Advertising companies

These 'four pillars' of the public media attracted 46.13 per cent of the total advertising spend . The remainder went into the pockets of advertising companies. Reckoning in the advertising revenue by those advertising companies subordinate to non-advertising enterprises , the total share of the advertising companies would have been 52.1 per cent in 2001.

Clearly, advertising companies have played an important role in the advertising industry, as they should. What makes China's advertising industry different from other countries is that state-owned advertising companies have a dominant position in the industry who in 2001 accounted for only 22.67 per cent of the 78,339 advertising companies but took 54.94 per cent (RMB43.66 billion) of all advertising sales. However, a close look at the performance of those state-owned advertising companies reveals that the total number dropped by 2.4 per cent and the growth was a negative
8.3 per cent for state-owned advertising enterprises against a moderate increase of 3.1 per cent. Their dominant position seems to have been eroded by companies owned by private and foreign invested advertising bodies.

Private advertising companies dominated in terms of total number “ 37906, or 48.39 per cent of the total number of advertising establishments. Their sales reached RMB13.95 billion in 2001, 17.55 per cent of the total advertising spend in China and a 35.44 per cent increase on 2000. However, the average advertising sales for each private advertising company was quite small at only RMB0.37 million.

Foreign companies have been active in China's advertising industry. Familiar names such as Saatchi & Saatchi, J. Walter Thompson, Ogilvy & Mather, Dentsu and McCann Erickson have all entered the battlefield of China's advertising industry. According to the State Administration of Industry and Commerce, the total number of foreign-invested advertising agencies was 329 in 2001, a drop of 13.42 per cent. However, the growth in their total advertising sales was a remarkable 64.02 per cent in 2001 and their share in the country's total advertising spending was 9.35 per cent. The average advertising revenue for these foreign-invested advertising firms was RMB22.6 million, which clearly demonstrates the competitive advantages of foreign- invested advertising firms over local ones.