Asian Media: Battle of the giants

China and India are seen as the engine rooms of their Asian regions. Initiative's King Lai and Robert FitzGerald look at how powerful they will be in the future.

China and India are marching progressively forwards on the world stage of emerging economies. While China has been the one enjoying top billing, India is shining under a spotlight of her own.

There are certainly some initial similarities that go beyond their obvious geographical scale and population sizes. In 2003, both countries experienced similar patterns of growth. India reported adspend growth of more than 18.6 per cent, while the overall economy grew by 5.6 per cent. For China, the figures were 15 per cent and 9 per cent, respectively.

Even beyond the figures, there are similarities. Their growth was fuelled by booming telecoms sectors. And both countries have growing reputations as centres for outsourcing, although anyone with experience of China will tell you it is unlikely that it will be able to move beyond manufacturing into the service sector, as India has done so successfully.

They also wrestle with the same problems, notably the growing divide between rural and urban populations and the "haves" and "have nots" that their economic successes are creating.

However, there remain some fundamental differences that will ultimately affect the futures of both as advertising superpowers. For instance, the heavy spending behind political advertising in India that is boosting its ad market this year is, of course, not going to happen in single-party China. Yet, that same single-party situation could provide China with the political and economic predictability that may not be possible in democratic India. The Chinese policy of long-term sustainable growth of 7 to 9 per cent ("hot but not overheating, controlled but not stagnating") has been consistently delivered and looks set to continue.

Even if China doesn't have elections to fuel advertising spending, it continues to have plenty of other catalysts. Events such as the Beijing Olympics in 2008 (no article on China can avoid mentioning it), this year's Formula One race in Shanghai, Expo 2010 and possibly even a World Cup bid in the near future will all drive the growth of its advertising market.

The growing affluence of even a small percentage of the total population continues to attract advertisers but this in itself is adding to one of the key issues of media in China: rampant media inflation, particularly in the TV market.

Excess demand, legislation to restrict supply, the creation of media monopolies (as in Beijing, Shanghai and Shenzhen) and the growing demand from the government for more ad revenue from their media. All have combined to create a situation where TV inflation could hit between 25 and 30 per cent in some of the key markets this year. This far outstrips the economic and business growth of clients, so the danger is that they will be forced to either increase spending unsupported by a similar increase in sales, review or reduce the geographic spread of their advertising, or review their strategy of commitment to heavy, sustained ad support for highly competitive, "innovation-led categories" such as haircare.

Media inflation in India bears no comparison to China's. But marketers should also be wary that a disconnect between economic return and media price increases could loom on the horizon. The economic rise of India lags ten to 15 years behind China, as their political reforms happened at different times (China in 1979, India not until 1991). We envisage India as a "second-stage China" in the making over the next ten to 20 years.

However, the implications of the Indian democratic state versus the state-controlled media of China will nurture a splitting of their destinies.

One divergence in media development is already evident. Satellite development with the success of foreign participation such as News Corp's Star TV, Sony, the BBC and Zee in India contrasts with the limited access to date for foreign players in China.

For all the comparisons, it is not rivalry between the two we're really interested in. Both are growing rapidly, both are already the engines that fuel the growth of their respective Asian sub-regions. And both have unique cultural, economic traits that are reflected in the unique challenges of both media markets.

Yet there is a growing bond between the two. They are increasingly swapping experience, talent and learnings. On the client side, many of the senior marketers in China, particularly in FMCG companies, are either Indian or have had experience in India. Likewise, the strategic planning departments of the creative agencies are often led by planners from the sub-continent.

The same is happening in media. Agencies are taking advantage of the statistical and technical strength of the Indian market along with the experience of handling a large developing market to develop the ROI and awareness modelling, optimising software and technologies capability of their Chinese operations.

While this talent transfer remains one way for now, with few or no examples of Chinese staff moving in the opposite direction, we are already seeing some of the systems and approaches developed in China now being applied in India.

Looking at the prospects for both markets, the most hopeful future lies not in rivalry but in what they can do together to raise the profile and capabilities of Asia within the global networks.

- King Lai is the chief operating officer of Initiative Asia-Pacific and Robert FitzGerald is the regional director of Initiative North Asia.



Population 1.093 billion 1.266 billion

Population per household 5.5 3.4

Unemployment 27.1% 1.8%

GDP $5.7 trillion $480 billion

GDP per capita $2,200 $4,400

GDP growth 5.6% 9%

Adspend ($000s) 2,694,668 22,715,401

Media split (%) TV: 42.5 TV: 44.0

Press: 47.3 Press: 38.8

Radio: 1.7 Radio: 4.2

Outdoor: 8.0 Outdoor: 13.0

Internet: 0.4 Internet: 15.0

Adspend growth

2003 vs 2002 18.2% 15%

Fastest-growing medium TV (24.9%) TV/Press (both 15%)

Top-five advertising

categories Soaps Pharmaceuticals

Corporate Toiletries

Soft drinks Retail and services

Toothpastes Industrial

Automotive Real estate

Top-five advertisers Hindustan Lever Gai Zhong Gai

Coca-Cola Naobaijin Pharma.

Procter & Gamble Taita Pharma.

Godrej Soaps Xiuzheng

Paras Pharma. Hutong Pharma.


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