Maurice,
Jay may not buy a CDMA phone because of you. I am sure his daughter will. :-) YiWu and the like may or may not rule Taiwan. But they had better learn to give PRC's constituional rights to PRC's people fast. Lying will not do it. Otherwise one side of Jay may go independence in HK. The other side of Jay may of course fight for it.
Selling in China? Which one is it?
By David Lague International Herald Tribune
MONDAY, JANUARY 16, 2006
BEIJING: When Angela Feruglio, an advertising researcher, sat in last year on focus groups of young Chinese in Shanghai and Guangzhou as they were quizzed about consumer electronics, it was immediately clear that cities could be divided by desire.
In Shanghai, Feruglio said, all the participants wanted iPods and were strongly attracted to the best mobile phone with the most advanced features.
In Guangzhou, young consumers said it was important to have the latest mobile phone, but only if they had MP3 players. They saw no need to buy a phone and an iPod.
"In Guangzhou, they were what I would call 'pragmatic cool,"' said Feruglio, based in Hong Kong as director of context planning in Asia for Starcom MediaVest Group. "They were much more practical in their approach to the same thing."
For political purposes, the Communist Party insists that China is basically homogenous, with 95 percent of its people belonging to the Han ethnic group and united by a written language and common culture.
Critics dismiss this characterization. Geographical differences in attitudes like the ones toward the iPod in cities along China's booming coastal zone reinforce what demographers, anthropologists and many Chinese have long known: There is no "one China."
For merchants, and therefore for advertisers, there are many Chinas, perhaps as many as there are countries in Europe, specialists say. To succeed in China, advertisers need to take into account wide regional variations in language, temperament, income, culture, climate, diet, demographics and history, they say.
"The idea that the population labeled 'Han Chinese' is homogenous is a nationalist myth," Human Rights in China said in a 2002 report. "Within this category there is enormous cultural and linguistic diversity."
Although the Chinese share a common written language, linguists identify eight major spoken-language groups that are mutually unintelligible.
The Communists, like the Nationalists before them, have gone to great lengths to impose a common spoken language, Putonghua, commonly known as Mandarin outside of China, as part of their drive to reinforce national unity. But regional language groups, which include Cantonese and Shanghainese, have been surprisingly resilient.
"In China, dialect plays a very important role in advertising," said Arvind Sethumadhavan, based in Singapore as chief executive of Advanced Techniques Group, a division of GroupM. "You want consumers to relate to what is being said in an ad."
After Mandarin, Cantonese - spoken by about 60 million people in Guangdong Province and in Hong Kong and Macao, as well as among ethnic Chinese populations overseas - is probably the most important language for advertising.
The region where Cantonese is entrenched as the language of popular discourse and entertainment has become a global manufacturing powerhouse over the past 25 years and is now home to some the country's wealthiest consumers. "If you don't advertise in Cantonese as a new brand coming into the market, you would be committing suicide," Feruglio said.
Other regional languages can also be useful. Joseph Wang, based in Shanghai as chairman of Ogilvy in Southern China, said colloquial expressions in Shanghainese were important to the successful 2002 introduction of China Mobile's wireless service M-Zone in China's financial capital. Clearly, that type of campaign needed modifying for other regions.
"Once we took that into Beijing and other parts of China, it became too Shanghainese," he said.
Some industry experts expect China to overtake Japan by 2010 to become the world's second-biggest advertising market, after the United States. Spending on advertising in China increased 20 percent in the first half of 2005 to 143.4 billion yuan, or $17.7 billion, according to Nielsen Media Research, compared with a global increase of about 5 percent. Television advertising accounted for about 80 percent of spending in China, Nielsen said.
The pharmaceutical industry was the market leader, with spending of 30 billion yuan, followed by the cosmetics and personal care sector, where spending was 27.5 billion yuan, and then the retail and service industries, which together spent 21.5 billion yuan.
Almost all of the big multinational media agencies are well established in China, and these companies were expected to account for 30 percent of billings in 2005, according to a November report by Recma, a media research company based in Paris. Recma said that last year, the top-ranked global media buyers in the Chinese market by billings were local agencies affiliated with MindShare, which is a unit of WPP Group, ZenithOptimedia and Starcom; which are divisions of Publicis Groupe; and Carat, which is a unit of Aegis Group.
For advertisers, China's economic boom clearly creates opportunity, but it is also adding another layer of complexity to existing regional differences.
After more than two decades in which annual economic growth has averaged 9 percent, according to government figures, millions of Chinese have been lifted out of poverty and gone on to develop strong appetites for consumer goods.
A McKinsey survey of 6,000 households in 30 cities released in December showed that 8.5 percent of respondents intended to buy new homes in the following 12 months, 8.1 percent mentioned flat-screen televisions as their next major purchase and 2.4 percent said they would buy cars within a year.
But the distribution of this spending power has been very uneven. In fact, some sociologists warn that the yawning income gap between the prosperous cities, mainly on the east coast, and rural areas has become a serious threat to social and political stability.
Most of China's bigger spending consumers can be found in the so-called Tier 1 cities like Shanghai, Guangzhou and Beijing, or the more numerous Tier 2 cities like Chongqing, Harbin, Wuhan, Nanjing, Chengdu and Tianjin.
However, there are also hundreds of millions of potential customers in the hundreds of Tier 3 and 4 cities around the country. And this urban population is expected to grow rapidly as one of the biggest mass migrations in history from the countryside into cities gathers pace. In the decade to 2010, the United Nations estimates, 200 million rural Chinese will become city dwellers.
For now, it is the smaller cities that are proving to be a special challenge for outsiders. "Most multinational brands are not getting much penetration into the Tier 3 or 4 cities," said Wang, the Ogilvy executive. "That is where Chinese brands feel they have strength."
Industry analysts note that Nike and Adidas dominate sporting brands in China's Tier 1 and Tier 2 cities but that a local brand, Li Ning, is stronger in the smaller cities. Aiming at those customers often requires subtle advertising that takes into account the lower disposable income of the smaller urban areas without appearing cheap or condescending.
Wang points to the strategy that Procter & Gamble uses to market two versions of its Olay skin whitening creams. In Tier 1 cities, the more expensive cream is promoted with detailed claims about its benefits. The assumption is that a more worldly customer in a big city will have a better understanding of her skin. For the cheaper cream, advertising in smaller cities omits complex product information and concentrates on images of a natural-looking woman with sex appeal. "It's all about finding the right sort of insight," Wang said.
Environmental factors like climate in a country as big as China can also have a major bearing on the impact of advertising. Sethumadhavan, the chief executive of Advanced Techniques, said an analysis of the effectiveness of advertising for Nescafé in Beijing, Shanghai and Chongqing showed that spending could be curtailed in colder months when people were drinking more hot drinks.
"Part of the marketing budget deployed in high-season periods could be channeled to boost sales in low-season periods," he said.
For most advertisers, the diversity of China's market doesn't always mean devising multiple messages. Instead, some experts say campaigns may need only to be carefully devised and tested across a variety of markets to make sure they have a uniform effect.
"The best advice I can give any new entrant in this market is research, research and research because it is so complex," Feruglio said. "You can't walk down Nanjing Road in Shanghai and think that you understand China."
BEIJING: When Angela Feruglio, an advertising researcher, sat in last year on focus groups of young Chinese in Shanghai and Guangzhou as they were quizzed about consumer electronics, it was immediately clear that cities could be divided by desire.
In Shanghai, Feruglio said, all the participants wanted iPods and were strongly attracted to the best mobile phone with the most advanced features.
In Guangzhou, young consumers said it was important to have the latest mobile phone, but only if they had MP3 players. They saw no need to buy a phone and an iPod.
"In Guangzhou, they were what I would call 'pragmatic cool,"' said Feruglio, based in Hong Kong as director of context planning in Asia for Starcom MediaVest Group. "They were much more practical in their approach to the same thing."
For political purposes, the Communist Party insists that China is basically homogenous, with 95 percent of its people belonging to the Han ethnic group and united by a written language and common culture.
Critics dismiss this characterization. Geographical differences in attitudes like the ones toward the iPod in cities along China's booming coastal zone reinforce what demographers, anthropologists and many Chinese have long known: There is no "one China."
For merchants, and therefore for advertisers, there are many Chinas, perhaps as many as there are countries in Europe, specialists say. To succeed in China, advertisers need to take into account wide regional variations in language, temperament, income, culture, climate, diet, demographics and history, they say.
"The idea that the population labeled 'Han Chinese' is homogenous is a nationalist myth," Human Rights in China said in a 2002 report. "Within this category there is enormous cultural and linguistic diversity."
Although the Chinese share a common written language, linguists identify eight major spoken-language groups that are mutually unintelligible.
The Communists, like the Nationalists before them, have gone to great lengths to impose a common spoken language, Putonghua, commonly known as Mandarin outside of China, as part of their drive to reinforce national unity. But regional language groups, which include Cantonese and Shanghainese, have been surprisingly resilient.
"In China, dialect plays a very important role in advertising," said Arvind Sethumadhavan, based in Singapore as chief executive of Advanced Techniques Group, a division of GroupM. "You want consumers to relate to what is being said in an ad."
After Mandarin, Cantonese - spoken by about 60 million people in Guangdong Province and in Hong Kong and Macao, as well as among ethnic Chinese populations overseas - is probably the most important language for advertising.
The region where Cantonese is entrenched as the language of popular discourse and entertainment has become a global manufacturing powerhouse over the past 25 years and is now home to some the country's wealthiest consumers. "If you don't advertise in Cantonese as a new brand coming into the market, you would be committing suicide," Feruglio said.
Other regional languages can also be useful. Joseph Wang, based in Shanghai as chairman of Ogilvy in Southern China, said colloquial expressions in Shanghainese were important to the successful 2002 introduction of China Mobile's wireless service M-Zone in China's financial capital. Clearly, that type of campaign needed modifying for other regions.
"Once we took that into Beijing and other parts of China, it became too Shanghainese," he said.
Some industry experts expect China to overtake Japan by 2010 to become the world's second-biggest advertising market, after the United States. Spending on advertising in China increased 20 percent in the first half of 2005 to 143.4 billion yuan, or $17.7 billion, according to Nielsen Media Research, compared with a global increase of about 5 percent. Television advertising accounted for about 80 percent of spending in China, Nielsen said.
The pharmaceutical industry was the market leader, with spending of 30 billion yuan, followed by the cosmetics and personal care sector, where spending was 27.5 billion yuan, and then the retail and service industries, which together spent 21.5 billion yuan.
Almost all of the big multinational media agencies are well established in China, and these companies were expected to account for 30 percent of billings in 2005, according to a November report by Recma, a media research company based in Paris. Recma said that last year, the top-ranked global media buyers in the Chinese market by billings were local agencies affiliated with MindShare, which is a unit of WPP Group, ZenithOptimedia and Starcom; which are divisions of Publicis Groupe; and Carat, which is a unit of Aegis Group.
For advertisers, China's economic boom clearly creates opportunity, but it is also adding another layer of complexity to existing regional differences.
After more than two decades in which annual economic growth has averaged 9 percent, according to government figures, millions of Chinese have been lifted out of poverty and gone on to develop strong appetites for consumer goods.
A McKinsey survey of 6,000 households in 30 cities released in December showed that 8.5 percent of respondents intended to buy new homes in the following 12 months, 8.1 percent mentioned flat-screen televisions as their next major purchase and 2.4 percent said they would buy cars within a year.
But the distribution of this spending power has been very uneven. In fact, some sociologists warn that the yawning income gap between the prosperous cities, mainly on the east coast, and rural areas has become a serious threat to social and political stability.
Most of China's bigger spending consumers can be found in the so-called Tier 1 cities like Shanghai, Guangzhou and Beijing, or the more numerous Tier 2 cities like Chongqing, Harbin, Wuhan, Nanjing, Chengdu and Tianjin.
However, there are also hundreds of millions of potential customers in the hundreds of Tier 3 and 4 cities around the country. And this urban population is expected to grow rapidly as one of the biggest mass migrations in history from the countryside into cities gathers pace. In the decade to 2010, the United Nations estimates, 200 million rural Chinese will become city dwellers.
For now, it is the smaller cities that are proving to be a special challenge for outsiders. "Most multinational brands are not getting much penetration into the Tier 3 or 4 cities," said Wang, the Ogilvy executive. "That is where Chinese brands feel they have strength."
Industry analysts note that Nike and Adidas dominate sporting brands in China's Tier 1 and Tier 2 cities but that a local brand, Li Ning, is stronger in the smaller cities. Aiming at those customers often requires subtle advertising that takes into account the lower disposable income of the smaller urban areas without appearing cheap or condescending.
Wang points to the strategy that Procter & Gamble uses to market two versions of its Olay skin whitening creams. In Tier 1 cities, the more expensive cream is promoted with detailed claims about its benefits. The assumption is that a more worldly customer in a big city will have a better understanding of her skin. For the cheaper cream, advertising in smaller cities omits complex product information and concentrates on images of a natural-looking woman with sex appeal. "It's all about finding the right sort of insight," Wang said.
Environmental factors like climate in a country as big as China can also have a major bearing on the impact of advertising. Sethumadhavan, the chief executive of Advanced Techniques, said an analysis of the effectiveness of advertising for Nescafé in Beijing, Shanghai and Chongqing showed that spending could be curtailed in colder months when people were drinking more hot drinks.
"Part of the marketing budget deployed in high-season periods could be channeled to boost sales in low-season periods," he said.
For most advertisers, the diversity of China's market doesn't always mean devising multiple messages. Instead, some experts say campaigns may need only to be carefully devised and tested across a variety of markets to make sure they have a uniform effect.
"The best advice I can give any new entrant in this market is research, research and research because it is so complex," Feruglio said. "You can't walk down Nanjing Road in Shanghai and think that you understand China."
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