Stand in Shanghai's Central Fangbang Road, and you can see the past, present and future of China. To the east, the future: the stunning 21st-century towers of the Pudong business district - towers that were barely conceived five years ago. To the west, the past: the old city of Shanghai, a maze of twisting lanes and swarming humanity, unchanged for 100 years or more.
And all around you is the present: the Fangbang tourist market - a seething mass of buying and selling, business and busyness, essentials for some and bargains for all. If only the past, present and future of PR in China could be captured so easily. As it is, PR in the People's Republic of China (PRC) has little past, a chaotic present and a distinctly uncertain future.
The problem for 'PR in the PRC' is that the industry is too successful while there is a lack of talented staff. John Chen, director of research and development for the China International PR Association (CIPRA), says: 'Our latest market study shows that the industry grew by as much as 40 per cent in 2004'.
Industry on the up
Unsurprisingly, PR agencies in China are thriving. They fall loosely into three groups: the China offices of the multinational PR groups (almost all are represented in China, most have offices in Beijing and Shanghai, and some also have offices in Guanzhou); non-Chinese-owned agencies operating only in China or 'Greater China' (which includes Taiwan and Hong Kong); and Chinese-owned agencies operating only in China.
CIPRA's survey suggests the total fee income of agencies in 2004 was around £275m. When in-house salaries and non-fee PR expenditure are added to this, the total expenditure on PR in China is probably around £820m per annum - a stunning figure for an industry born only ten years ago.
There are many factors behind this explosive growth. Johan Bjorksten, founder of Eastwei, a leading 'non-Chinese, China-only' agency, points out just some them: 'Firstly, the growth is from a low base, because the PR industry started to grow after the general economy did, and is playing catch-up; secondly, consumer organisations are spending heavily ahead of the 2008 Olympics; thirdly, China's accession to the World Trade Organisation has made it more attractive to foreign investment; finally, consider the sheer speed and scale of China's growth as a market.'
Whatever the factors, it is likely that China's PR industry will continue to boom - and herein lies its potential bust. It is estimated that the industry in China employs around 15,000 people. If the market sustains its growth at some 30 to 40 per cent per year, and if current staffing levels are appropriate to the level of work being done and the payment received for it, the industry will require an additional 5,000 or so qualified and competent workers in the next year; an additional 7,000 or so in the year after that; and an extra 9,500 in the following year.
China's PR crisis is that it simply does not have enough people capable of filling its need for services - and it cannot, by any stretch of the imagination, develop them fast enough to meet its future needs.
With good people in such short supply, their price is rising: salary inflation is soaring, loyalty is decreasing, and staff poaching is rampant.
Penny Burgess, general manager of Ketchum Newscan in Shanghai, says: 'The major firms, such as Ketchum, need to invest heavily not just in obtaining and training the best people, but also in sustaining and retaining them.'
In an industry where demand so dramatically outstrips supply, one might expect service prices - and profits - to rise. Strangely, however, many agencies are competing on cost.
While most (but not all) of the 'respectable' agencies in China - perhaps 50 out of 2,000 or more agencies - will not compromise on fees, many of the local outfits, including some of the largest, are significantly cheaper, using their price to win business. This risks diminishing the quality, reputation and value of PR.
Indeed, there is a real risk that PR in China will simply implode. This is because sophisticated and demanding clients, Chinese and non-Chinese, will find that local agencies do not have the capabilities they require, and that the major agencies do not have the capacity. As a result, they may turn instead to other communications disciplines, where they can feel more confident of promises being delivered.
In the meantime, for non-Chinese organisations that want and need to build their PR operations in China, selecting the right agency or the right in-house people is fraught with difficulty - local knowledge is essential; without it you are floundering.
Ultimately, however, the lack of a sophisticated comms industry is not so much of a problem for non-native organisations selling to the country as it is for Chinese operations seeking to sell to the rest of the world.
This is a problem for China as a whole. To fund the development of its population, it must become an exporter of high-value goods and services.
As Esmond Qwek, general manager of Hill & Knowlton China, says: 'The future lies in exporting its brands to the world. That means increasing the value of "the Chinese product" and "the Chinese brand".'
PR has a crucial role in building and maintaining brand value - and a nation that cannot master this is at an enormous disadvantage.
Tom Wells is managing partner of procurement specialist Gyroscope, whose full report, The PR Landscape in China, will be available to download free from www.gyroscopeconsultancy.com within the next fortnight.
CHINA: PR DOS AND DON'TS
- Do remember the cultural difference between China and the West extends to more than just the language
- Do educate journalists about your organisation: they will often need lots of support - Do plan your budget - China is not a low-cost country for effective PR
- Don't assume that PR in China works the same way as it does anywhere else
- Don't let cost be the leading factor in selecting agencies or staff - Don't part with money before you have built a relationship based on trust.