Eye of the tiger

Shanghai's growth and financial concentration make it a key target for companies and comms.

Shanghai's growth and financial concentration make it a key target for companies and comms.

In the mid-'90s, Jerry Olszewski, Ketchum senior partner responsible for Asia-Pacific business, toured Shanghai with Kenneth Chu, partner and CEO of Ketchum Greater China. In Pudong, Olszewski saw only dirt and a half-constructed tower (the Oriental Pearl TV Tower). Chu saw the future.

"[Chu] said, 'This is going to be one of the world's great financial centers,'" recalls Olszewski. "I thought, 'We'll see.' [Now] it's the dominant financial center. In many ways, it's the story of China's growth and the PR industry's growth. Reality matches the promise talked about years ago."

Indeed, as a key part of China's tiger economy, Shanghai offers tremendous PR opportunity, particularly in consumer, corporate, financial, and healthcare. As of 2005, nearly 130 multinational companies had headquarters in Shanghai. Chu cites corporate influx, the 2008 Beijing Olympics, and the 2010 Shanghai World Expo as drivers of PR expansion.

APCO Worldwide in 1999 came into Shanghai via its acquisition of Batey Burn, which had been there since 1989. APCO CEO and president Margery Kraus says there's a focus on enhancing commercial interest in the World Expo, a six-month event estimated to draw 70 million visitors. "Companies will increasingly locate in Shanghai," she says. "It's a jumping-off point for huge consumer markets."

The Shanghai Public Relations Association has more than 200 members. In April, it launched the International Association of Business Communicators accreditation program. PR is maturing, competition among firms is growing, and talent is tough to keep.

"The agency environment has become intensely competitive, with most major global agencies in [Shanghai] and a growing crop of local firms all chasing business," says Susan Tomsett, The Hoffman Agency's Asia-Pacific MD (based in Hong Kong).

Lifestyle capital

In the sixth year since accession to the World Trade Organization, there's still a lot of brand launching, though many agencies report increasing need for broader PR service.

"Shanghai is [China's] lifestyle capital," Olszewski says. "Most major companies are still introducing themselves. The work is positioning [and] introducing brands, building loyalty. There is huge opportunity for event or experiential marketing. There is growing opportunity in financial services. Pharma is emerging... many pharma companies have concentrated in the Shanghai area."

Kraus says most of APCO's work involves helping existing corporate clients enter the market, especially through b-to-b and corporate responsibility work. "As the market has become more sophisticated, there is opportunity for more upscale PR, such as crisis management and public affairs," she says. "One way companies position well is [to] pay attention to government social programs. By definition, in China, [there is] a lot of government interaction."

Text 100 (in Shanghai since 1999) reports diverse work. "A lot is focused on helping clients map goals and objectives against the larger Chinese context," notes Brian Cronkhite, managing consultant and office lead in Shanghai. "We identify overlaps between client goals and national agenda. Where there's a fit, there's often opportunity to build a connection to China [and] create relevance to develop a brand for the long term."

Scott Kronick, president of Ogilvy PR Worldwide China, says its office has doubled in the past two years. Consumer, corporate, public affairs, healthcare, and tech practices have grown. "[Our] corporate practice has enjoyed phenomenal growth," he adds.

Newcomer Cohn & Wolfe has been in Shanghai 14 months and is mostly doing big-brand project work. Like everyone else, Doug Buemi, vice chairman of C&W Asia, says talent turnover is a big issue. "As wages rise, talented, experienced young people are easily lured away," he explains. "The lucky pros that get some good big-agency experience are often quick to start boutiques."

Chu says staff turnover rate estimates are as high as 40%. He cites the "mushrooming" of local and international agencies and increasing in-house corporate needs.

Text 100 client IBM has been in Shanghai 14 years. Eric Xu, IBM Greater China group communications executive, says Shanghai "represents the financial, commercial, and logistics center for the country. It's considered an internationalized business environment that is mature and sophisticated. Shanghai is becoming increasingly important, not only for business and financial media, but also for IT and general media."

Evolving media market

According to Ketchum, mainland China has 2,100 newspapers, 9,500 magazines, 1,200 TV channels, 300 radio stations, and 700,000 news-related Web sites.

"While Beijing is still strongly established as China's media center, Shanghai has seen a growing number of lifestyle/consumer magazines, [and] many are joint ventures with international publishers," Chu notes.

"Proliferation of local publications has made the media business more competitive," adds Tomsett. "Getting attention and share-of-mind is no longer as simple as getting a lot of reporters to show up.

"Shanghai has become increasingly self-referential," she continues. "People tend to be more interested in what is happening in Shanghai and abroad than they are in what is happening in the rest of China. Media outlets tend to respond by focusing coverage on Shanghai-related topics. It also means [it's easier] to break a global story out of Shanghai than to break a national story."

Providing journalists travel allowances is embedded and part of their income structure, but does not guarantee coverage. "A good story is a must," Buemi notes.

Kraus notices reporters are "increasingly focused on consumer rights" and interested in having things explained to them. "If you can help them become better educated, that's a real asset," she says.

Olszewski notes that media strategy should include Beijing and other markets, and he agrees media is evolving. "We have a pretty sophisticated interaction now," he says. "There's still room for evolution on both sides."

Selected multinational PR firms

Cohn & Wolfe
Hill & Knowlton
The Hoffman Agency
Manning, Selvage & Lee
Ogilvy PR
Text 100
Weber Shandwick

Companies with Asia-Pacific Headquarters in Shanghai

Company  Global rev.
Alcatel 15.5
Delphi 27.2
FedEx 30.8
General Electric   149.7
General Motors  192.6
IBM 91.1
Johnson & Johnson   50.5
Kodak  14.2
Roche  26.9

Source: Fortune

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