Case Study Analysis

JWT China: Advertising for the New Chinese Consumer

Group 1
Case Analysis

Business Strategy and Expansion of JWT China from 1990s to 2008
Selling more products to more people in more places than any other agency in the world
Key igh!ights
JWT was acquired by WPP in 198! "t was ran#ed the world$s largest ad%ertising agency in &S in
'8 and (ourth largest mar#eting communication networ# in world!
JWT entered Chinese mar#et 199with o)ce in *ei+ing and opened a o)ce in Shanghai in 1991
Wanted to create an une,pected (usion between (undamental consumer insight and a unique
brand o-er
They acquired or went (or a J. with lot o( companies in China li#e *ridge Ad%ertising/ 0ew Sun/
Always/ 1lendinning/ 231 Connect to increase it$s reach in China
*y the end o( '8/ JWT had a re%enue4sharing strategic alliance and pursuing to acquire "dentica
"n China/ 85 o( business went to local agencies which competed on lower price premiums
6uring 19's both domestic and (oreign companies started ad%ertising in China through
newspaper ads/ billboards/ posters and pamphlets
Communist re%olution in 1979 resulted in socialist economy which banned ad%ertising industry
which was remo%ed by 1989
'8 *ei+ing 9lympics was a golden opportunity (or both domestic and (oreign ad%ertising
agencies
:i%e o( JWT clients became sponsors o( the e%ent! ;eno%o 1roup was the only o)cial Chinese
9lympic Sponsor with a global brand
:ocus o( these sponsors was to marry the product characteristics with the spirit o( 9lympics to
ma#e brand bigger and bolder
The Chinese mar#et was growing and had highest re%enue growth rate within WPP (or that region!
0ow JWT China had to align with JWT (or its strategic e,pansion and growth
Situationa! ana!ysis
"nterna! En#ironment

JWT$s leadership group at the JWT Shanghai

o)ce

JWT China was supposed to be a traditional

ad%ertising company

<mphasi=ed high standards o( transparency

Premium ad%ertising ser%ices

3ale to (emale ratio is '>?

&ne%en distribution o( customers across

cities
Externa! En#ironment

@ighly competiti%e mar#et A 85 ta#en o%er by

local ad%ertising Brms and '5 by 30C$s

Stringent ad%ertising laws

Transition (rom a socialist setting towards a

mar#et oriented economy

To increase consumer consumption go%ernment

ga%e %arious subsidies

Client$s short term relationship with ad%ertising

companies

@uge growth potential (or online ad%ertising

top three ad%ertising categories were

retailCser%ices/ pharmaceuticals and toiletries
"mpa$t of high!y fragmented Chinese
$onsumers mar%et& so$io'e$onomi$ disparities&
go#ernment $ontro!!ed media and $u!tura!!y
determined $onsumer (eha#iour on future of
JWT)s ad#ertising and mar%eting strategies
E#a!uate JWT)s (usiness expansion in China
dea!ing *ith !o$a! and foreign $ompetition
o* to adapt *ith $hanging Chinese
$onsumer (eha#iour and trends
"mpa$t of (eing +,C ad#ertising agen$y in
$hina
-ro(!em Statement
-EST. ana!ysis / China perspe$ti#e
Political

<conomic Technological
Socio4cultural
;egal
1979 A the communist
re%olution
19DE A nationali=ed all pri%ate
players
199 onwards A economic
re(orms
6isposable income increased/
cutting interest rates on
sa%ings/ reduced ban# charges
on credit cards
1989 A new (oreign trade policies/
in%esting F implementing (ree
mar#et re(orms
16P growth a%eraging 15
*oom in ecommerce/ (ashion/
(ood industry/ real4estate F
property
Submissi%e to authority
Stringent laws o( the land 4
Ad%ertisement law/ Consumer
Protection ;aw/ 9ne child
policy
Tech sa%%y
See# products that account (or
sa(ety and prestige
"n%est on research and de%elopment
Con(ucian doctrine
Passi%e acceptance o( (aith
Culture rests on #inship ties and
respect (or elders
Priority (or sa(ety/ stability and
happiness
+,C ad#ertising agen$y in $hina'
ad#antages0
Tap the potential %ia the population o( 1!?D billion
<nter into a strategic partnership with Chinese ad%ertising Brms
Acculturation A learn new cultures by being adaptable to penetrate in to the
(oreign mar#et
"ncrease in consumer e,penditure and go%ernment policies to boost domestic
consumption
1isad#antages of (eing in China
6omestic brands are gaining brand equity whereas multinational brands
G30*sH are losing it
6omestic ad%ertising agencies understand the culture better F can ha%e the
cost ad%antage
The Chinese ad%ertising ;aws are a big disad%antage
"ssue o( Phonetics4 *rand blunder 4#e#ou #ele4 essence o( the brand is lost
Conser%ati%e audience/ ;ess e,perienced and sophisticated F conscious
audience
Cha!!enges for JWT China

6ynamic change in the consumption pattern o( the citi=ens o( China with the growing
economy

:ocus on e,pansion strategy due to pressure o( competing with international F local

ad%ertising Brms

Consumers turning out to be more indi%idualistic and demanding in the mar#et

Company has to be more (ocused towards the change according to the changing
consumer trends

Acquisition o( talents according to requirements o( the position with their passion o(

creati%e wor#

6ue to income gap in China/ JWT$s (ocus should be more on low end goods and ser%ices

As the Chinese consumers can be characteri=ed as highly traditional/ their rich culture F
history/ JWT needs to be care(ul with the multinational commercials being a ma+or ad
agency

According to the research/ because o( the di-erences in social status o( Chinese/ there is
a problem o( deBning middle class

;ocal clients (ocus on quic# return policy rather than long term brand %ision/ which leads
to shorter relationship with the local clients as compared with (oreign clients
2d#i$e to +r3 Tom 1o$toro4
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Clan and nation
are pillars o(
identity
Anti4indi%idualism
Standing out .CS
:itting in
As Chinese become wealthier/
they become modern and
international but remain anti
indi%idualistic
Position items o( lu,ury as status
in%estments rather then their
inherent beauty
*eneBts elaborated should be e,ternal not
internal
The use o( emotional appeals4
Chinese are deeply obligated towards
their (amily and widespread use o(
image4building ads
;ocal pri%ate Brms would be more
entrepreneurial than large S<9s
T 2 , K 5 6 7