Beijing-based Trends Media Group (TMG) is the biggest player in China’s fashion publishing industry. Though the company celebrated its 20th birthday last year, it has not been immune to the challenges facing the print industry in China and worldwide as people increasingly consume content on computers and mobile phones rather than in books or magazines. 

But Liu Jiang, the firm’s co-founder and board chairman, has announced a restructuring of the group and the implementation of a new strategy. We don’t position ourselves as a media group any longer as that will limit our future if the sector gets weaker,” he says. “However, these new business developments are all based on our media sector.” 

TMS is the publisher of 18 mainstream fashion magazines in China, including Cosmopolitan, Esquire and BAZAAR under license from their copyright owners. Its annual revenues are around one billion yuan ($152 million.) The company employs more than 1,000 people. Three years ago, the group began diversifying from print by building its digital platform and launching iPad products. It set up a TV production company to make fashion-based programs, and is also moving into the fashion education sector.

Liu has won several awards for entrepreneurship. A many-faceted man, he has brought his love of literature to fashion; he is the author of two published works of poetry. According to Liu, at a time of change, yesterday’s success does not guarantee tomorrow’s survival. In an interview with Knowledge at Wharton, Liu discussed the company’s restructuring roadmap and business model innovation.

An edited transcript of the conversation follows.

Knowledge at Wharton: 2013 was a tough year for the print media. How did TMG perform?

Liu Jiang: For the first time ever, our annual income declined slightly. But, overall, the negative industry outlook had a limited impact on our group. Our operations are still stable and strong. There are several reasons for this. First, we have already achieved scale with annual income of more than one billion yuan. Second, our experimental multimedia business had an income of tens of millions of yuan. Three years ago, we developed mobile products and started making programs for TV and radio. Our TV show, Trends Home, is now getting 10 million yuan in ad revenue and has the potential to grow bigger. Thirdly, we have healthy cash flow; I am conservative in financial management. Finally, the overall competitiveness of our 18 fashion magazines is still very strong and they are profitable.

However, we have to admit that the media industry has been seriously challenged in recent years. What we have done is not enough. In terms of creative ideas, organizational changes, and process and business model reform, we have done nothing. It will be very dangerous if we keep running on inertia. Many big enterprises have collapsed because of their inability react to mega-changes.

Knowledge at Wharton: What are you going to change in the near future?

Liu: We have reorganized our company structure. I am no longer president; my new job is board chairman to coordinate overall strategy. A vice-president — earlier, head of the media unit — is taking on the president’s role. We are going to explore other businesses. But they will all be based on our media capability. We will not give up the media business; our media DNA will not disappear. For example, a vice-president in the publishing business is taking charge of our Fashion Institute, to lead our education business.

“It will be very dangerous if we keep running on inertia. Many big enterprises have collapsed because of their inability to react to mega-changes.”

At the same time, we will be more open to external talent. We will [recruit] people for our investment and digital media business. As long as employees have ideas and are capable, we will offer them a flexible platform to support their growth. 

Knowledge at Wharton: What is the change strategy for the group?

Liu: From 2014, we will integrate all our resources to enter new areas. The core business will be realigned to tap the new trends in media and fashion. We will look at education, investment and industry.

There are lots of ways an enterprise can innovate — technical innovation, management innovation, cultural innovation…. But the most important may well be business model innovation. TMG will no longer be a media company; it will be a diversified enterprise based on media. We don’t position ourselves as a media group any longer as that will limit our future if the sector gets weaker. However, these new business developments are all based on our media sector.

Knowledge at Wharton: What steps are you taking to set up your multi-platform media business?

Liu: One of the strategic goals of our media strategy is to cover different channels with the fashion content we have created. The digital channels have four product lines. Our print magazines content is available on our flagship website,, and 11 other websites. Our major magazines have all started offering digital content for the iPad and other tablets. For the mobile phone, we have created a Read Fashion App with telecom operators in which part of the content is paid. This will be marketed mainly by the operators. Finally, we have launched an iFashion App that integrates and consolidates all of our content in the whole group. 

We re-sorted the content by celebrity, brands, showman, magazine category, etc. We aim to launch a mobile fashion platform for user interaction and to explore new business models. Take luxury brands, for example. We can [provide] company and new product information. We can recommend them to relevant users based on the retail [outlet’s] geographic position and the user’s geographic position. We can charge brands service fees. Only when we align media, technology and creation can it create new value.

The digital platform revenue mainly comes from ads and revenue sharing with operators. A small part is user-paid content. We nearly broke even last year and we expect that new media revenue will grow to 100 million yuan this year. At the same time, Fashion Starlight Media, the producer of our TV programs, has grown. It has produced five shows so far. 

Knowledge at Wharton: How does TMG intend to foray into education and training?

Liu: We have entered the fashion education business. Last year, we jointly launched programs with the School of Economics and Management of Tsinghua University, IFM (Institut Francais de la Mode) and HEC Paris. These programs are to groom managers for the fashion industry and are already generating revenue. 

Education is a big sector, and the fashion education market has just started [to grow]. Fashion training will first of all aim at improving the individual’s fashion awareness. This is a one-and-a-half year course. We are also ready to launch tailored training services for fashion industry companies. 

The full-schedule training program of our Fashion Institute will start from this year. We will invite professional fashion experts from home and abroad, senior executives of fashion brand companies and others to build up professional and high-quality fashion programs.

TMG has to go outside the limit of its media mindset to integrate the resources of the whole fashion value chain. People — artists, stars, models, writers, fashion buyers, fashion industry executives — are the most valuable assets. Right now, I am confident that no domestic player can compete with us on fashion education resources. My target for our education business is to become the biggest fashion training institute in China in three years.

“We don’t position ourselves as a media group any longer as that will limit our future if the sector gets weaker. However, these new business developments are all based on our media sector.”

Knowledge at Wharton: What is your plan for the investment business?

Liu: Our investments will be centered on the fashion industry, not only on media and publishing, but also on new sectors such as e-commerce and emerging fashion brands. Our focus will be start-ups with potential. We have created specialized magazines in verticals such as automobiles, jewelry, arts, watches and home design. We are very close to these industries. When resource and capabilities unite consciously, it can create a lot of value. When we invest in new start-ups, we also allow them to tap our own marketing channels and talent resources.

Our investments so far have not been individually very big. The recent projects include, a fashion website targeted at high-end users; the Chengdu-based MCI, which is about mobile digital publishing and ad solutions; Monogram, which offers one-stop fashion consulting and buying services; Roseonly, the high-end flower e-commerce brand, and Technode, an original technology blog in China.

Knowledge at Wharton: TMG has grown fast. Today, when print is on the decline, 17 of your 18 magazines are profitable. How did you manage this? And how do you manage so many magazines?

Liu: After our founding team started Fashion in 1993, we worked very hard for five years to establish it in the market. In 1998, we began to cooperate with foreign publishing institutions on copyrights. Then, we extended to verticals such as home design, tourism, automobiles and watches. Whenever we sensed that a vertical was becoming mature, we launched a new magazine. After 1998, we have been launching one new magazine every year.

In 2000, we adopted the “publisher system.” This was new for the Chinese publishing industry at that time; traditionally, content, ads sales and marketing have been separated. Today, each magazine is managed entirely by the publisher, who integrates every function. It was a very modern concept for any media company at that time.

In terms of management, we believe in centralized management and decentralized operations. I have a “grape” theory: This means every magazine is like a bunch of grapes that grows on the branches and roots of the group. The group is like an incubator, offering both internal support resources like administration, HR and finance, and external resources like client networks, marketing systems, circulation channels and printing services. If we decide to launch a new magazine, we will promote one chief editor and one advertising director. These two people can then set up a team and get things started. 

The magazine has to make money on its own. It is operated and edited independently. Every magazine has its own sales team. We don’t encourage bundle sales, selling several magazine ads together to one client. That weakens individual magazines. We promote internal competition to some extent.

Knowledge at Wharton: Have you had magazines that ultimately failed?

Liu: Yes. We had a magazine targeting young girls. Although the circulation was good, the ad revenue was not enough.

“The core value of fashion is positive energy. Many people think fashion is a beautiful dress, but that is just the format. My definition of fashion is ‘positive, healthy, progressive and beautiful.’”

Some of the failures are not necessarily commercial. We once had a magazine [focused] on properties, which was expected to get ads from property developers. We had to close it down when we found that some of the developers were not professional and had no resources to spend on advertising. I want our people morally clean; we do not allow employees to [cross] the line to get advertising revenue.

Knowledge at Wharton: What are your core values?

Liu: The entrepreneurial spirit and the courage to dream. Our founding members are all dreamers. I dare to say that people who have the entrepreneurial spirit and dreams will be bold enough to give up anything. At the beginning, we rode bikes on the street to sell our magazines. All of us gave their savings to build the company.

We are very lucky that the dream DNA of TMG has been passed down the line. Some people view fashion as vanity and vain glory, but our people work extremely hard.

Knowledge at Wharton: People who receive white collar salaries are teaching readers who often make more than they do to be fashionable and live a life of luxury. Isn’t that a contradiction?

Liu: This is work. When I started, my salary was 200 yuan. I taught women who make 2,000 yuan a month about fashion. It is necessary to offer insights beyond your own angle and environment. The Bazaar Watch editor may not be able to afford a luxury watch with his lifetime salary, but he can become an expert to appreciate luxury watches. Do you have to own something before you can appreciate its beauty?

Knowledge at Wharton: Media people often considered to be difficult to manage. What is your perception?

Liu: I believe in Theory Y, which argues that human nature is good. I believe people are inherently responsible and wish to prove themselves by achievement. I don’t have strict systems, but they are result-oriented. Culture and creativity cannot be created by systems.

We don’t attract people by giving high salaries. We value people who can work day and night and look for excellence. We find people who are really passionate about fashion — people who can realize their potential and value at work. We have 50 people who have been with the group for more than 15 years. Our turnover rate is below 15%, less than the industry average.

Knowledge at Wharton: How do you understand and define fashion?

Liu: The core value of fashion is positive energy. Many people think fashion is a beautiful dress, but that is just the format. My definition of fashion is “positive, healthy, progressive and beautiful.” It’s not materials or character only; it may even be a good attitude. The biggest fashion is to grow positively.

Knowledge at Wharton: You have already been successful in your career, is it difficult to start again?

Liu: It was for a different and exciting life that we chose to start 20 years ago. If you choose a direction, then just go. I am still very passionate today. You can be old in years, but your heart has to be young.