FORTUNE -- It is an iron-clad rule of the contemporary business landscape: Invest in China or imperil your future growth. It's noteworthy, then, that one of the most aggressive western companies in terms of trying to crack the China nut is more or less giving up the fight.
21st Century Fox, the film and TV company Rupert Murdoch cleaved from his print-focused News Corp. (NWSA) this summer, is actively reducing its exposure the world's second-largest economy. It's a shocking development only in that Murdoch spent so many years pursuing the China market so enthusiastically. The company is going out guns-a-blazing too. Murdoch's son James, his only child currently employed as a company executive, has criticized the Chinese government for timidity and a lack of commitment to reform.
Why get out now? "It's always been hard for us in the business of ideas to do business in China," the younger Murdoch said during an extensive interview in July at Fortune's annual technology-industry conference, in Aspen, Colo. "We went from the end of the Jiang Zemin regime, which was liberalizing, trying to do all things, to a much more ... timid approach to investment and to liberalization ... I don't think a lot of people noticed [the shift] enough. And basically it became harder to do business there."
As a result, 21st Century Fox (FOX) has been busy selling off and selling down investments. A few years ago it cuts its stake in broadcaster Star China to below 50%. More recently it reduced its stake in publicly traded Phoenix Satellite Television from 17% to 12%. A spokeswoman says "we're continuing to explore our strategic options," in this and other China investments.
To some extent 21st Century Fox is zigging where others are zagging. Relativity Media and DreamWorks Animation have invested heavily in film production in China. Legendary Entertainment recently signed a deal with China's largest film distributor. (21st Century Fox isn't completely fleeing: A year ago it took a 17% stake in another Chinese film distribution, Bona Film Group.)
But judging James Murdoch's tone -- he is the company's deputy chief operating officer, with responsibilities primarily in global television activities -- China is low on the Murdoch empire's list of priorities. India has become its favored Asian nation. "In the meantime, in the 20 years we've been investing in Asia, contrast what we've achieved in India, [where we own] the largest media company ... which is hugely successful financially and ... from a popularity point of view. We're a big investor in original programming and original writing and content creation in India in nine different languages. It's a fundamentally different animal [from China]." We just decided that [India] was a better place to be."
To some extent, the 21st Century Fox China retreat is a function of its specific industry. "When it comes to the media this is one of the last preserves that China is going to let go of," says Orville Schell, a noted China observer and director of the Asia Society's Center on U.S.-China Relations. "Although many people are making money in China, it's not easy to make money in the media. The closest anyone has come is in public relations, which is really propaganda. And the Chinese understand propaganda."
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