Agencies fear end of China as growth engine amid regulatory crackdown | WARC | The Feed

Agencies fear end of China as growth engine amid regulatory crackdown

China grows quicker than most other major economies, and is the engine of growth for many agencies, but with tightening restrictions some don’t see a future for western shops operating in the country in the long term.

Why it matters

The world is becoming more open, and with that brands are struggling to maintain one stance for most of their territories while working to another set of cultural, political or social standards, without emerging wounded by charges of hypocrisy on both sides. Witness efforts by the NBA to protect the tenth of global revenues that come from China – the same as agencies derive.

But an additional problem for western firms is that Chinese customers tend to trust Chinese brands more, and Chinese brands prefer Chinese agencies when selling into China, a new report by Business Insider finds.

Takeaways

• There has, in the last year, been a slate of measures by Beijing to shape the way business is done in China, from pushing for interoperability between the vast walled gardens that dominate the commercial Chinese internet to cultural measures such as the restrictions of “sissy boys” in the media.
• Agency holding groups derive serious revenue from their Chinese operations, but risk missing out on the Chinese ad market’s outsized growth with an overreliance on traditional media in what is now a deeply digital market.
• However, measures like interoperability could be a benefit to brands that may no longer need to plough so much cash into the largest Chinese tech giants and diversify investments.

Sourced from Business Insider, WARC