China, once memorably referred to as the '2.4 billion armpit' by
one leading deodorant manufacturer, presents a host of interesting
challenges for the international advertising player.
Many would argue that the country's impending entry into the World Trade
Organisation marks, in some tangible way, the maturing of this market
into a stable business environment with global standards.
And in the media world there is much to support this view, not least
improved research, more professionalism among planners and buyers, a
more commercial attitude from media owners, as well as an element of
media owner consolidation. These factors all point to a market rapidly
moving from 'developing' to 'developed'.
However, while there is much that has changed there is also much that
has not, and some aspects that have actually changed for the worse.
Many traditional practices in the Chinese media industry, some of which
used to cause raised eyebrows among foreign operators, have
These, unfortunately, include some of the more entertaining aspects of
working in China. One of the first casualties of the more professional
approach was the legendary CCTV 'Annual Auction'. CCTV is China's only
national broadcaster and every year all the clients and agencies had to
queue up to buy its limited primetime commercial minutage, in cash, on a
first-come, first-served basis.
This unseemly scrummage, which included scenes of senior executives
loaded down with suitcases of money, used to then be broadcast later in
the day on TV as entertainment (one advertiser paid USdollars 47million
for its airtime, which included a 15 per cent downpayment in cash at the
Gone too is the TV stations' refusal to acknowledge ratings as a measure
of audience - or, in fact, anything as a measure of audience. In the
past, unless the broadcasters themselves had done the measuring, no
research was taken seriously. Also gone is the old three-tier ratecard,
which dictated how much you paid according to the origin of your company
- local (poor), Asian but not Chinese (rich but not stupidly so) or
international (rich and just plain stupid).
Where there have been significant improvements is in the area of
research - we are now able to develop a real consumer insight as an aid
to effective media planning and there is real accountability in media
buying. CNRS, the equivalent of TGI, along with Telmar software, now
extends to 30 cities, 489 print titles, 372 TV stations and 2,253
brands. Measured ratings data has been extended to 66 cities and 12
provinces. Even people-meters have been established in eight leading
What has not changed are the basic obstacles any foreigner faces when
dealing with the China media market: its scale, complexity and basic
For a start there is not a single market in China but 30 (based on the
provinces), each the size of a medium or large European country (the
municipality of Beijing, for instance, is the same size as Belgium). On
top of this, you have more than 300 major cities and, often, cities
within a province have widely different attitudes and media consumption
habits. Add to this the four different levels of media - national,
regional, city and even neighbourhood (all state-run), and you end up
with a total media market with more than 2,400 TV stations alone.
Ratecards are, in effect, set by the government. They dictate the
required increases in revenue for each station, which is then simply
passed on as ratecard increase to the advertiser.
Then there is the unfamiliarity. With the exception of Beijing and
Shanghai, most outsiders would be hard pressed to recognise any other
major market or city in China - Chengdu, Chongqing, Dalian, Tianjin,
Harbin, Kunming, anyone? It is only when one has spent some time in
China that one begins to appreciate the problems of managing a media
market that is akin to working within four Europes without knowing where
Madrid or Barcelona is (or even Spain). And there isn't even a good map
to clarify the situation.
What is clearly changing for the worse is the accelerating rise of the
local 'broker' and the impending battle between the agencies that belong
to the 4As (American Association of Advertising Agencies) and the local
operators. Initially trading only on local 'insight', these brokers were
originally often an extension of the powerful provincial TV stations
which bullied everyone in the city. Either that or they were founded on
the 'guanxi' (relationship) of a few individuals - usually a station
president's sister's husband's brother! As a result the brokers were not
taken seriously by most major advertisers.
However, another type of operation has emerged parallel to these
Multinational agencies and clients have been training their staff for
more than a decade and the result is that there is now a core group of
local but internationally trained media-buying 'entrepreneurs'. Some of
these executives are now setting up in small groups, often fuelled by
large but unsophisticated local brands, and are offering their services
to anyone at a very competitive cost.
Their ability to operate on practically non-existent margins is fuelled
by the fact that they have no research costs to cover - research does
not drive their buying decisions. In some cases, if it is absolutely
necessary, they 'borrow' research data from friends at 4As agencies.
To further confuse the issue, some of the latest international entries
into the media specialist area have been forced, through lack of choice,
to take a major stake in these operations. Consequently, one sees some
strange, local - and somewhat shady - brokers operating under the
disguise of an internationally recognisable media brand.
A final complication to the buying scene is the rise of 'programming and
syndication'. The potential gains of programming and syndication deals
in China are enormous. With so many small TV stations unable to buy or
develop quality programmes, a successful programme can be sold to
literally hundreds of TV channels or bartered for large quantities of
discounted airtime. While there are many credible international
programming operations, China seems to have collected a whole number of
mavericks, lurking around Hong Kong, promising clients all sorts of
introductions and connections on the mainland.
Given the difficulty in measuring or even tracking many programming
deals, it is not surprising that this whole area seems to attract the
very worst type of business practices.
But it is certainly not all bad. Admittedly some clients have steadily
reduced their advertising investment in China, a result of tempering
their initially optimistic business plans. However, every year more and
more international and local brands are launched and, as a result,
advertising expenditure in China will grow by more than 20 per cent for
the second year in a row. The important question now is how will it be
spent and by whom?