The Future of Foreign Advertising in China 1

Globalization. China is a populated market. Chinese market offers great business opportunities due to its rapid economic growth and huge market. Major institutional obstacles in accessing the Chinese market. Impact on foreign advertisers after china’s accession to WTO. 2

Socialism Resistant to change Very much traditional Hierarchical structure Government centric Collectivism 3

Centralized government. Advertising should construct a socialist spiritual civilization. 4

1982 : Detailed rules on the implementation of provisional regulations on the administration of advertising 1986 : The circular on the authority to licence the establishment of standing representative offices by foreign advertising businesses 1987 : Regulations on the administration of advertising 1994: Rules on establishing foreign invested advertising business in china 1995: Advertising Law 5

Chinese mass media was not allowed to carry the same foreign advertisement consecutively. - Citizen Watches Commission fees for foreign advertising agencies were higher. - SAIC Regulations - Three-tier advertising rate system. Chinese media and advertising companies had to obey the national economic policies concerning advertising. Domestic advertising was given more priority regardless of the amount they pay. - Ogilvy & Mather

Constant fluctuations in economic and political policies. Political bias towards domestic brands. - Free advertising by officials - “Use domestic products, and protect domestic brands” The Chinese government is reluctant of its monopoly in many key industries. - Closed markets for luxury products 7

Solely foreign owned agencies were not allowed in China. - Rules on Establishing Foreign Invested Advertising Business in China United Fleet concept. Certain western advertising techniques were not allowed in China. - Procter & Gamble - Budweiser 8

Chinese government agreed to : - Reduced tariff on imports significantly - Opened many of its formally closed markets to foreign businesses Solely foreign owned agencies were disregarded in China. WTO membership did not change administration in China. Chinese government raised more entry barriers to minimize foreign competition. 9

Though China has tight regulations, the conditions affecting the marketing industry have improved after 1990’s. Accession to WTO has unrealistically raised expectations for foreign advertisers who are trying to establish their markets in China. WTO acceptance is a partial solution for foreign advertisers but not a very successful one. However still there is an anti foreignness in Chinese politics. Development of foreign advertising in China is unlikely to experience dramatic change in the near future. 10

And we are; K. P. Wijedoru H.M.V Pathirana R.S. Herath D. Vitharana G.A.S.S.C. Fernando Y.M.K. Ratnayake W.M.L.S. Wijesinghe K.A.D. Samaratunga