China Herald: Newcomers on the consumer market: too late, too little

Tom Doctoroff

2014 will be the year newcomers in China's consumer market will not have the chances, they had in the past, says advertising guru Tom Doctoroff in the Huffington Post. TV becomes less affordable to advertise, and digital media are no real alternative.

Tom Doctoroff:

A more acute problem for multinational corporations is changes on China's media scene. Due to new and ever stricter government regulations, the range of permissible broadcast television programs is becoming more and more narrow, and less and less interesting to viewers. Officials now allow only one "reality-based" show to air every quarter across 31 provincial stations. (CCTV, the national network, has long been soporifically-inclined.) And only one "imported format" -- for example, China Idol -- is allowed in a calendar year.

The result? Ratings, already low, will further decline.

However, because China's media market is government-controlled -- that is, monopolistic at city and provincial levels -- media prices will remain sky high. So the cost of establishing brand awareness is increasingly prohibitive, a trend that will only accelerate in 2014. Brand building costs, typically 5-7 percent of revenue for corporations operating in the West, were already double or triple of what they are in the United States and Europe.

True, as TV becomes less affordable, alternative digital media grow. But, unfortunately, digital is better for deepening engagement for and optimizing experience with existing brands than forging awareness of new ones.

Large MNCs who have already captured significant market share by, in part, expanding distribution will continue their march towards national dominance. Blessed with on-the-ground scale and healthy cash flows, foreign companies continue to boast active preference amongst consumers vis-à-vis local competitors, will become bigger and bigger. (By the way, government orchestrated propaganda attacks against foreign brands, a characteristic of China's brandscape for many years now, will continue but will not markedly affect consumers' fundamental preference for international brands given their safety and "cool.")

More in the Huffington Post.

Tom Doctoroff is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

China Weekly Hangout

How do China’s media work? The +China Weekly Hangout is going to focus Thursday 7 November on the case of journalist Chen Yongzhou, the reporter of the New Express in Guangdong, and try to figure out how media in China work. Chen got arrested for articles he wrote on the state-owned company Zoomlion, developed into a hero for press freedom. Until he apologized for getting paid for those articles.
Two scenario’s are still possible: a hero or a cheater, or even more scenario’s. You can read or announcement here, or register her for the event.

Is president Xi Jinping going to win the fight against corruption, the +China Weekly Hangout asked last week? +Chao Pan, +Steve Barru and +Harm Kiezebrink discuss how the drive against corruption and political survival mix with each other. Moderation by +Fons Tuinstra of the China Speakers Bureau.