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6 White Paper on the Business Environment in China
output value of the industry was nearly $15 billion.22Further- China Central Television, the country’s biggest
more, despite reported cutbacks in global advertising spending television network, sat quietly Monday on the sidelines
by between 10 and 15 percent (advertising budgets are often of its annual advertising auction, a fanfare event typically
the “first against the wall” when cash flow becomes an issue), a seen as a barometer for the economy and a muscle show
study cited by China Daily indicated that advertising expendi- for the state broadcaster. It broke 20 years of tradition
tures in fact grew by 15 percent in China during 2008, reaching by declining to disclose the auction’s final total sales
a total of 441 billion yuan.23 figures, inviting only a handful of state reporters to the
event and downplaying what it has hyped every year
Despite the global economic slowdown, advertising spend- before.
ing reportedly grew by 13.5 percent in 200924 and 2010 expen-
diture was reported to grow by nearly 20 percent over 2009 Marketing experts say CCTV is silent because it has lit-
values25 to reach $442 billion.26 PwC forecasts this value to in- tle to cheer about. Some key advertisers are pulling back
crease to $578 billion by 2015.26 amid a government-led austerity campaign that began
last year. Companies—once willing to pay premium
The online segment is of particular interest to many, hav- rates for mass marketing to CCTV’s big audiences—
ing grown 52 percent year-on-year in 2008 to account for $1.4 are also taking their money to the Web, following their
billion of spending on its own.27 A later report from Shang- viewers.35
hai-based iResearch Consulting Group indicated that the on-
line advertising market had grown by nearly 60 percent in 2010 Unrelated regulatory pressure on ‘infomercials’ 36may also
to account for more approximately $5 billion in revenue (albeit play a factor in media buyers’ decisions; regardless, the world
less than a fifth of the estimated $26 billion in online advertis- wide web is clearly becoming a dominant platform upon which
ing revenue recorded in the United States the same year).28 brands reach out to Chinese consumers.
2009 marked the first time “Recommended Usage Stan- In 2011, the Chinese government announced a new law
dards” for online advertising had been compiled by the China that would prohibit outdoor advertisements that “promote he-
Advertising Association. The standards came into trial opera- donistic or high-end lifestyles”. The Jing Daily reported: “The
tion on January 1, 2009 pending a review for amendments a Beijing Administration for Industry and Commerce said in a
year later.29 recent statement that businesses were given an April 15 dead-
line to rectify such ads, along with any that excessively promote
By the first quarter of 2012, “The market size of China’s on- ‘foreign’ things. It gave no details on which ‘foreign’ things were
line advertising reached 14.03 billion yuan ($2.22 billion) [… deemed objectionable. Such promotions help create a political-
representing a] 56.2 percent year-on-year increase [but a] 5.6 ly ‘unhealthy’ climate, it said. Newly forbidden words include
percent decrease compared to the last quarter of 2011.”30 ‘supreme’, ‘royal’, ‘luxury’ or ‘high class’.”72
A 2012 report by PriceWaterhouseCoopers predicted that The banking industry was ‘fully opened’ to foreign partic-
“Investment in China’s Internet advertising [would] grow by ipation in December 2006, and international financial insti-
32.1 percent annually over the next five years.”31 tutions were not slow to enter the market: the China Banking
Regulatory Commission reported that by the end of that year,
In contrast, other platforms like newspapers, magazines, TV 74 foreign banks had set up branches, and 186 others had estab-
and outdoor appeared to have far dimmer futures on the Main- lished representative offices.37 By the end of 2008, these figures
land: “advertising expenditure in traditional media, including were reported to have grown to 196 banks from 46 countries
newspapers, magazines, TV, radio and outdoor, increased just having established 237 representative offices38 and 75 banks
1.4 percent in the first quarter, the lowest in nearly five years,” from 25 countries having opened 116 branches.39
according to a market research service cited by China Daily.32
By June 2009, 26 foreign banks had fully incorporated in
In 2005, there were reportedly 40.4 billion copies of news- China;30 A 2010 KPMG study indicated that 37 foreign banks
papers, 2.75 billion magazines and 6.4 billion books published had incorporated on the Mainland by the end of July that year.41
nationwide, and the 2003 “Administrative Measures on For- A study released one year later by PwC saw the number of for-
eign-Invested Book, Newspaper and Periodical Distribution eign banks incorporated rise to 40.42
Enterprises” opened retail (in 2003) and wholesale (in 2004)
operation in China for foreign-invested enterprises, although Despite growth in the number of incorporations, however,
administrative approval by the General Administration of Press several challenges remain that are unique to foreign banks. An
and Publication on a case-by-case basis was coupled to the re- earlier PwC study in 2010 had concluded that “While [foreign
laxation of the regulations.33 More recent figures provided by banks] have continued to be proactive in seeking out new op-
Financial Times indicated that by 2010 newspaper circulation portunities, they remain challenged by policy constraints that
had surpassed 50 billion in 2010.34
Television spending is apparently also declining, rounding
out the trend observed in other ‘traditional’ media:
230
output value of the industry was nearly $15 billion.22Further- China Central Television, the country’s biggest
more, despite reported cutbacks in global advertising spending television network, sat quietly Monday on the sidelines
by between 10 and 15 percent (advertising budgets are often of its annual advertising auction, a fanfare event typically
the “first against the wall” when cash flow becomes an issue), a seen as a barometer for the economy and a muscle show
study cited by China Daily indicated that advertising expendi- for the state broadcaster. It broke 20 years of tradition
tures in fact grew by 15 percent in China during 2008, reaching by declining to disclose the auction’s final total sales
a total of 441 billion yuan.23 figures, inviting only a handful of state reporters to the
event and downplaying what it has hyped every year
Despite the global economic slowdown, advertising spend- before.
ing reportedly grew by 13.5 percent in 200924 and 2010 expen-
diture was reported to grow by nearly 20 percent over 2009 Marketing experts say CCTV is silent because it has lit-
values25 to reach $442 billion.26 PwC forecasts this value to in- tle to cheer about. Some key advertisers are pulling back
crease to $578 billion by 2015.26 amid a government-led austerity campaign that began
last year. Companies—once willing to pay premium
The online segment is of particular interest to many, hav- rates for mass marketing to CCTV’s big audiences—
ing grown 52 percent year-on-year in 2008 to account for $1.4 are also taking their money to the Web, following their
billion of spending on its own.27 A later report from Shang- viewers.35
hai-based iResearch Consulting Group indicated that the on-
line advertising market had grown by nearly 60 percent in 2010 Unrelated regulatory pressure on ‘infomercials’ 36may also
to account for more approximately $5 billion in revenue (albeit play a factor in media buyers’ decisions; regardless, the world
less than a fifth of the estimated $26 billion in online advertis- wide web is clearly becoming a dominant platform upon which
ing revenue recorded in the United States the same year).28 brands reach out to Chinese consumers.
2009 marked the first time “Recommended Usage Stan- In 2011, the Chinese government announced a new law
dards” for online advertising had been compiled by the China that would prohibit outdoor advertisements that “promote he-
Advertising Association. The standards came into trial opera- donistic or high-end lifestyles”. The Jing Daily reported: “The
tion on January 1, 2009 pending a review for amendments a Beijing Administration for Industry and Commerce said in a
year later.29 recent statement that businesses were given an April 15 dead-
line to rectify such ads, along with any that excessively promote
By the first quarter of 2012, “The market size of China’s on- ‘foreign’ things. It gave no details on which ‘foreign’ things were
line advertising reached 14.03 billion yuan ($2.22 billion) [… deemed objectionable. Such promotions help create a political-
representing a] 56.2 percent year-on-year increase [but a] 5.6 ly ‘unhealthy’ climate, it said. Newly forbidden words include
percent decrease compared to the last quarter of 2011.”30 ‘supreme’, ‘royal’, ‘luxury’ or ‘high class’.”72
A 2012 report by PriceWaterhouseCoopers predicted that The banking industry was ‘fully opened’ to foreign partic-
“Investment in China’s Internet advertising [would] grow by ipation in December 2006, and international financial insti-
32.1 percent annually over the next five years.”31 tutions were not slow to enter the market: the China Banking
Regulatory Commission reported that by the end of that year,
In contrast, other platforms like newspapers, magazines, TV 74 foreign banks had set up branches, and 186 others had estab-
and outdoor appeared to have far dimmer futures on the Main- lished representative offices.37 By the end of 2008, these figures
land: “advertising expenditure in traditional media, including were reported to have grown to 196 banks from 46 countries
newspapers, magazines, TV, radio and outdoor, increased just having established 237 representative offices38 and 75 banks
1.4 percent in the first quarter, the lowest in nearly five years,” from 25 countries having opened 116 branches.39
according to a market research service cited by China Daily.32
By June 2009, 26 foreign banks had fully incorporated in
In 2005, there were reportedly 40.4 billion copies of news- China;30 A 2010 KPMG study indicated that 37 foreign banks
papers, 2.75 billion magazines and 6.4 billion books published had incorporated on the Mainland by the end of July that year.41
nationwide, and the 2003 “Administrative Measures on For- A study released one year later by PwC saw the number of for-
eign-Invested Book, Newspaper and Periodical Distribution eign banks incorporated rise to 40.42
Enterprises” opened retail (in 2003) and wholesale (in 2004)
operation in China for foreign-invested enterprises, although Despite growth in the number of incorporations, however,
administrative approval by the General Administration of Press several challenges remain that are unique to foreign banks. An
and Publication on a case-by-case basis was coupled to the re- earlier PwC study in 2010 had concluded that “While [foreign
laxation of the regulations.33 More recent figures provided by banks] have continued to be proactive in seeking out new op-
Financial Times indicated that by 2010 newspaper circulation portunities, they remain challenged by policy constraints that
had surpassed 50 billion in 2010.34
Television spending is apparently also declining, rounding
out the trend observed in other ‘traditional’ media:
230
