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WPP's Sorrell: China's anti-graft drive is benefiting us

Martin Sorrell
Chris Ratcliffe | Bloomberg | Getty Images
Martin Sorrell

China's clampdown on corruption and extravagance has benefited the world's largest advertising agency, WPP's CEO told CNBC.

Foreign companies have come under increased scrutiny since Chinese authorities launched an anti-graft drive in 2012, with investigators focusing on alleged price-fixing activities and bribery.

But WPP, which has a $1.5 billion business in China and 16,000 employees there, said the anti-graft drive has provided an opportunity.

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"[In terms of] public relations and public affairs, every time there's a crisis, to be honest, there's an opportunity for us. Not an opportunity that we relish, but an opportunity," WPP's Martin Sorrell told CNBC recently.

In the past, WPP lost out in China due to its transparent model and method of buying media directly, rather than via media brokers, he said. However, with the anti-graft drive in full force, Sorrell said the firm's model is paying off.

"We are now benefiting because the state-owned enterprises are saying we have to be open and transparent, can you help us develop open and transparent systems in the context of China?" he said.

"Our competitors do not do that… some of our competitors have said their businesses have collapsed in China because of the lack of gifting, the corruption pressure, I would say our business is benefited by that," he added.

As part of its anti-graft drive the government has banned the custom of government-run companies giving officials expensive gifts, a move that has hurt luxury retailers.

No hard landing

Concerns over China's slowing economy are a hot topic for foreign companies active in the world's second-biggest economy.

Read MoreWeak China factory data raise prospect of stimulus

Over the weekend such concerns were underscored by the weakest industrial production figures since the 2008 global financial crisis. Industrial output grew 6.9 percent on year in August, down from 9 percent in July, the National Bureau of Statistics said on Saturday.

Sorrell told CNBC he is not concerned about the possibility of a hard landing in China, however: "Having said that, it has been volatile… The first quarter of this year we were flat. I can't remember when we've had a flat quarter in China, it's been ten, 15 years," he said.

Business in China improved in the second quarter, Sorrell added; progress he attributes to having two Chinese nationals on his board.

Read MoreChinese are most upbeat about their economy

"I think we have a very good understanding of what's going on in China, and they indicated that the credit expansion in Q2 helped the Chinese market," he added.

WPP is targeting revenue from new media and markets such as China, Brazil and India to make up 40 to 45 percent of total revenue over the next five years, the Guardian reported last month.

Sorrell also gave his two cents on the much-talked about initial public offering of Chinese tech giant Alibaba in the U.S., scheduled for 19 September.

Read MoreAlibaba will raise range of IPO, price will be below $70 a share: Sources

"My view is that Alibaba's market value will go through $200 billion quite quickly, surpassing or equaling Facebook," he said

WPP reported revenues climbed 2.7 percent to $9 billion in the first six months of 2014, with pre-tax profits up 1.5 percent to $813 million. The company said sterling's strength had proved a headwind.