WPP targets acquisitions
Leading advertising company WPP Group is embarking on an aggressive acquisition drive on the mainland.
The company plans to buy a controlling stake in up to five advertising and public relations companies in Nanjing, Guangdong, Chengdu and Hainan, according to Joseph Wang Shao-jie, group managing director for Hong Kong and southern China of WPP-owned Ogilvy & Mather.
The agency expects to double its workforce to about 2,000 in three years.
Ogilvy has been involved in a joint venture with the mainland's largest domestic advertising firm, Shanghai Advertising Co, since 1991. Shanghai Ogilvy and Mather Advertising Co now has offices in Beijing, Shanghai, Guangzhou and Fuzhou.
'Our contract with Shanghai Advertising is almost at an end,' Mr Wang said.
'We have been profitable for 12 years of our 13-year relationship. We have no plan to terminate our venture but will seek acquisition opportunities to facilitate expansion in China.'
The expansion plan is focused on the health-care industry and includes the formation this year of a special Asia unit based in the mainland to cater for clients in the medical services.
According to Nielsen Media Research, companies marketing pharmaceutical, medical and personal-care items increased their advertising spending by 63.27 per cent to 22.58 million yuan last year, the highest growth among all categories.
'There is increasing demand for medical products and services in line with the improving living standards,' Mr Wang said.
'We will create marketing and networking plans for doctors and drugmakers with our international knowledge and experience. It is a professional service that local players find hard to offer.'
Ogilvy & Mather will also focus on brand building exercises for clients looking to expand in China and beyond.
'Young consumers in China still go after big names for the prestige,' said Mr Wang. However, because they know everything is made in China, quality is no longer an issue.
'Because of this, we have found that local firms are willing to invest more to create an image, a brand that is valued.'
Meanwhile, Grey Advertising, acquired by WPP in September last year, is also looking to expand its mainland operations.
'Over 90 per cent of Sino-foreign advertising joint ventures, including us, were formed in the early 1990s and many of their 15 or 20-year-old contracts are due to expire soon,' said Viveca Chan, chief executive for China and Hong Kong of Grey Worldwide.
'The local companies are growing fast with strength in sales and localised information. To compete with them, we hire local expertise to reinforce our branding services.
'We are moving from advertising and communications to marketing and consultation. In China, we must deliver our offerings from the boardroom to grassroots,' she added.
Grey's mainland joint venture partner is Citic Advertising Agency.
