The Beijing Youth Daily expects to include the newsroom into its listed advertising arm Beijing Media Corp as part of future reforms. Shu Ning / for China Daily

Strength in numbers

Other papers were deeply troubled by the lack of a unified brand.

Liu Zelin was running 10 journals of industrial technology and marketing information. They were under the supervision of five administrative units, at provincial and ministerial level, that owned the journals without actually publishing them.

"I felt like I was raising babies for others," Liu said.

When the journals sought cooperation with other companies, such as Web portal Sohu.com, each had to go by its own name. But potential partners often considered the journal a small newsroom and underestimated its power and influence.

In September 2007, the journals were gathered under the umbrella of a new company, Beijing Prominion Publishing Co Ltd, with Liu as general manager. As a unified enterprise, the company has grown to include one newspaper, 14 journals and about 400 employees.

Operations revenue has risen from 50-60 million yuan before reform to an anticipated 200 million yuan this year, Liu said.

"Thanks to the transformation, I was able to integrate all the resources and turn them into a competent market entity. Although the transformation cost, I've gained a lot more."

Now the company plans a public stock offering. Liu said it is likely to be valued at several hundred million yuan.

Creative solution

Many executive editors and general managers share the same top concerns about converting to market-based operations: How much will it cost? How will we cover the expenses?

When China Automotive News started its restructuring in November 2008, it had more than 250 employees. About 40 were managed as staff members of public institutions.

Once the weekly newspaper and four automotive magazines were registered as a single business entity in June 2010, all its staffers would be managed as enterprise employees and incorporated into Beijing's basic pension insurance system for enterprise employees.

Under the Chinese social security system, staff members of public institutions do not pay pension insurance while they are working but usually enjoy higher pensions than enterprise employees. That meant China Automotive News employees would receive lower pensions after the restructuring.

For example, at the current salary level, a senior editor would receive 5,000-6,000 yuan a month after retiring as a staff member of a public institution, but only 2,700-2,800 yuan after retiring as an enterprise employee, said Li Chunlei, the group's editor-in-chief.

To keep that employee's pension at the same level, the enterprise would have to fill a gap of more than 2,200 yuan a month. If the person were still alive 20 years later, the payment would total at least 528,000 yuan.

"The biggest challenge of transformation lies in how to handle the personnel," Li said.

To win their support, he spoke with each senior employee and visited the retirees at home to explain how they would be affected.

His solution was to enroll the senior employees into the pension insurance system as quickly as possible and pay three times the monthly average social standard contribution.

However, there is little time left to pay for those who will retire within five years. Some senior employees chose early retirement before the transformation, so they could receive a public institution's pension.

For those who stayed, the enterprise offers supplementary retirement benefits beyond social insurance. Each year, it invests one-twelfth of its total salary of the previous year in enterprise annuity funds. China Automotive News has made a retroactive investment of 12 million yuan to make sure senior employees will not suffer heavy financial losses.