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China’s Advertising Market: From the Doldrums to Major Player

04.12.07 09:16 Age: 13 yrs
China’s Advertising Market: From the Doldrums to Major Player

According to TNS Media Intelligence, China is now tied with the U.K. as the world’s third-largest advertising market, after the U.S. and Japan.
 

China, with its history of a planned economy and current status of part-planned/part-market economy, presents an interesting environment for the advertising industry. However, the advertising industry in China is still something of a mystery, particularly in terms of client perceptions of advertising and advertising agencies.

Even though never officially banned, advertising in China halted for 3 decades following the CPC’s ascent to power in 1949. Three factors contributed to this phenomenon. The first was ideology. Advertising was castigated, especially during the Cultural Revolution, as the apotheosis of capitalist consumption and a totem of advanced capitalist culture.

The second factor was related to the country’s economic system. In China’s highly centralized economy in which buying and selling were centrally planned and carried out by the State, there was little need before 1979 for enterprises to worry about marketing their product, regardless of whether they would earn or lose money.

The third factor stemmed from China’s production orientation. China was at one time a faithful follower of the Soviet-style economy that emphasized the development of heavy industries at the expense of consumer products. In an economy of general scarcity where consumer goods were often in short supply, advertising was indeed unnecessary.

When advertising was finally reintroduced in 1979, and its sanctioned scope expanded beyond industrial goods, the State faced a daunting ideological task: rebuilding a case for advertising in a socialist system that has long defined itself as one that did not need commercial exhortation. In essence, it had to sell the legitimacy of selling. 
 
Today, China is the fastest growing advertising market in the world. For many companies, China represents one of the world's most important opportunities because of the growing population, the continuing evolution of its market, and more people having more money to spend.

China’s growth in advertising is stimulated by:
(1) Rapid economic development
(i) GDP growing annually at more than 10% over the last few years
(ii) More than 100 million families in the three major economic powerhouses of Beijing, Shanghai and Guangzhou
(iii) Although the percentage of households that can afford modern luxuries is relatively low when compared with developed economies, the absolute size of its upscale urban consumers has turned China into a huge market – something that both foreign and local firms cannot afford to ignore.

For more information on how Lehman, Lee & Xu can be of assistance in this vital market, please contact us at http://www.lehmanlaw.com.

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