ADVERTISING IN CHINA -A MARKET ANALYSIS

SUMMARY

Advertising in China covers both market size (by adspend, media and product category spend) and is also an overview of the practice of advertising in China -traditional and new media, advertising's governing bodies, major practitioners and more

EXTRACT FROM INTRODUCTION

'...Advertising in China is now a major business with ads covering the whole country on buses, TV, the sides of buildings & radio.

China's advertising industry remains surprisingly robust in the face of a worldwide recession in ad spending and the slashed marketing budgets of multinational fast-moving consumer goods (FMCG) firms in particular.

Steady market growth in China has stemmed from three main factors. First, membership of the WTO; Second, the perception that China's economy is weathering the global recession more successfully than other markets and; third, local players in the advertising industry becoming more experienced.

Access Asia believes that China's total adspend for 2001 is close to US$5 billion and growing....'

TABLE OF CONTENTS

CHINA CONTACT I

CONTENTS II

1 INTRODUCTION

1.1 Executive Summary

1.2 Report Coverage

1.3 Glossary

1.4 Relevant Access Asia Reports

2 CHINA? ADVERTISING MARKET

2.1 Market Size

2.1.1 Market Size: Total Advertising Revenues

Table 2.1 TOTAL ADVERTISING REVENUES IN CHINA, 1996-2001

2.1.2 Market Size: Advertising Revenues by Province

Table 2.2 ADVERTISING REVENUES IN CHINA: REVENUES BY PROVINCE, 1997-2001

2.1.3 Market Size: Growth in Advertising Revenues by Province

TABLE 2.2 ADVERTISING REVENUES IN CHINA: REVENUES BY PROVINCE, 1997-2001

2.1.4 Market Size: Revenues by Leading Advertised Product Categories

TABLE 2.4 TOP TEN ADVERTISED PRODUCT CATEGORIES IN CHINA, 2001

3 REGULATORY ENVIRONMENT FOR ADVERTISING

3.1 Regulatory Environment: Regulatory Bodies

3.1.1 Regulatory Bodies: Overview

3.1.2 State Administration for Industry & Commerce (SAIC)

3.1.3 China Advertising Association (CAA)

3.1.4 Ministry of Commerce (MOFCOM)

TABLE 3.1 MOFCOM DEPARTMENTS, 2003

3.1.5 Ministry of Information Industry (MII)

3.1.6 State Administration of Radio, Film and Television (SARFT)

3.1.7 China Radio, Film & Television Group (CRFT)

3.1.8 Ministry of Culture

3.1.9 State Press & Publications Administration (SPPA)

3.1.10 Shanghai Radio & TV Bureau

3.2 Regulatory Environment: Legislation

3.3 Regulatory Environment: WTO and Foreign Investment

4 ADVERTISING AGENCIES IN CHINA

4.1 Overview

4.2 Advertising Agencies: Current Environment

4.3 Advertising Agencies: Growing Foreign Investment

4.4 Advertising Agencies: Chasing Local Clients

5 CONSUMERS IN CHINA

5.1 Emerging Middle Class

5.2 Consumers and Political Change

5.3 Consumers and Economic Reform

5.4 New Generation of Consumers

6 BRANDS IN CHINA

6.1 China? Brand History

6.1.1 China? Brand History: Overview

6.1.2 China? Brand History: Big Brands Emerge

6.2.Brand Preference

6.2.1 Brand Preference: Brand Perceptions

6.2.2 Brand Preference: Brand Loyalty

6.2.3 Brand Preference: Brand Equity

6.2.4 Brand Preference: Regional Disparities

6.3 Emerging Local Brands

6.3.1 Emerging Local Brands: Overview

Table 6.1 CHINA? 25 MOST VALUABLE BRANDS 2002

6.3.2 Emerging Local Brands: Product Innovation

6.3.3 Emerging Local Brands: Going Global

6.4 Marketing the Brand

6.3.1 Marketing the Brand: Current Environment

6.3.2 Marketing the Brand: Packaging & Presentation

6.3.3 Marketing the Brand: Pricing

6.3.4 Marketing the Brand: Geographical Expansion Within China

6.3.5 Marketing the Brand: Product Launches & Promotions

6.3.6 Marketing the Brand: Direct Mail

6.3.7 Marketing the Brand: The Threat from Fakes and Counterfeits

6.3.8 Marketing the Brand: Consumer Protection Policies

6.3.9 Marketing the Brand: Lessons for Foreign Marketers

6.3.10 Marketing the Brand: Key Challenges for Brand Owners

7 THE MEDIA IN CHINA

7.1 Television

7.1.1 Television: Overview

7.1.1 Television: Advertising

Table 7.1 CHINA: TELEVISION STATISTICS, 2002

Table 7.2 AVAILABLE CCTV CHANNELS, 2003

7.1.2 Television: Satellite TV

Table 7.3 ESTIMATE FOR UNOFFICIAL SATELLITE TELEVISION ACCESS PRICES IN SHANGHAI, MARCH 2003

Table 7.4 FOREIGN SATELLITE CHANNELS AVAILABLE IN SHANGHAI, 2003*

Table 7.5 LOCAL, CABLE AND SATELLITE TELEVISION PENETRATION IN SHANGHAI, 2002

7.1.3 Television: Cable TV

TABLE 7.6 TOP TV CHANNELS IN CHINA RANKED BY AUDIENCE SHARE, 2001

7.1.4 Television: Interactive & Pay TV

7.2 Print

7.2.1 Print: Newspapers - Overview

TABLE 7.7 THE TOP TEN NEWSPAPERS IN CHINA, 2001*

7.2.2 Print: Magazines - Overview

7.2.3 Print: Regulatory Environment

7.2.4 Print: WTO and Foreign Investment

7.3 Radio

7.3.1 Radio: Overview

7.3.2 Radio: Market Reach

7.3.3 Radio: Advertising

7.3.4 Radio: Foreign Investment

7.4 Outdoor

7.4.1 Outdoor: Overview

7.4.3 Outdoor: Foreign Investors

7.5 Internet

7.5.1 Internet: Growing Internet Population

7.5.2 Internet: Advertising

7.5.3 Internet: Online Marketing

8 SWOT ANALYSIS

8.1 Strengths

8.2 Weaknesses

8.3 Opportunities

8.4 Threats

9 INDUSTRY EVENTS

9.1 PFP ·Printing South China ·International Electronic Publishing & Advertising (EP) Exhibition

9.2 Zhengzhou International Advertisement Exhibition on New Technology, New Equipment & New Material

9.3 Advertisement & Printing Machine Show

9.4 International Advertising Exhibition of New Medium, New Technology, New Equipment, New Material

9.5 Shanghai International Ad

9.6 Shanghai International Exhibition on Media

9.7 International Advertisement Technology & Equipment Exhibition

9.8 Advertisement Show

9.9 Guangzhou International Advertising Expo (Ad Expo)

9.10 International Advertising Show

APPENDIX A - MARKET BACKGROUND

A.1 Fast Facts

A.2 Regions of China

Map A.1 CHINA: PROVINCES AND MUNICIPALITIES

A.3 Demographics

A.3.1 Demographics: Total Population

Table 1.1 TOTAL POPULATION, 1996·002

A.3.2 Demographics: Population by Location

Table A.2 POPULATION BY URBAN-RURAL DIVIDE, 1996·002

A.3.3 Demographics: Population Breakdown by Location

Table A.3 POPULATION BREAKDOWN BY URBAN-RURAL DIVIDE, 1996·002

A.3.4 Demographics: Population by Province

Table A.4 POPULATION BY PROVINCE, 1999-2002

A.3.5 Demographics: Population Density by Province

Table A.5 POPULATION DENSITY BY PROVINCE, 1999-2002

A.3.6 Demographics: Population Concentration

Map A.2 POPULATION CONCENTRATIONS BY PROVINCE, 2002

A.3.7 Demographics: Population by Gender

Table A.6 TOTAL POPULATION BREAKDOWN BY GENDER, 1996·002

A.3.8 Demographics: Population by Age Group

Table A.7 POPULATION BY AGE GROUP, 1996·000

Table A.8 POPULATION BY AGE GROUP (PERCENTAGE), 1996·002

A.4 Consumer Lifestyles

A.4.1 Consumer Lifestyles: Livelihood

A.4.2 Consumer Lifestyles: Individual loans

A.4.3 Consumer Lifestyles: Housing

A.4.4 Consumer Lifestyles: Possessions

A.4.5 Consumer Lifestyles: Travel

A.4.6 Consumer Lifestyles: Entertainment

A.4.7 Consumer Lifestyles: Health and Fitness

A.4.8 Consumer Lifestyles: Purchasing Influences

A.4.9 Consumer Lifestyles: Taboos

A.5 Consumer Wealth

A.5.1 Consumer Wealth: GDP and Cost of Living

Table A.9 GDP AND COST OF LIVING INDEX, 1996·002*

A.5.2 Consumer Wealth: Provincial Differences in GDP

Table A.10 GDP RANKED BY PROVINCE, 1996·002*

A.5.3 Consumer Wealth: GDP Growth by Province

Table A.11 GDP GROWTH RANKED BY PROVINCE, 1996·002*

A.5.4 Consumer Wealth: GDP Per Capita by Province

Table A.12 PER CAPITA GDP RANKED BY PROVINCE, 1999-2002

A.5.5 Consumer Wealth: Concentration of Wealth by Province

Map A.3 VALUE OF GDP PER CAPITA BY PROVINCE, 2002

A.5.6 Consumer Wealth: The Major Cities

Table A.13 LEADING CITIES KEY ECONOMIC INDICATORS, 2002

A.6 Households

A.6.1 Households: Overview of Household Conditions

A.6.2 Households: Total Households by Size

Table A.14 NUMBER OF HOUSEHOLDS BY SIZE, 1996·002

A.6.3 Households: Total households by Urban/Rural Split

Table A.15 NUMBER AND SIZE OF HOUSEHOLDS BY LOCATION, 1996·002

A.6.4 Households: Income Earners Per Household

Table A.16 AVERAGE NUMBER OF INCOME EARNERS PER HOUSEHOLD, 1996·002

A.7 Employment

A.7.1 Employment: Number of Workers by Sector

Table A.17 NATIONAL EMPLOYMENT BY SECTOR, 1996·002

A.7.2 Employment: Growth by Sector

Table A.18 GROWTH IN EMPLOYMENT BY SECTOR, 1996·002

A.7.3 Employment: Number of Workers by Gender

Table A.19 TOTAL NATIONAL WORKFORCE BY GENDER, 1996·002

A.7.3 Employment: Number of Workers by Habitation

Table A.20 NATIONAL WORKFORCE BY HABITATION, 1996·002

A.7.4 Employment: Urban Unemployment

Table A.21 URBAN UNEMPLOYMENT RATES, 1996·002

A.8 Consumer Income

A.8.1 Consumer Income: Average Incomes by Sector

Table A.22 AVERAGE INCOMES BY SECTOR, 1996·002

A.8.2 Consumer Income: Growth by Sector

Table A.23 GROWTH IN AVERAGE INCOMES BY SECTOR, 1996·002

A.8.3 Consumer Income: Average Incomes by Region

Table A.24 AVERAGE INCOMES BY REGION, 1998·002

A.8.4 Consumer Income: Growth by Region

Table A.25 GROWTH IN AVERAGE INCOMES BY REGION, 1998·002

A.9 Consumer Market

A.9.1 Consumer Market: Spending Trends

Table A.26 CONSUMER EXPENDITURE* BY BROAD SECTOR AT CURRENT PRICES, 1996-2002

A.9.2 Consumer Market: Per Capita Consumer Expenditure

Table A.27 PER CAPITA CONSUMER EXPENDITURE* BY BROAD SECTOR AT CURRENT PRICES, 1996·002

A.9.3 Consumer Market: Retail Sales and Consumer Spending

Table A.28 RETAIL SALES AS A PROPORTION OF CONSUMER EXPENDITURE, 1996·002

A.9.4 Consumer Market: Urban Income and Spending Compared

Table A.29 URBAN AVERAGE ANNUAL INCOME/EXPENDITURE, 1996·002

A.9.5 Consumer Market: Average Urban Weekly Shopping Basket

Chart A.1 AVERAGE WEEKLY URBAN SHOPPING BASKET, 2002

A.9.6 Consumer Market: Average Rural Weekly Shopping Basket

Chart A.2 AVERAGE WEEKLY RURAL SHOPPING BASKET, 2002

A.9.7 Consumer Market: Average Urban & Rural Weekly Shopping Baskets Compared

Chart A.3 URBAN & RURAL SHOPPING BASKETS COMPARED, 2002

A.10 Exchange Rates

A.10.1 Exchange Rates: China

Table A.30 AVERAGE ANNUAL EXCHANGE RATES, 1997·002

A.10.2 Exchange Rates: Hong Kong

Table A.31 AVERAGE ANNUAL EXCHANGE RATES, 1997·002

APPENDIX B: RELEVANT LAWS & REGULATIONS

B.1 China? Advertising Law

Chapter I: General Provisions

Chapter II: Advertising Norms

Chapter III: Advertising Activities

Chapter IV: Examination of Advertisements

Chapter V: Legal Liability

Chapter VI: Supplementary Provisions

B.2 The Announcement on Regulating the E-Mailing of Commercial Information

B.3 The Announcement of the Beijing Municipal Administration for Industry &

Commerce on Standardizing the Qualifications for Engagement in the Business of

Network Advertising

B.4 Notice of the State Council on the Prohibition of Direct Marketing Business

Activities

B.5 Provisional Regulations on Food Advertising

B.6 Measures for Administration of Advertisements of Alcoholic Beverages

B.7 Regulations on the Establishment of Foreign-Funded Advertising Enterprises