India and China continue to solidify their place as emerging markets that are necessary growth-strategy targets for both global and domestic companies.
Fleishman-Hillard opened an office in New Delhi in late 2009 as part of its global commitment to Philips Electronics.
Although the company has had a presence in India for 80 years, Philips' efforts in the past two years to establish itself as a global health and wellness company is driving increased communications in markets like India, says Moushumi Dutt, director of corporate communications for Philips Electronics India.
Specifically in India, Philips is targeting youth audiences as it seeks to increase brand awareness about its health and lifestyle products.
“We are the country with the youngest population and the highest number of the youth population,” she says. “We are merely investing in the youth of today who will become the decision-makers of tomorrow.”
Fleishman employs about a dozen staffers in both offices, but has plans to add up to 15 employees and open an office in Bangalore, says Yusuf Hatia, SVP for Fleishman. It is part of the One Voice network, a roster of Omnicom Group shops created specifically to service the Philips account.
About 80% of the work coming out of the Delhi office will be billed to Philips, but as the PR market grows, the agency is looking at bringing in additional domestic and global clients.
“When we came into India, our initial plan was to focus on outbound work, essentially large Indian companies going global,” Hatia adds. “In the past couple years, we realized that there's opportunity for some domestic work and that tends to be network-related.”
Nearly 60% of clients served by Fleishman's offices in India are network, or global, clients, including Emerson, AT&T, Philips, and British Airways. It is increasingly looking at working with Indian clients.
Despite the implications of the recession worldwide, emerging markets like India and China have become necessary growth strategies for multinational and domestic companies to ensure long-term, sustainable growth. The PR industry has become essential to defining those strategies.
Global agencies, many of which faced the same economic challenges as clients during the past 18 months, are investing deeply into these markets while also pushing to educate multinational companies about how PR can drive growth.
“India and China represent an opportunity to create top-line growth for companies,” says Margery Kraus, CEO of APCO Worldwide. “We have had a lot more interest in those markets [now] than we've seen in the past two years.”
Despite the growth, communications leaders still face challenges in these markets, including adapting
Western digital strategies, addressing talent concerns, and ensuring that companies provide budgets that reflect their market commitment.
Eyes on China
Statistics show the strength of the China market. The country's economy grew 8.7% in 2009 and retail sales went up 18% during a national holiday period in October 2009, notes Mark Hass, president of Edelman China. It's the third largest economy in the world and is on pace to overtake Japan at number two.
“The market, in general, is primed for a lot of growth,” he says. “The nature of the Chinese economy, the fast growth that they've experienced there, and the fast emerging middle class there indicates, compared to other PR markets, it's going to grow at a much faster rate.”
Hass, who started in his post with Edelman March 1, says the growth will fuel Chinese companies looking to become global entities. Agencies already positioned in the Chinese market have an opportunity to grow with them.
“This market is growing and multinational companies are thinking the same way Edelman is, that they need to put more of their resources in China and take advantage of that growth,” he adds. “I can't imagine a global brief that doesn't include a critical element for how you handle growth in China.”
Zippo, best known for its lighters, is working with Weber Shandwick in eight markets, including China, India, and the US, as it seeks to reinforce its global footprint, says David Warfel, director of global marketing for Zippo.
The account followed work it had done with McCann-Erickson and was awarded to Slam PR, a London-based division of Weber Shandwick.
“For a relatively small company, we have remarkable global brand awareness,” says Warfel. “To be a stronger brand globally, we need an integrated, consistent message spoken in a single voice globally. We're not trying to take an off-the-shelf program and put it in 160 countries.”
The company is also seeking to raise brand awareness among men 18 to 24 years old about its other lifestyle products, which include men's accessories, watches, leather goods, and camping gear, especially in a growing economic power like China.
“In our portfolio of countries, China remains a very important star on the horizon,” says Warfel. “China is a priority market. There are other emerging markets like India and southeastern Asian countries and they're that much more important as economic affluence shifts in that direction. Fortunately, we started at an earlier enough stage that we're participating during growth.”
Many firms cite consumer, technology, and healthcare as the top growth areas for communications, as well as corresponding work with CSR, digital, and reputation and issues management.
Much of the growth could stem from expanded briefs from global clients as companies seek to further raise brand awareness and increase market share in those three sectors, says Steve Dahllof, regional CEO of Ogilvy PR Worldwide, reportedly the largest PR firm in China.
“IBM and Intel, two large clients for us, want the depth of an agency like us,” he says. “Not only because we have a variety of capabilities, but [we] have long-term presence in the marketplace. It's an important advantage for us.”
What clients are asking for now, notes Dahllof, is brand positioning, message development, and long-term strategy.
“They made the first rush into the marketplace, pre-recession, and realized that they want to have a long-term presence there,” he says. “They want to create the right position for [that].”
PR continues to mature in India
In India, the trends are similar. Communications growth is expected in consumer, healthcare, and public affairs work as companies jockey for position in a market that features numerous audiences.
“Anything that looks like consumer or consumer marketing is going to grow, whether it's apparel, food, aviation, healthcare services, financial services,” says Ashwani Singla, CEO of Genesis Burson-Marsteller. “Corporate issues and corporate reputation are taking center stage, as it is around the world.”
One outcome of the financial crisis was that Indian companies began, for the first time, to look at how crisis and other forms of strategic communications can be used to affect reputation, explains Angela Chitkara, CEO of US-India Corridor, a strategic communications and business development firm.
“PR was never about image-building, it was about getting someone's mug into the newspaper,” she says. “Companies in India never had to concern themselves with image-building, strategy, messaging, or positioning like we do now.
For both India and China, the growing domestic understanding of PR and its role in business strategy has opened up doors for more corporate teams to increase their spend and firms to gain new clients.
“There's a maturity with the clients we're seeing, with the budgets utilized in this market, and there's a much better understanding of what PR can do for them,” says Fleishman's Hatia. “The downturn in some ways helped that because if clients have a small budget, how can they get the most out of that? A lot looked towards PR.”
Even as PR has matured in India and China, challenges remain, especially in how teams hire and retain talent.
Hass says that Edelman, which has 165 employees in the five offices it operates in China, and other firms of its size face issues with staffing because talented PR professionals have ongoing opportunities in the regional market.
“There's a talent issue in China in that, because of the growth of the market, it's very easy for talented people to move around,” he adds.
Part of the challenge, says Tim Sutton, chairman of Weber Shandwick in the Asia-Pacific region, is educating people in China that PR is a career and not just a job. He notes that for many Chinese professionals, it's easier to explain to family members a career in PR at a company, rather than at an agency.
In India, talent is also a concern, says Singla. “If India wants to become a vibrant PR business,” he says, “it has to look at talent very carefully, especially for the agency world. Talent is going to be a key differentiator as sophistication and the need for services grow.”
Hatia notes that from what he has seen, the largest gap is between the account manager and account director positions. He is looking at the issue as Fleishman prepares for its growth in India this year, in part through its work with Philips.
“That's where the talent issue becomes a real problem,” he asserts. “The business is here. A lot of companies are looking for PR now. It's finding the people who can service that need.”
During the economic downturn, communications efforts increased for Tata Consultancy Services (TCS), says Pradipta Bagchi, VP of corporate communications for the outsourcing and IT subsidiary of the Tata Group.
“It made it much more important to communicate,” he says. “We did not scale back in any significant manner.”
Yet, despite TCS' multinational status, the company faces challenges in communications, especially to media in key markets like the US and Europe. Bagchi notes that five of his contacts at BusinessWeek, an important publication in the American market, where 50% of TCS' revenues come from, lost their jobs in one day in 2009.
“Things like that are also driving a lot of communications strategy,” he says. “An Indian multinational is going to find it more difficult to get a look. We've got to find other ways of communicating to our audience.”
Another challenge, especially for agencies in the region, stems from a client's willingness to award a budget that is on level with the work and relevance to the company's business objectives.
“The growth is not reflected in budgets,” says WS' Sutton. “There's a disconnect between strategic objectives and the reality of what they are actually doing [with budgets]. People need to get serious about China.”
Yet in India, where budgets are still considered a challenge for many firms, the maturation of the PR industry from a media relations vehicle into a strategic communications and reputation adviser has provided a larger scope of work with little effect on budgets.
“Clients are starting to understand that it isn't just about press cuttings or basic media relations, but that there are other deliverables that we can focus on,” says Hatia. “But the budgets still reflect the very basic perception of what public relations is.
“The budgets seem to be opening up for what people here are calling digital PR,” he adds. “There's a lot of anticipation that this is something we need to invest in.”
James Heimowitz, president and CEO of Hill & Knowlton in North Asia, says the firm, which has been in the China market for 26 years, is increasingly taking on public and private sector Chinese clients as part of its growth strategy.
“We've always had a lead with the local clients, but I would say the mix has changed,” he says, noting that during the downturn multinational clients pulled back budgets markedly more than Chinese clients. “That's why we've invested there. We see it continuing to provide and be a growth area for the future.”
The firm works with Chinese companies like Haier, an appliance company, and ZTE Technologies, a publicly owned telecom company. It was also hired in 2009 to handle the Shanghai Expo.
“ZTE hired us to work with them domestically to help them better understand communications strategies for the domestic market, as well as the global [market],” Heimowitz says. “To me, that's quite an interesting change. They want to apply some of the best techniques from overseas, but domestically, within China.”
Supporting local companies
WS, Ogilvy, Edelman, and APCO also plan to invest in Chinese companies, both for domestic work and as they look at becoming multinationals. It's similar in India, says Singla, with growth coming from multinationals, as well as Indian companies that are seeking to become multinationals.
“Firms need a balanced portfolio,” says Sutton. “A lot of Chinese manufacturers are looking at Western markets.”
While a portion of the growth from Chinese manufacturers stems from a public stimulus program announced in November 2008, APCO's Kraus says she expects there to be a continued need for strategic counsel in sectors like transportation, infrastructure, and manufacturing.
Hass says that his top three priorities for Edelman's growth in China are healthcare, technology, and working with Chinese clients, which could lead to growth for Edelman's global family of agencies.
“The third opportunity is really with Chinese companies, as they grow, to do business outside of China,” he explains. “There's an opportunity to export business from China into the Edelman network.”
Digital and CSR are also considered growth areas in China, both for Chinese companies and Western multinationals. Chinese companies are developing CSR initiatives, says Heimowitz, as they work to be become globally relevant.
“Quite a few of our Chinese clients are beginning to think about it,” he notes. “A decade ago, Chinese industry was all about corporate responsibility. That's the heritage of a socialist, communist system. However, in order to be more commercial, they had to shed those socialist responsibilities to schools and hospitals and doctors.”
Now, adds Heimowitz, Chinese companies reflect the same trends in business as global or Western companies.
“I would say that China broadly reflects global trends now and it's not different in China than it is in other places,” he says. “Yes, I would have said that two years ago, but I say it more strongly today.”
New faces in Asia-Pacific
Several global PR agencies in Asia-Pacific have reported leadership changes in the past 12 months, including Edelman, Burson-Marsteller, and Ogilvy PR Worldwide.
Mark Hass was named CEO of Edelman in China, effective March 1. The former CEO of MS&L Worldwide is managing a staff of 165 employees, five offices, and the Edelman and Pegasus brands.
He notes that as the market has become more mature in China, the differences between firms is growing smaller. Hass plans to focus on growing Edelman's healthcare and technology practices, as well as establish more client relationships with Chinese clients.
“There's not a full appreciation for how important China is to the future of most of the firms,” he says. “It's a reflection of China's emergence as a world economic power. It seems to just have happened yesterday.”
Ogilvy PR also reported a shift in leadership in mid-2009 when Christopher Graves, then the president and regional CEO in Asia-Pacific, was tapped to succeed Marcia Silverman as the firm's global CEO.
Steve Dahllof, MD of Ogilvy's global strategy and planning group, was promoted to regional CEO of Asia-Pacific, starting January 1. Dahllof says he plans to focus on retention of talent and building on the advantages that Ogilvy already has in the market.
One priority area for Silverman, who was named chair of the firm, is to take Ogilvy's social marketing practice global. Dahllof notes that companies in China are increasingly becoming aware of the role of social marketing as a driver for behavior change.
“Our healthcare work will increasingly be divided equally between social marketing and the pharmaceutical side,” he says. “We see that as an area of potential huge growth.
Countries such as China are beginning to learn from countries like the US in behavior-change models.”
Another recent new leadership announcement in the Asia market includes Bob Pickard, former president of North Asia for Edelman, being named Burson-Marsteller's president and CEO of Asia-Pacific, effective February 1.
While the cotton campaigns are familiar to US audiences, the entities behind the famed “Fabric of Your Life” program turned their attention to the China market to increase awareness and educate consumers there about cotton.
Cotton Incorporated (CI) and Cotton Council International launched the ongoing “Cotton – Beyond Your Imagination” campaign in 2006. Ruder Finn, which was hired in January 2009, is providing support for the initiative.
“China is the biggest cotton market in the world,” says Ric Hendee, VP of marketing services for CI. “They have a burgeoning middle class. We want to make sure that the Chinese are also aware of the benefits of cotton.”
The PR team added Chinese celebrities to the campaign and developed humor videos for Youku, the Chinese version of YouTube, to complement the ongoing media relations efforts, interactive exhibitions and events, and online outreach.
One difference in communicating in the China market is that, while CI targets women in the US, the campaign targets both Chinese men and women, explains Hendee.
“We target women in the US for very clear reasons,” he adds. “But in China, no, we aren't specifically targeting women. We're trying to reach media and let them decide what's of interest and who the audience is.”
While Chinese consumers have responded to the campaign – Hendee says the organizations may work with the Chinese Cotton Association in coming years – the recession and economic challenges of the past two years have affected the communications budget.
“Everything is dependent on budget,” Hendee notes. “Like every other entity, we've been going through a rough time. But we are still in China, even in a constrained budget year, and I suspect we'll do everything we can to stay in China. When our budget gets a bit less constrained, I would like to think we would be aggressively adding to our effort there.
“It's a very important country and I don't think it's going to stop being a very important country,” he adds. “We intend to be there.”