Study: Pressure mounts for Chinese shops

'Short-term mindset' takes hold among clients

Chinese agencies are coming under pressure as a "short-term mindset" takes hold among clients, yielding more project-based relationships and driving high turnover, according to a new report by independent consultancy R3.

More than 25% of the relationships reviewed were less than one year old, up from 19% two years ago during R3's previous China study, the firm said. Also, 37% of those relationships were project based, compared to 28% in 2006, per R3.

In addition, "The average length of relationships is now 2.5 years, down from 2.8 years in 2006, and well behind the European and U.S. average of six years," according to R3 principal Greg Paull.

"There were more changes than we expected in the last two years," said Paull. "The Chinese marketing communications industry continues to flash before our eyes."

For the survey, R3 held face-to-face meetings with marketers in 12 Chinese cities and analyzed 536 relationships. Companies included multinationals such as Adidas, McDonald's, Nokia and Unilever, as well as leading local firms like Lenovo, Li Ning, Uni-President and Yili. More than 200 foreign- and locally-owned agencies were benchmarked in terms of creativity, strategy, media planning and marketing services. R3 and Groupo Consultores, a Madrid-based consultancy, led the initiative.

Most Respected by Peer Marketers

Procter & Gamble and local milk company Mengniu tied for the most admired marketer in China as voted by peer companies. Cola-Cola placed third.

"Mengniu increased sales 70% year on year -- for any Chinese company on the way up, they are setting the standard," said Goh Shu Fen, principal and co-founder of R3. "While P&G has always led the way in process excellence, it's that shot of entrepreneurship Mengniu has delivered through Super Girl, the manned space flight and the NBA leverage that has got them noticed."

Placing third among the most admired companies was Coca-Cola, which led the way in reputation amongst 200 agency professionals also interviewed in a separate part of R3's study.

WPP Shops Perform Well

As in 2006, WPP Group's Ogilvy & Mather and MindShare topped R3's list in agency perception.

"Ogilvy not only led in terms of awareness, with two thirds of marketers spontaneously mentioning them, they also led the way in terms of creative and strategic perception" said Paull. "Their long-term investment in China is reaping rewards."
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