5 million daily unique users, according to stock exchange filings. And both banks maintain large retail and trading operations in Hong Kong, with their namesake skyscrapers planted in the center of the city’s central business district.
The “H” in HSBC stands for Hong Kong. But the “S” stands for “Shanghai,” and both HSBC and Standard Chartered have been expanding in mainland China after rules restricting foreign banks were relaxed as a condition for China’s entering the World Trade Organization more than a decade ago. HSBC has also relocated thousands of so-called back office workers to the mainland.
Mr. Simon said two local advertisers, Bank of East Asia and Hang Seng Bank, an HSBC subsidiary, also stopped advertising around the same time as HSBC and Standard Chartered last year.
Mr. Simon’s allegations, reported in The Sydney Morning Herald, come amid increasing apprehension in Hong Kong about the encroaching influence of mainland China in its economic and political affairs, and a surge in attacks against journalists.
A poll released in April found that for the first time in a decade, most Hong Kong residents disapproved of the way the central government in Beijing was handling its relations with Hong Kong.
In February, Kevin Lau, the former editor in chief of Ming Pao, who had been pushed aside the previous month, was attacked by assailants wielding cleavers, the weapon of choice of the city’s organized crime gangs. He suffered serious injuries and is still recovering.
Last June, a vehicle rammed into the front gate of Mr. Lai’s home in Hong Kong, and an ax and a knife were left at the scene. Thousands of Apple Daily newspapers were set on fire in two separate cases that month. The company detailed the events in an animated video.
Chris Buckley contributed reporting, and Alan Wong contributed research.
From:http://cn.nytimes.com/china/20140612/c12chinamedia/en-us/