China - Trade Promotion and Advertising China - Trade Promotion
China is the world’s second-largest advertising market with consistent double-digit growth in which its market value reached more than $80 billion in 2016. Internet ad spending is now rapidly outpacing TV ad spending. By 2018, Internet advertising that will have been spent in China will be over three times the size of TV adverting spent. This trend puts China ahead of the global trend as advertising migrates online.
Over 200,000 advertising firms exist in China; with over 30 American firms, 90 U.S. based subsidiaries and 400 U.S. branches. Many major international advertising firms have established a presence in China. Companies new to the market can gain valuable advice from top-notch advertising firms on how to craft an effective advertising strategy that is responsive to Chinese consumer preferences and cultural differences.
The advertising industry in China remains heavily regulated, and the national and provincial levels of government still exercise ultimate control over content. Advertising in China is regulated by the Advertising Law of the People‘s Republic of China (Advertising Law), which was updated on April 24, 2015 and shall take effective on September 1, 2015 - a major change for the first time since its publication. The updates to the Advertising Law introduced several major changes impacting online advertising, health claims, celebrity endorsers, and false advertising.
Major changes include:
- The law expanded to online advertising;
- Telecommunication, internet service providers, and websites are obliged to remove illegal/misleading advertisements;
- Dietary supplemental must not imply that they are "necessary" for good health;
- Prohibits use of spokesperson in many types of health-related advertising;
- Broadens definition of "advertising" and "false advertising";
- Restrictions on children's advertising;
- Restrictions on tobacco advertising.
Notably, foreign businesses without a Chinese business license gained through establishing an office in China are not permitted to advertise in China.
The State Administration for Industry and Commerce (SAIC) is the primary regulatory organization for the advertising sector, but many other organizations such as the Ministry of Culture and the State Administration of Radio, Film and Television, play an active role in controlling print or television content. Under the enforcement of the new Advertising Laws, AIC is tasked to supervise the advertising industry. Specifically, SAIC will be responsible to:
- Inspect the premises of a company suspected of violating the law;
- Investigate suspicious behavior;
- Demand that a company suspected of misbehavior surrenders documents before a certain time;
- View and confiscate copies of contracts, receipts, advertisements, records and other documentation;
- Close down suspect operations.
China's retail boom and increasing competition among retailers is causing China's advertising industry to grow even faster than the economy as a whole. Most of the major international advertising firms are present in China.
Now that China is in the midst of a consumer revolution, foreign products that make use of advanced marketing, advertising and research techniques are leading the way. Brand awareness is increasingly important and sophisticated advertising is beginning to play a key role in attracting the Chinese consumer. Another important trend that U.S. companies need to be aware of is China’s increasing use of social media to promote brands and introduce products. With over half a billion new social media users in 2016, social media has seen a 21% year-on-year growth rate. China is among the five countries that accounted for more than half of that growth with over 130 million new social media users in 2016.
Average Time Spent Per Day with Major Media by Chinese Adults
The total value of the global ad market is predicted to reach $547 billion in 2017 with digital advertising as a key driver to ad spending. China over contributes to growth in global ad expenditure with digital content an increasing significant driver. By 2021 digital ads are expected to represent 59% of total advertising sales in China, with mobile-based impressions and sales as the primary source of growth. China’s platform innovation is led by WeChat, a clear example of how global social media platforms are evolving beyond apps and into ecosystems.
In China, WeChat is the most popular mobile social network application with over 846 million active monthly users in Q3 2016 94% of WeChat users access their account daily. With WeChat, brands can access potential consumers through creative marketing to capture a new and a more diverse market share in China. With the rapid development and adoption of mobile internet and smartphones, users’ spending habits tend towards the use of mobile devices. Companies can utilize WeChat official accounts to promote products and brands. Most companies hope to reach potential consumers through a WeChat official account according to WEMCB research. There are various options for building your brand on WeChat, a subscription account where brands can push out consistent messaging and a service account to create a platform to manage ecommerce and customer service.
In 2016, China hosted more than 3,000 exhibitions, and the number continues to grow between 15 percent and 20 percent annually, particularly in second tier cities. In general, exhibitions can be an excellent venue to gauge market interest, develop leads, and make sales. Most are sponsored or co-sponsored by government agencies, professional societies, or the China Council for the Promotion of International Trade (CCPIT). Some shows are organized by the U.S., Hong Kong, and other countries. Show participation costs are sometimes high since pricing options for available booth space for foreign companies at shows is often limited to certain areas within events. Some shows may reach only a local audience or cater primarily to Chinese exporters despite being described as Import/Export Fairs. Therefore, companies are advised to scrutinize shows carefully before confirming participation.
The Departments of Commerce and Agriculture’s Foreign Agricultural Service (FAS) support U.S. Pavilions at trade shows around China to promote American goods and services in primary, secondary, and tertiary markets. China is home to over 100 cities with individual populations in excess of one million inhabitants. To meet the demand and to bolster consumption, China is opening new airports, railway stations, subways systems, and superhighways on a daily basis. Trade shows play an important role in introducing U.S. companies to newly emerging regional and national firms and logistics companies.
FAS partners with more than 70 non-profit trade associations, called "cooperators," who represent producers of a vast amount of food and agricultural products, ranging from hardwood lumber to fresh-chilled pork. As part of their mission to promote U.S. agricultural products around the world, many cooperators offer exporter assistance, sponsor trade missions, and help farmers and ranchers identify international market opportunities. Similarly, the five FAS Agricultural Trade Offices in China sponsor reverse trade missions to the United States to introduce U.S. quality brands and companies, facilitate technical exchanges on industry standards, and further the acceptance of U.S. food safety systems.
FAS also supports four non-profit State Regional Trade Groups (SRTG), which in turn assist U.S. food and agricultural businesses with the entire exporting process. Your SRTG can help you with everything from learning the fundamentals of exporting to identifying overseas opportunities to marketing your products through trade shows and trade missions. With FAS support, SRTGs also help fund international marketing campaigns and promote U.S. farm and food production overseas. FAS and SRTGs work closely together with the ultimate goal of helping U.S. agriculture build a global business.
Through the Market Access Program (MAP), FAS partners with U.S. agricultural trade associations, cooperatives, state regional trade groups and small businesses to share the costs of overseas marketing and promotional activities that help build commercial export markets for U.S. agricultural products and commodities.
FAS provides cost-share assistance to eligible U.S. organizations for activities such as consumer advertising, public relations, point-of-sale demonstrations, participation in trade fairs and exhibits, market research and technical assistance. When MAP funds are used for generic marketing and promotion, participants must contribute a minimum 10 percent match. For promotion of branded products, a dollar-for-dollar match is required.
See more information:
U.S. Department of Commerce trade missions
Foreign Agricultural Service
Trade Lead System
Agricultural Trade Office