It has become increasingly important for those who work in the area of international marketing and public relations to know something about the practice of public relations in China. If China continues on the same growth trajectory, it will be the world's biggest economy by 2020. Chinese companies are now venturing into overseas markets (Lenova and Haier are two names now familiar to many American consumers), and companies from around the world are eager to sell goods and services to the most populous country on earth. However, for the uninitiated, it's not easy to define exactly where the Chinese business world stands today - while China is no longer ruled by Maoist communism, neither is it a capitalist system in the Western sense.
This is the second of a two-part interview with Katsunobu Katada about public relations in China. Mr. Katada, a native of Japan, is Director and Vice President, Kyodo Public Relations of China, Inc. in Shanghai. Kyodo PR is headquartered in Tokyo.
Bridge: How well do Chinese business people understand PR?
Katsunobu Katada: PR as we know it supposedly began in China with Hill and Knowlton's office opening here in 1984. With a business history of only 22 years, the industry has been growing at more than 30 percent a year, according to an announcement made by the China International Public Relations Association. The industry as a whole reached 1.5 billion RMB (about $192 million) in revenues in 2000, but that number swelled to 6 billion RMB ($857 million) in 2005, and it is expected to grow further this year. These sales numbers, while much lower than in some other countries, are already higher than PR revenues for the Japanese market. PR-consciousness and recognition of the industry by the Chinese business world may still be somewhat lacking, but if one simply considers the rapid growth of the industry market then PR certainly seems to be gaining recognition in China.
Bridge: Do you know any foreign companies that do their own PR in China, or do they all hire PR firms?
KK: This is really case-by-case. Western companies in China are more PR-conscious than the Japanese and local Chinese companies, and they do their best to implement PR activities in a systematic and strategically sound way. They often have their own local PR personnel, providing them with all the know-how and skills to handle activities by themselves without outsourcing. They are still likely to use PR agencies on a project basis for special activities. Therefore, the use of PR companies by Western business is generally high.
Bridge: What is the PR agency market like in China?
KK: PR practiced in China includes corporate communications, media relations, communications research, crisis management, and other common types of PR practiced elsewhere. Chinese PR agencies are aggressive about marketing to foreign companies, and they do have many foreign companies as clients. Several of these local Chinese agencies are spin-offs from Western PR agencies, started by former employees of Western firms. Our agency, headquartered in Tokyo, specializes in communications support for Japanese companies in China. We see this positioning as an initial stage of our operations in the Chinese market. Japanese companies have a unique corporate culture and different and harder-to-solve language issues than Western companies, and therefore are a much bigger challenge for local Chinese PR agencies to deal with. Western PR agencies mainly serve European and US companies. However they do have some Chinese clients.
Bridge: What is the cost of the average monthly retainer paid to PR firms in Shanghai?
KK: This varies a lot depending on the amount and type of service. For our firm, the fee could range from about 10,000 RMB/month* for general communications research to 300,000 RMB/month for an overall brand strategy consultation program. For conventional PR activities, the general fee would probably range between 50,000 to 100,000 RMB/month.
Bridge: We hear the younger generation in China is quite different from their parents. What advice would you give to marketers who want to reach young Chinese consumers?
KK: This is a very difficult question. The younger generation can be very different, and have completely different attitudes to consumption, depending on what region of the country they live in. If you just take the example of the big cities of Shanghai and Beijing, it's important to realize that you can't equate spending power with salary. This tendency isn't limited to the younger generation, but it is especially strong among them. Some people who earn a fixed salary of 3,000 RMB purchase 500 RMB cosmetics and have 700 RMB dinners on a regular basis, wear 1,000 RMB shirts and drive cars that cost more than 100,000 RMB. This indicates that a sizeable number of people can rely on extra discretionary income, such as an allowance from parents, presents from boyfriends, part-time second jobs, etc. Marketing campaigns based on the average official income of the younger generation of urban Chinese will not work.
It has become increasingly important for those who work in the area of international marketing and public relations to know something about the practice of public relations in China. If China continues on the same growth trajectory, it will be the world's biggest economy by 2020. Chinese companies are now venturing into overseas markets (Lenova and Haier are two names now familiar to many American consumers), and companies from around the world are eager to sell goods and services to the most populous country on earth. However, for the uninitiated, it's not easy to define exactly where the Chinese business world stands today - while China is no longer ruled by Maoist communism, neither is it a capitalist system in the Western sense.