WPP, one of the world's leading marketing services firms, has acquired another Chinese firm, its third in as many months.
This time the target is Beijing Raynet Advertising, which has
offices in Beijing, Shenyang and Changchun and had revenues of 37m yuan
last year. WPP's wholly owned subsidiary Ogilvy & Mather Worldwide
is buying 49% of Raynet.
Founded in 2001, the ad agency's clients include China Netcom,
Liaoning Mobile, Liaoning Netcom, Mengniu Dairy and Shanghai Xinjiegou.
WPP's boss, Sir Martin Sorrell, is a long-time China fan and has
made a couple of equally shrewd acquisitions in recent months. In
October, it acquired a majority stake in Beijing Century Harmony Advertising, a leading internet advertising firm. A month earlier, it bought a Chinese agency specialised in property advertising.
EngagingChina first heard Sorrell speak on China at a conference
back in 2004, when the country was still categorised as an “emerging
market” by the consumer industries of the west. One of his observations
made back then seems even more relevant today:
Critics often ask how many of the 1.3bn Chinese can afford to buy
the goods and services that WPP sells. I answer that even if its only
150m that is still half the size of the US market. It is very difficult
for us to get our minds around a market of this size.”
Sorrell predicts that China will grow to become the second largest
advertising market by the 2008 Olympics, which he sees as a watershed
event for China.
By 2008, China is likely to have some of the characteristics of much
more mature advertising markets of the west. One of the most
interesting developments, for example, is the emergence of a distinct
“Baby Boomer” generation of thirtysomethings in China who have have
never experienced a downturn in the economy and have only seen yearly
increases in their quality of life.
Shaun Rein of the China Market Research Group has written a good story
on SeekingAlpha that covers the likes and tastes of China's Baby
Boomers and how their growing importance in China's consumer market
could benefit western companies in a wide range of sectors, including
healthcare, travel and luxury brands.