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.
