This paper presents an overview of the advertising and PR industry in China with some of the latest statistical information

Fan, Y

English

Brunel University Research Archive

ADVERTISING AND PUBLIC RELATIONS IN CHINAYing FanPublished as a part of Chapter 12 “Communicating with 1.3 billion people in China”, Handbook of Corporate Communication and Public Relations: Pure and Applied Ed. by Oliver, S. M. (2004) Routledge: LondonIntroductionChina is undoubtedly a large and important market with 1.3 billion consumers. The economic  reform and  open-door  policy  since  1978  has  set  off  an  unprecedented consumer  revolution,  which  has  significantly  changed  the  living  standards  and lifestyle  of  millions  people.  The  phenomenal  growth  in  the  market  economy  is mirrored by the dramatic development in integrated communication in the country, particularly in the advertising industry. A virtually non-existent sector until the early 1980s,  the advertising industry is  now the second largest  in  Asia  after  Japan and employs more than half a million people. Contemporary advertising in China dates back in 1920s. During the past 80 years it has experienced many ups and downs. After the first advertising boom in 1930s, its development suffered restrictions after the communist founded the People’s Republic in 1949 and began to practice the Russian style centrally-planned economy. During the Cultural Revolution (1966-1976), being branded as evil and deceptive, advertising virtually  disappeared.  It  returned  to  business  in  1978  when  China  started  the economic reform and open door policy.1Advertising IndustryThe last decade of the 20th century has witnessed a dramatic growth in the sector with average  annual  growth  rate  of  39.8  percent.  The  total  advertising  revenue  has increased more than 28 times from 2.5 billion RMB to 72.2 billion RMB (US$ 9 billion) between 1990 and 2000, making China into the top ten largest markets for advertising services (see Table 1).  By the end of 2001, there were more than 70,000 enterprises  involved  in  the  industry  employing  640,000  people,  including  40,000 advertising agencies, as compared with fewer than 10 agencies in 1976 and 6,000 people in 1980. Geographically, advertising industry is concentrated on three centres: Capital  Beijing,  the  largest  commercial  city  Shanghai  and  Guangdong  Province, which  borders  Hong  Kong  and  has  the  most  dynamic  economy.  The  three  areas account for 46 percent of all advertising revenue. Table 2 show the top ten largest advertisers by product category. The top ten advertisers by brand were all local brands whose expenditure accounted for seven percent of the total ad spend. Types of MediaThe four major advertising media are television, newspapers, radio and magazines (Table 3).  In  1990 television accounted for  17.7 percent  of  the total  expenditure, ranking third after outdoor (39%) and newspaper (31 %) in advertising spend. During the past twenty years, every type of media in China: radio, television, newspapers, magazines, and other media have all  increased in number and expanded in scope. They have become more segmented and variegated in content and style. For example, there were 202 television stations in 1985; ten years later the number surged to over 1000, plus more than 1,200 cable stations.  There are now 2,895 television stations, 2,128 newspapers and 723 radio stations that take advertising. Television is the most 2powerful  medium,  reaching  more  than  1.1  billion  viewers  (90  percent  of  the population) and accounting for around 40 percent of advertising revenue in China. China’s  TV  stations  in  2001  broadcast  an  estimated  9.56  million  hours  of programmes, whilst only producing 2.02 million hours of programmes. The media sector has been dominated by a few important players. For example, one leading TV channel  CCTV1 attracted 28 percent  of  all  advertising revenue on TV. Similarly, Guangzhou Daily had an 18 percent share of all newspaper advertising income. Elle proved to be the most “sellable” magazine in China with 21 percent of all advertising revenue for magazines (China Daily, 06-11-2002).In recent years the Internet and mobile phones emerged as the new media with great potential. By the end of 2002, China became the largest mobile phone market in the world with 206.6 million subscribers (compared with only 10 million users in India). Chinese mobile phone customers sent nearly 80 billion text messages in 2002, a five-fold increase over the previous year. During the 10-day period of the Chinese New Year  holiday  in  2003,  6  billion  text  messages  and  more  1  million  multimedia messages were sent (China Daily, 02-11-2003). Production  of  TV  programmes,  development  of  cinemas  and  distribution  of newspapers  and  magazines  will  become  the  most  profitable  investment  areas  in China’s media industry, according to China Media Investment Report 2002-03 (China Daily,  02-11-2003).  In  its  third  year  of  WTO  membership  the  government  has loosened its control on foreign media entering the Chinese market, and will open up TV, book and newspaper sectors to foreign investors.3International Firms and Their StrategiesEntering China in the early 1980s, international advertising agencies have seen their market share increased from 5-10 percent in the middle of 1980s to 55.4 percent in 2000.  The  primary  motive  of  these  multinational  agencies  to  enter  China  was  to provide  a  service  to  their  international  clients  who  were  eager  to  tap  the  large consumer market  there.  But  now they  also  attracted more accounts  from Chinese domestic  companies.  China  has  presented  a  great  challenge  to  both  international agencies and their clients: a language based on ideograms, different cultural values with  regional  variations,  huge  divide  between  urban  and  rural  areas,  remaining ideological restraints, to name a few. In contrary to the notion that standardisation is enough  for  low-income  markets  like  China,  a  recent  survey  of  873  international advertisers in China found that most companies used the combination strategy (Yin, 1999). Although the Chinese market is still less affluent, it is a highly competitive one that  requires  international  advertisers  to  recognise  the  cultural  differences  and  to adapt.  However,  studies  on  how  advertising  in  China  should  be  adapted  remain inconclusive. On the one hand, Chinese consumers have shown great responsiveness to advertisements that emphasise concrete, functional and utilitarian product benefits rather than symbolic themes. They will  read even the fine details of product print advertisements.  On the other  hand,  Chinese consumers  are  becoming increasingly sophisticated. Urban, young and affluent viewers prefer the advertisements that are interesting, entertaining and communicate new life-style and western values. Public Relations IndustryIn  1980  Public  relations  practice  first  appeared  in  China  in  some  foreign-funded enterprises in Shenzhen and from there to spread gradually to the whole country. 1985 4witnessed  several  firsts  in  the  PR  industry:  the  first  PR  department  set  up  in  a pharmaceutical company, the first PR company founded by the state news agency and the first PR degree programme. Over the past 20 years the PR industry has grown from zero to become an established sector. By the end of 2000, there were 150 PR organisations and more than 1,000 PR agencies employing around 100, 000 people, including 5,000 qualified PR professionals. The total turnover reached 1 billion RMB in 1999 and was forecast to double in 2001. The first international PR firm came to China was Hill&Knowlton in 1984 followed by Burson-Marsteller in 1985. Now 15 international PR firms (including the top 10) are operating in China. International PR firms have apparent strength in strategic planning, branding and crisis management; while Chinese PR firms are good at media relations, event planning and exhibition design.  Despite  its  short  history,  PR has  played  an  important  role  in  China.  For example,  in  the  aftermath  of  Tiananmen  massacre  in  1989,  Chinese  government employed an international PR firm to improve its image in the west. A more recent case is the use of PR to help China’s Olympic bid. ConclusionDespite  its  rapid  growth over  the  past  two  decades,  the advertising  industry  still accounts for only 0.7 percent of China’s GNP, as compared to 3-4 percent in the United States.  The industry is  expected to  continue grow at double-digit  rate  and China is  predicted  to  become the  second largest  market  after  the US  (but  before Japan) by 2020. China is the world’s largest market with 1.3 billion consumers. More than 350 million people (the size of EU) are expected to become relatively affluent “middle class” with an annual income above US$ 4,000 in the next decade. With the country’s entry to the World Trade Organisation and 2008 Olympic Games to be held 5in Beijing, there will be a huge influx of foreign goods and capitals into China as the market will become more open with many trade restrictions being removed. This will provide international advertising and PR firms with great opportunities.ReferencesACNielsen, www.acnielsen.com.cnChina Daily, www.chinadaily.com.cnChinaPR, www.chinapr.com.cnYin, J. (1999) “International advertising strategies in China: a worldwide survey of foreign advertisers”, Journal of Advertising Research, 39:6Table 1. Advertising Industry Turnover and GrowthYear Turnover RMB bn Annual Growth (%)1990 2.5 -1991 3.5 401992 6.8 941993 13.4 971994 20.0 49.31995 27.3 36.51996 36.7 34.41997 46.2 25.91998 53.8 16.51999 62.2 15.62000 71.2 14.5  Average annual growth (1990-2000):          39.8Source: Adapted from China TV Yearbook 1999 and other sources.6Table 2. Ad Expenditure by Product Category 2000Rank Product1 Tonics and vitamins2 Chinese medicines3 Property sales and lease4 Cough and cold drugs5 Telecom equipment and service6 Hair care and conditioners7 Skin care and cosmetics8 Chinese wine and spirits9 PC and peripherals10 Mobile phone and accessoriesSource: ACNielsen (China) LtdTable 3. Ad Expenditure by Medium 1997Turnover RMB bnAgency 19.4Television 11.4Newspaper 9.2Other 4.1Radio 1.1Magazine 0.5Source: ACNielsen (China) Ltd7

Advertising and public relations in china

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