Joint venture a long-term commitment

IN July last year, after four years in China, Grey Advertising established a joint venture with Beijing Guoan Advertising, a subsidiary of CITIC's Beijing Guoan Industry Development Corporation.

Headquartered in Beijing with a second office in Guangzhou and a third planned for Shanghai, Grey holds majority equity within the joint venture.

''We are in control,'' said Ms Leonie Ki, chairman of Grey Hongkong.

''When operating a joint venture, you can't have two parties calling the shots,'' she said.

Grey began doing business in China in 1987.

By 1991, the company felt the Chinese market was moving towards its potential of being the biggest consumer market in the world, and it decided to push for a joint-venture agreement.

''The decision on China was linked to 1997. Hongkong will be part of China just like Beijing, Guangzhou and Shanghai,'' Ms Ki said.

''The future lies in China. I have good faith that China will be successful in the consumer market sense.

''China is like Hongkong of the 1970s, rising and becoming economically viable.'' Ms Ki said a joint venture was a long-term agreement based on committing to get business going.

In the beginning, work progressed slowly because it was necessary to build up a good infrastructure before going after business.

''We have set up a role model where the agency can work, make money and improve the advertising scene in China.

''It is a slow and steady business,'' she said.

She emphasised that relationships and networking were the key factors to successful advertising in China.

''You have to give face and respect because money is not the concern. You deal with the right person at the right time and always by approaching top management with caution, not offending lower management,'' Ms Ki said.

Relationships were important because the Hongkong partner always needed help in China in research, media and knowing who to deal with in the organisation.

''It is a two-way thing. We get the status to operate in China and the invaluable help of a local partner while they get an agency committed to raising advertising standards in China and bringing in profits,'' Ms Ki said.

''In Hongkong, we are used to effectiveness and efficiency but in China you spend a lot of time wining and dining to build up relationships.

''It is time-consuming but worth it.'' Grey's clients in China include foreign companies such as British American Tobacco and Wrigley's and joint ventures such as Nike and Procter & Gamble.

The agency has some local business including the Garden Hotel in Guangzhou, but has not actively pursued local accounts yet.

''We hope by to be making money by July 1993 as we are progressing well now, existing business having given us a good base,'' Ms Ki said.

Last year's China billings were $50 million.

Grey's two offices in China are staffed by a majority of local people.

Only two Hongkong staff from the agency have been sent to the mainland, one in each office.

''We are training local people to do local advertising.

''Only locals understand Chinese consumers,'' Ms Ki said.

Training and guidance come out of Hongkong and there are plans to bring new recruits from China to Hongkong.

''It was expensive setting up in Beijing and Shanghai, but in 18 months the local staff will be doing things independently and they have a good attitude, they want to succeed,'' Ms Ki said.

''There is no other way to look at China except as a long-term commitment.

''It is going to be there for a very long time.''