Dentsu's China Crisis

16 June 2005

Japanese advertising titan Dentsu is warning of stagnant growth in its Chinese business.

Figures for the fiscal year ending in March show Dentsu's China sales were flat at ¥35.2 billion ($321m; €267m; £178m). The results have been partly attributed to anti-Japanese sentiment in China over what it calls Japan's denial of its depredations before and during the Second World War.

Dentsu managing director Michio Niiyama also says the company has deliberately shifted away from high-growth Chinese clients to Japanese clients because the latter more often pay their bills on time.

However, the problem may be more straightforward. Dentsu is experiencing increased competition from other major global groups operating in China, including WPP and Publicis.

China is expected by many to top Japan as the second-largest advertising market, after the US, by the end of the decade. Ad spending in China grew 32% to $18.9 billion last year, according to Nielsen Media Research.

Sir Martin Sorrell, ceo of UK-headquartered WPP, told investors last month that the group would bring in revenue of about $350 million in China this year and he expected that to grow by 20% or more each year for the next five to 10 years.

Data sourced from Wall Street Journal Online; additional content by WARC staff