Publicis sets Chinese growth target

15 September 2009

DALIAN: Publicis Groupe, the advertising holding company, is aiming to substantially improve its revenue levels in China, and is seeking to increase the number of domestic brands its works with as part of this process, Maurice Lévy, its ceo, has said.

While Publicis currently derives under 5% of its total sales from the world's most populous nation, Lévy stated this "crucial" market could become its third – or even second – biggest in five years time.

The Paris-based firm employs some 3,000 people in the Asian country at present, and plans to increase its headcount there to around 6,000 over the course of the next three years.

Speaking at the World Economic Forum in Dalian, Lévy predicted that "without China, we will have a limited future."

This situation has been compounded by the slowdown in most other core regions, which now means "to win a new client in Europe is very painful."

While most of the major holding companies first entered China in order to represent multinational clients, they are now increasingly looking to advertisers based locally.

Chinese brands currently generate around a third of Publicis' business on the mainland, a total its chief executive wants to reach two-thirds over the short-to-medium term.

"If I am relying only on international companies," Lévy said, it will mean the company's strategy "will have failed."

While the conglomerate's current rate of growth is "not as rapid as I would wish … our China growth is rapid," he continued.

Despite this, some countries in Latin America and the Middle East could still overtake China to become its fastest-growing market this year.

One key obstacle in China is that brand owners are demanding an increasing number of services for no extra charge, and the level of competition also means "we can't afford to be expensive," Lévy said.

At the same event, Sir Martin Sorrell, ceo of WPP Group, said China would witness a "V-shaped" recovery from the financial crisis, compared with the "italic-L" he has forecast worldwide.

WPP made around $950 million (€650m; £572m) in the country in 2008, and Sorrell said there were "big opportunities" in helping Chinese companies expand outside their home market.

More broadly, he warned that "we don't see any green shoots" on a global level, as many clients "won't invest again until they are sure", while most consumers are also "still shell-shocked."

Data sourced from Reuters; additional content by WARC staff