City & Business: China is buzzing but Murdoch's kept out

Click to follow
BIRCH GROVE, Harold Macmillan's old house in Ashdown Forest, East Sussex, changed hands recently for a reputed pounds 5m. The purchaser was Larry Yeung, the millionaire son of China's vice-president and head of the China- controlled Citic Pacific Investment Group. More extraordinary evidence of China's changing face would be hard to find. Even five years ago, the very idea of such a purchase would have seemed unthinkable.

Yet today, the possibility that Shanghai, where Mr Yeung is based, might soon rival Hong Kong as a commercial and financial centre, is common dinner party talk. Many of Hong Kong's leading businessmen originally came from Shanghai; some are returning with the aim of restoring it to its former glories. The place is now so abuzz with new money and excitement that Christie's is about to open a representative office there - not, as you might expect, with the intention of exporting Chinese art and porcelain to the auction rooms of the West, but to satisfy a growing band of Shanghai-based collectors.

According to Christopher Davage, managing director of Christie's, the office will act 'as our eyes and ears'. The purpose, he tells me, is chiefly to sell Chinese artefacts from the West back to the Chinese. But though all China seems to have embraced unbridled, sometimes highly corrupt capitalist ways, key markets remain closed to opportunistic Westerners.

Despite his best endeavours, Rupert Murdoch has found China's doors tightly locked against Star TV, the Asian satellite service in which he bought a 60 per cent stake for pounds 350m last summer. It's early days yet, but many Hong Kong business people and bankers believe Mr Murdoch is going to find it well-nigh impossible to crack this huge potential market.

Mr Murdoch's formula for keeping track of and managing his increasingly far-flung global empire is to focus intensely on one business at a time. During and after the move to Wapping, it was his British newspaper interests. More recently it's been his Fox studios and American TV interests. His latest obsession is Star.

Recently he's upped sticks and moved to a house on the Peak, Hong Kong's most fashionable residential district. With China denied to him, he's been on a 10-day visit to India, where his audience with the Indian President apparently received more press attention than the coincidental state visit of Vaclav Havel, the Czech President.

But though India is Star's biggest market, it's also a poor one; there's not much point in having huge numbers of viewers if none of them pay and nobody wants to advertise to them. The real prize for Mr Murdoch remains China; with the old politics still deeply entrenched despite the new capitalism, he's going to find it an uphill struggle.