SUMMARY

JWT CHINA

CEO JWT Greater China and Northeast Asia Area Director - Tom

Doctorof
JWT's headquarters - Shanghai
Doctorof thought about future of advertising industry in china.
Signs were everywhere.
High-rise towers, shopping centers, foreign and domestic cars, desire
of mobility, billboards of cosmetics cars and watches, patriotic signs all showed potential of China to become political and economic

superpower and create millions of new Chinese consumers.

Advertising companies business future in china looked promising.
1988 - Doctorof joined JWT Shanghai
He had past experience of working in JWT Asia Pacific.
Because of fast-growing economy and rapid rise in consumption, JWT
China required thinking seriously about expansion strategy because of

international and local competitors.

Also, consumers were individualistic now and reevaluating the
channels and advertising approaches used in China's big cities of east
and south

JWT IN CHINA

January 2008 - JWT was ranked largest advertising agency in US and

4th largest marketing communications network in world.

WPP - Parent company of JWT
JWT - 200 offices in 90 countries
JWT evolved itself from Traditional advertising to nontraditional
services (promotion marketing, trade marketing, event management,

CRM & digital services)

1864 - Company was founded and 1st international office in London
JWT worked on brand building e.g.
1939 - Introduced 1st national consumer research panel

1988 - Created 1st research study of consumer lifestyles "Life stages" "We believe in being cultural anthropologists first, advertising people

second."
1990 - JWT entered China market - office in Beijing
1991 - office in Shanghai
1998 - Doctorof joined JWT Shanghai as managing director.
90% of companys revenue came from two MNCs, Pepsi & Unilever.
Between 1998 and 2008, JWT China became one of the largest
integrated communications companies in China and Shanghai became

largest creative center of the company.

2000 - Doctorof became MD of JWT mainland China operations,

handling both Shanghai and Beijind.

2001 - Doctorof became CEO of Greater China and Northeast Asia Area

Director.
1996 - Lo Sheung Yan joined JWT
2001 - He was executive creative director of JWT Northeast Asia.
1997 - Rattan Malli moved from Taiwan office to Shanghai office. Hw

was strategic planning director of JWT Northeast Asia.

Marchille Yan - Finance director of JWT Northeast Asia and only

mainland member of team was with JWT since 10 years.

2007 - Michiel Hofstee joined JWT Shanghai as MD
2008 - JWT's client list included big MNCs.
JWT China operated as MNC and as creative services unit.
Their mission was to ofer and maintain highest standard of
transparency.

SHANGHAI: THE TEMPLE OF ADVERTISING

Shanghai office - temple of Advertising.

2008 - It had 220 employees and served as creative powerhouse for

JWT China.
2007 - It was voted as TOP AGENCY IN CHINA in advertising industry's

2007 campaign brief Asia awards for second year in row.

Premium price reflected their quality. Expensive than 90% of ad
agencies.

2008 - About 25 clients.

Because of law of China, JWT partnered with Bridge Advertising to

entered China and they held 20% ownership of JWT China.

Angus Chao of Bridge advertising was appointed as Head of HR in
Shanghai office managing relations with tax authorities, advertising

industry organizations in China and PR with government.

50% turnover rate overall but 15% of JWT.
Average age of employees was 30
60% account managers were females.
New talent was recruited, Competency in Level 6 English and College

degree were considered necessary for applicants.

Ma Yan - Executive creative director - "diversification was advantage

for creative process"

Promotions were given to employees.
Salaries were awarded based oin experience, benchmarking,

capabilities.
Trip was organized once a year.
Leadership and skilled labor was considered as biggest assets of the

company.
English and Chinese were considered office languages but Mandarin
was considered FIRST language.
BEIJING OFFICE

Beijing office - Strong arm in North.

2008 - 140 employees and 15 clients including Nokia, Yili and Cofco.
Beijing company had more state-owned enterprises and local firms as

customers and 70% business was because of them

As clients' requirements, Beijing creative standards were traditional as
SOEs and local firms were still evolving and sometimes battling with

internal structure issues

Gaining Nokia in 2007 meant a big step for Beijing and balanced their

business
With 15% gross profit margin, their revenue increased from $2million in
1998 to $11 in 2008

GUANGZHOU AND CHONGQING

2004 - New Sun became joint-venture with JWT

1994 - New Sun was founded in Guangzhou by husband and wife team
JWT acquired 30% and 70% was with founders
New Sun gave hold over markets of Pearl River Delta and Guangdong

province, but future was still shady.

JWT was weighing whether to use New Sun as driver of geographic
expansion in second-tier cities and whether to acquire majority of its

shares
October 2003 - JWT presence in China was still not stable.

ALWAYS IS EVERYWHERE

2006 - Marketing & Sales co. ALWAYS (founded by Cai Hua) was

acquired by JWT.
JWT took 70% stake of the company
CAI HUA - Degree in Chemistry from Beijing University; Impressive
experience in sales; worked for P&G, Hershey's, Gillette and other

China operations in 1990s.

1999 - Founded ALWAYS in Shanghai.
Cai Hua stayed as MD and expanded 'Always'.
2008 - 'Always' was so-called smart promotion management network
with over 100 offices in China and delicate Field Information Resource

Management System (FIRMS)

Shanghai - Above the line clients
Always - Below the line clients
2008 - Always employed 10000 young women aged 18-23 for activities

as in-store promotions, events and road shows.

2008 - Always profit was equal to JWT Shanghai revenue from

traditional advertising
2008 - JWT took 51% stake in Gaendinning, WPP management
consultancy partnering with Always.

TEAM JWT

To serve MNCs and Domestic clients, JWT China began to employ

synergies of what came to be called the Team JWT "solar system".

Team included JWT Shanghai, Glendinning, Always and RMG connect
Shanghai was in charge of creative advertising and leading the project

by "managing the idea"

Always benefited in nationwide smart promotion management network
Glendinning provided demand management solutions for clients
RMG Connect was JWT's data driven relationship management agency
and specialized in digital CRM from its Beijing and Hong Kong offices
providing strategic planning, measurement, direct and interactive

marketing services
Team JWT had to work as closely as possible requiring sharing of

financial interests and operational synergies.

High degree of operational autonomy was ensured but it also caused
NOMENCLATURE (naming) problems e.g. Always should be called JWT

Always?
End of 2008 - JWT entered revenue-sharing alliance with IDENTICA
(branding and visual identity expertise) and LINKSUS (one of China's
largest PR agencies). It expressed willingness to consider a closer

equity relationship in future.

20% of JWT's competitors were in China market and 80% in shape of

other local agencies.

JWT wanted to keep premium price but Chinese companies were price

sensitive.
Mid-sized and large companies even Chinese firms thinking about
starting initial public ofering (IPO) took services from JWT.

ADVERTISING IN CHINA

1911 - China was founded. Circulation of newspaper and magazines

started in Treaty Ports in this year.

Western and Chinese products were advertised in China since
nineteenth century.

Middle Class was emerged in Shanghai, Nanjing, Guangzhou and

Tianjin because of increase in industrialization, foreign trade and

commercialization of urban economies.

1920s and 1930s - foreign and domestic companies began to advertise

through print media to Chinese urban consumers.

Chinese women were target market of these companies as they

promised benefits for family and society.

Product signaling individualist, modern lifestyles became popular

including products like BAT Cigarettes, Pond's Facial cream etc.

1949 - Communist Revolution
1956 - Chinese govt. nationalized all private enterprises and

advertising was only permitted if required.

1976 - Death of Mao Zedong and opening of reforms.
1979 - Govt. lifted ban on ads.
1988 - Advertising still meant state controlled television channels

showing advertising for tractors, etc.

1990 - Economic Reforms.
It resulted in return of advertising and marketing industry because of
domestic and foreign clients demand.

LOCAL AND INTERNATIONAL COMPETITION AND CLIENTS

2008 - China had about 100,000 advertising shops and majority

dealing in designing fliers, negotiating rental space for ads in local

taxis for restaurants and parlors and placing ads on Internet.

They competed with each other on price so long term relationships

with clients were not their goal.

Most of the companies lacked scope, strategic vision, and

conceptualization capabilities.
But in order to broaden, some used unconventional associations.
Local clients presented diferent challenges for JWT compared with

foreign clients.
Because of no track record, Institutional and Managerial structures
were not set up as part of firm.

Most clients were sales-driven making it difficult for long term brand

vision.
Foreign clients were systematic but local clients required flexibility.
So making loyalty of local clients was difficult for JWT and they
considered two year relationship a considerable success.

CHINESE CONSUMERS AND REGIONAL DISPARITIES

Mismanagement resulted in huge diferences between urban and rural

areas resulting in strong market segmentation

Socioeconomic Development Gap resulted in richness of urban areas

and low standards of rural areas

Urban hubs had high per capita whereas provinces in northwest and

southwest were below national average

2006 - Per capita income of China grew by 7.4% in rural areas.
Household incomes in urban areas increased by 10.4%
High standards in urban areas attracted publicity.
2007 - Jonathan Anderson, chief Asia economist at UBS Investment

Bank, defined middle class.

READING MATERIAL. PG 7 LAST PARAGRAPH
1990 2005, Chinas Gini coefficient rose from 0.257 to 0.447
1990 - China's richest 10% of households possessed 19% of national

wealth
2006 - They possessed 40%
Inconsistent spending amongst diferent tiers required advertising
companies to target potential customers only

EXAMPLE

2005 - P&G sold OLAY oil to sophisticated women of Shanghai; Sold

Safeguard soap and Crest toothpaste to women in Urumuqi.

Same marketing strategy but diferent products were used by JWT

China diferentiating between middle class and mass marketing

For MNCs, strategy was to expand their brand portfolios by extending it

downwards to establish brand in both middle class and mass market.

EXAMPLE: Olay - Expensive oil for middle class; Inexpensive beauty
products for mass market

CHINESE CONSUMER CULTURE

Advertising was difficult for JWT as they had to understand cultural

framework for psychological and socioeconomic consumer

In past, consumer preferences were explained on basis individualistic

behavior
Under MAO ZEDONG, role of individual consumer did not exist in a

society which was strictly based on full-blown socialism

1990 reforms required Chinese consumer be viewed as increasingly

informed participant.
2006 - Top three advertising categories in China were pharmaceuticals,

toiletries and retail.

JWT saw brand-building and creating a sustainable brand vision as

biggest challenge as many brands still lacked clear message.

Chinese consumers responded more to products advertised protection

and safe secure future.

2005 - 25% market share of Safeguard
Focus was on enhancing safety, stability and happiness of child
ONE CHILD POLICY - protecting precious single child in family
Chinese consumers were status conscious
Combination of protection and status resulted in success of brands in

China e.g Buick

Segment of luxury consumers was made and status projecting

products were ofered to them.

2004 - Ferrari set up its import business in Shanghai and sold 13 sales
and 10 networks by 2006.
Ferrari with number 8 showed wealth and became flashy way for

publicity.
Middle class was self-centered.
PAGE 9. LAST TWO PARAGRAPHS.
YOU WILL HAVE TO READ THEM. THEY ARE ADVERTISEMENTS.

THE CHINESE MEDIA LANDSCAPE AND ADVERTISING

China was considered OLD MEDIA market i.e. tv radio etc were still

mode of advertising
2006 - all chinese urban and mostly rural households owned a tv
Newspaper sales was impressive with 20% growth compared to last

five years and 107million copies per day were sold

June 2008 - Internet user population reached 253 million, 84% increase

by 2006. But only 19 out of every 100 Chinese had access to Internet
2006 Survey - 76% used internet at home, 33.4% at work, 32.3% at

internet cafe.
25-30 years old (25%), above 40 years (2.5%)
58.3% male, 41.7% female
2008 - 5% of companies budget was spent on online ad
10% of JWTs ads for ford were transmitted through Internet
ISSUE:It was difficult to determine how successful internet ads had

been
2007 Annual Report of WPP - media growth in china was projected to

be higher than GDP growth rate

TV was still largest medium of advertisement
Advertisement Law of the Peoples Republic of China had to be
followed and was enforced by State Administration for Industry and

Commerce (SAIC)
Marketing strategies of MNEs successful in other countries could not be
automatically transplanted into china market

THE ROLE OF THE OLYMPICS

2008 Olympics - Chance for china to present local Chinese and foreign

brands to a national audience

5 of JWTs clients were involved as sponsors
Lenovo was chosen as only Chinese sponsor
JWT was hired to develop campaign for Lenovo
Yili was chosen as official sponsor of dairy products
China Unicom was also chosen

ANTA sports Products and Liland were not chosen but got involved by

sponsoring promising athletes

Tom Doctorof was called by Lenovo to become torchbearer for the

Olympics
Yili chose Liu Xiang to be a spokesperson

JWTs FUTURE IN CHINA

Chinese middle class was big and couldnt be ignored by multinational

advertising agencies
By 2017, it is estimation that there would be 270 million chinese

consumers with disposable income

2008 - JWT became one of the sponsors of Chinas Luxury Summit
Michael Maedel, JWTs president of International operations, considered
solar system a growth model for large emerging markets.