The World: Learning to work with the Chinese ad machine

With China's ad market poised to rule the world, how is Britain's industry making sure it won't be left behind?

The prospect of the Chinese economic dragon preparing to bestride the world presents an intriguing prospect for Britain's agencies and commercial-makers, many of which are scrambling to leap aboard its back.

What may turn out to have been a defining moment in the UK industry's attempt to start taming and understanding the monster occurred at the end of last month at a forum staged in Beijing by the IPA and the Advertising Producers Association.

As a result, IPA executives are now exploring the possibility of either boosting Chinese entries for the Effectiveness Awards or helping the country's ad industry establish their own version of them.

They are also looking at the feasibility of developing bespoke versions of its training programmes for Chinese agency staff - many of whom are young and eager, but woefully lacking in experience.

On the face of it, both initiatives look like pure altruism. Janet Hull, the IPA's head of marketing, who was a member of the Beijing delegation, admits the trade body would probably do no more than break even if it devised such programmes. "Could we make a profit? Who knows?" she says.

So why do it? China is, after all, already the second-largest ad market after the US and will knock it off the top spot before much longer. "This is no longer an emerging market," Moray MacLennan, the IPA past president, who spoke at the Beijing event, says. "It's fully emerged."

True, the growth of its adspend may have slowed from 18.9 per cent last year to 4.6 per cent in 2009. But as one of the IPA delegation remarks: "What wouldn't we give for a recession like that?"

Hull sees what the IPA is doing in China as a way of preparing the Chinese market and emphasising that Britain's global creative credentials belie its physical size.

Ingratiating the UK ad industry with Chinese clients is partly an extension of the IPA-inspired Creative Britain strategy that began last year, but also because of urgings from the Government-backed UK Trade & Investment. It wants UK agencies to follow the example of the design sector which is promoting itself as a "global creative hub".

Against that background, taking its first steps into China, hand-in-hand with the APA, has clearly been advantageous for the IPA. For one thing, the APA already knows its way around.

After the forum it held in Shanghai in November 2007, APA members won more than £5 million worth of business from Chinese agencies. RSA Films produced work for Cathay Pacific and the Dream City property development programme, while Stink created new commercials for Adidas.

Also, as Steve Davies, the APA chief executive, points out: "Initiatives like this allow UK advertising to present a broader offering to China and allow us to demonstrate the seriousness of our intent."

However, Davies insists that the business won as a result of the Shanghai forum can only be regarded as a short-term gain. Nothing, he says, can compensate for having a local presence. One APA member, the post-production house Smoke & Mirrors, is currently arranging Mandarin lessons for some of its staff before opening an office in Shanghai in August.

Not surprising, perhaps, since TV accounts for more than 70 per cent of China's total adspend and delivers audiences on a mind-blowing scale. Penny Verbe, the company's chief executive, expects to double the office's launch staff to 20 within six months.

"It takes time to set up because of the cultural differences," she says. "But to get the business, you really have to be on the spot." Not least, she might have added, given the intense competition for Chinese business from production houses in Hong Kong, Thailand, Taiwan, South Korea and even Australia.

The APA's experience isn't lost on the IPA, which hopes the Beijing initiative will open up links with those who grease the wheels within the Chinese government, as well as those industrial giants re- investing profits, made as low-cost manufacturers, to become credible world players.

Among them are Lenovo, the PC manufacturer, which has a high-profile sponsorship deal with the Washington Redskins American football team; Aigo, a leading technology company and one of last year's Olympics sponsors; and the telecoms company Huawei. All were represented at an IPA- hosted dinner in Beijing.

"Over the next 30 years, Chinese brands will play a dominant role in the world economy, just as US brands did in the first part of the 20th century," MacLennan, M&C Saatchi's worldwide chief executive, predicts.

"As those brands go global, they'll need advertising and marketing that reflects a deep cultural understanding of world markets and we in the UK have a history of doing this well," he adds. "If they get it wrong, they could damage themselves for years to come. Our challenge is to get this message across to Chinese multinational companies without sounding patronising or arrogant."

From now on, the emphasis will be on keeping the momentum going and building on the two-day Beijing forum, where almost every session attracted a full house and the event got 31,400 online mentions.

Around 140 IPA agencies have expressed interest in developing partnerships in China. Meanwhile, both the IPA and the APA expect to be involved in a celebration of British creativity set to take place at the Expo 2010 in Shanghai. The event is expected to attract more visitors than any other world fair in history.

British advertising seems to have stolen a march when it comes to China. The American Association of Advertising Agencies has attempted nothing similar and doesn't plan to. "It's difficult for us because of our limited resources and the current state of the US economy," a spokesman says.

Fortunately, its British counterparts seem to be heeding the words of Confucius. "Success depends on previous preparation," the Chinese philosopher once said. "Without such preparation, there is sure to be failure."