|
|
|
ONLINE FEATURES
Book Reviews
BW Video
Columnists
Interactive Gallery
Newsletters
Past Covers
Philanthropy
Podcasts
Special Reports
BLOGS
The Auto Beat
Byte of the Apple
Europe Insight
Eye on Asia
Getting In
Investing Insights
The New Entrepreneur
NEXT: Innovation Tools & Trends
On Media
Technology at Work
The Tech Beat
Traveler's Check
TECHNOLOGY
Product Reviews
Tech Stats
Hands On
AUTOS
Home Page
Auto Reviews
Car Care & Safety
INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip FINANCE Investing: Europe Annual Reports Bloomberg BW50 SCOREBOARDS Hot Growth Companies: 2008 Mutual Funds Info Tech 100 B-SCHOOLS Undergrad Programs Rankings & Profiles |  |
NOVEMBER 24, 2003
How To Succeed In The Chinese Ad Biz Political savvy and local acquisitions have Clear Media growing like gangbusters A sign advertising Coca-Cola on a bus shelter in the Chinese port city of Hang- zhou shouldn't have been any big deal. Problem was, the billboard -- like many Coke ads -- was predominantly red, and in China red belongs to the Communist Party. So Clear Media Ltd., the company that owns the shelter, had to lobby local officials at meetings over green tea before finally winning approval for the ad. "We brought them the Coke and Pepsi annual reports and showed the officials that, yes, the two companies use different colors," says Clear Media Chairman Steven T. Yung. Even advertising, it seems, is not beyond the reach of the long arm of the party in China. And it's not just color. Far more than in most other countries, Chinese advertisers face strict limits on the claims they can make in their ads. Superlatives such as "best" are banned. So are rankings and head-to-head comparisons with rivals. Just mentioning prices is pushing the envelope -- and still needs official approval. Clear Media, though, is ready to do what it takes to make sure Chinese consumers see its ads. With good reason: The Chinese ad market was worth $6 billion in 2002 and is expected to grow by as much as 15% annually in coming years. Since it was founded in 1998, Clear has posted annual sales and profit growth in the neighborhood of 20%, and last year earned $9 million on $55 million in sales, making it by far the largest outdoor media company in the country. Clear's 18,000 bus stop panels advertise everything from Motorola Inc. phones to Gucci bags, some of them in plain sight of such hallowed ground as the Zhongnanhai leadership compound in Beijing. Does Clear Media's name sound familiar? It should. The company is controlled by U.S.-based Clear Channel Outdoor Inc., which owns 46% of the operation. It's part of the empire of Texas entrepreneur Lowry Mays, who has built the largest radio station and outdoor advertising network in the U.S., with sales last year of $8.4 billion. Mays is known for his conservative views, but that hasn't kept him from investing heavily as the communist stronghold embraces consumerism. Just as its parent did in the U.S. billboard market, Clear Media is snapping up small local players and trying to take the lead in a fragmented business. Baby Clear, as insiders call it, was founded in 1998 and in 2001 listed its shares in Hong Kong. Its initial public offering pulled in $100 million, which has been plowed into more than a dozen acquisitions. And the shares? They're up 63% since June. Much of Clear Media's success is due to changes that have swept China since it started opening its markets after joining the World Trade Organization two years ago. Now, makers of everything from cars to toothpaste are looking to build their brands. And the WTO doubled the number of foreign movie imports each year, to 20 -- which has Hollywood looking to promote blockbusters such as the Matrix and the Harry Potter series. Local studios are fighting back with campaigns for the likes of Zhang Yimou's Hero. APPLY THE SCREWS A big market doesn't mean business is easy. For instance, Clear Media's local partner, White Horse, a mainland ad house controlled by the brother of Clear's president, is a big customer. But White Horse was slow to pay for ads it placed on behalf of clients. As receivables ballooned, Clear had to apply the screws. The company has since brought average payment times close to its target of 120 days. Yung also notes that bookings from White Horse now account for only 8% of the total, down from 25% two years ago. Whatever the challenges, Clear has big hopes for China. Beginning next year, it plans to build 2,000 taxi shelters in Shanghai equipped with a satellite system that summons the nearest cab. Clear will rent ad space on the shelters to high-end retailers like Louis Vuitton, which want to tap affluent consumers in the booming city. "The long march has just begun," says Yung, a 53-year-old former exec at Coke. He just has to get the colors right.  By Mark L. Clifford in Hong Kong Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
 Copyright 2003, Bloomberg L.P.Terms of Use | Privacy Policy |
Printer-Friendly Version
