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WPP CEO Martin Sorrell: Careful what you wish for on China

The head of WPP has warned to "be careful what you wish for" when it comes to China, as the advertising giant which is heavily exposed to the country reported first-half earnings.

China represents the third-largest market for the company, which is led by CEO Martin Sorrell. Concerns over growth in the world's second-largest economy has led to a crash in Chinese stocks which has caused shockwaves across global markets.

"Be careful what you wish for. It's all in our interests that China continues to grow because it will still be the driver of many industries like our own," he told CNBC on Wednesday.

Sorrell went on to play down the market downturn, saying it mirrored the cyclical growth story across Asia, pointing in particular to the financial crisis that gripped the region back in 1997.

"We've seen the stock market excesses in China, the stock market was overblown. There's been a correction, the economy is under pressure there, [but] in my view it's a cyclical swing."

Like-for-like net sales at WPP rose 2.3 percent in the first half of the year, after reasonable growth across all regions. The company said it expected to hit its full-year net sales target of more than 3 percent.

Martin Sorrell
Chris Ratcliffe | Bloomberg | Getty Images
Martin Sorrell

Beyond China and emerging economies — which still have long-term growth prospects — growth looks lukewarm, Sorrell added.

"We're looking at a world where it's tepid GDP (gross domestic product) growth, there's little or no inflation or pricing power and clients are very focused on cost," he said.

"In that environment our results are very strong indeed. If you look at the EPS (earnings per share) levels, the margins are up 30-40 basis points in constant currency so all-in-all, and a slowing GDP pattern at the end of last year and the first 6 months of this year, I think they're pretty good."

Sorrell did admit that problems would arise in emerging markets that are reliant on high oil prices, however. He said Russia, Saudi Arabia and Venezuela would be affected if crude continued to hover near $40 to $50 per barrel over the next few years.

"But in the context of long-term economic growth... given the scale of the economies and growth of the economies, these are the economies...where the long-term future is," he said.

Shares of WPP slipped 1.1 percent at the open on Wednesday, dragged down by the heavy selling seen across major bourses in Europe.