The state mouthpiece People’s Daily listed its online version people.cn (603000.CN) in 2012. On the first day of trading, the shares surged 76 percent from their offering price of 20 yuan (US$2.98).
Later, however, as most of its employees are civil servants, administration expenses and labor costs have been weighing on the company’s profitability.
Net profit dropped to 89.41 million yuan in 2017 from 110 million yuan in the previous year. Its share price lost steam and plunged below 6 yuan at one point last year, or 70 percent less than its offering price.
But the shares have staged a sharp recovery recently, rising more than three times from their closing level last year, thanks to a new business line to help third parties review their content and make sure they are compliant with the rules.
For example, when a social media platform provides information on a daily basis, it has to ensure its content is legal and don’t contain any politically sensitive information.
Such “self-censorship” is an arduous task, with taboos and sensitive words being updated on a daily basis, as Chinese authorities tighten their grip on media.
For example, Jinri Toutiao, the popular Chinese news aggregator, now hires nearly 20,000 employees, half of its total workforce, to make sure the company won’t get into trouble for its content.
The job of filtering content is paid 4,000 to 6,000 yuan per month, and every employee needs to go through around 1,000 news items. That will give you a rough idea of the kind of workload involved. Imagine what it’s like for even bigger firms such as Tencent and Baidu.
But these companies can now outsource the work to people.cn.
Not only is it more cost-effective, but another beauty of enlisting the help of those as closely linked to the government as people.cn, who are supposed to be experts in the field, is that companies are relieved of responsibility should something go wrong.
People.cn has predicted its full-year profit for last year would more than double from 2017, mainly due to a 166 percent jump in its third-party content review business. Hence the recent surge in its share price.
This article appeared in the Hong Kong Economic Journal on April 12
Translation by Julie Zhu
[Chinese version 中文版]
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