China gets tough on ads, hopes for boom

A billboard advertising the New Beijing Center in Beijing, Aug. 24, 2015.
ChinaFotoPress | Getty Images

While the U.S. is still the most lucrative advertising market, China is quickly rising through the ranks. According to eMarketer, brands are projected to spend $73.13 billion in total media advertising in the country in 2015, over $30 billion more than in Japan.

"China is one of the fastest-growing advertising markets in the world," said DDB Worldwide CEO Chuck Brymer. "You're seeing a significant amount of investment from multinational companies and international business. We're now starting to see a significant part of that investment from Chinese companies."

It seems China is realizing that big brands want to market to its citizens, and is adding stricter regulations to its advertising industry to entice them. State media outlet Xinhua News Agency reported that in April, the country passed rules against false advertising, preventing companies from saying they are the best without any evidence. It also barred celebrities from extolling the virtues of products without being able to attest personally to their quality. Mashable said that breaking the new laws can carry fines of up to 1 million yuan or a little over $157,000.

"Celebrity in China is often used to replace concept," said Huge agency's creative director, David Tupper. "In Shanghai, for instance, it is not uncommon to travel from the Pudong airport into the city center and pass a collection of billboards sporting the smiling face of Brad Pitt or George Clooney. It's frustrating to say the least, as the images used are so obviously placed as an afterthought beside the product."

Other updated rules included banning advertising in schools or on educational materials, and preventing children under the age of 10 from endorsing products. China also cracked down on tobacco advertising, banning ads in mass media, in public places or directly to minors.

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In order to chase Chinese consumers, CNN reported that some companies are changing their names in order to avoid dialect issues that could lead to unintentional taboo words. The outlet said other brands are opting to rename themselves in order to resonate with Chinese values. For example, Goldman Sachs is known as "Gao Shen," or "highly prosperous." HSBC goes by "Hui Feng" or "Gathered Abundance" instead of Hong Kong and Shanghai Banking Corporation.

Brymer said the practice to have a company change names isn't that common, especially because global companies already have recognition in China. But DDB WW has had to change taglines and slightly tweak campaigns in order to fit the Chinese culture, including recent work for Qualcomm.

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Huge's Tupper added that changing names takes away from the quality associations that having an American or European brand name might carry so most companies shy away from dumping their names.

"Brand loyalty is based on its global recognition," he said. "The idea of changing a brand name would suggest a quality change. There remains trust in imports, more specifically, in American and European imports. While messaging may differ, the brand should stay the same."

Brymer said the advertising business has always existed in China, but thanks to massive shifts in technologies like how consumers can be reached through digital media, more brands are interested in entering the country.

However, he said advertising in the country has traditionally been difficult for various reasons, ranging from the number of different languages in the country to China's propensity to allow counterfeit items to the lack of consumer research.

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"It's a newer industry, and it's been less structured as it might be in Western Europe or the U.S.," Brymer said. "It's just been tougher not having the research and demographic data. We're now getting that kind of data. We're understanding better behavioral habits. As a consequence, we're getting better at one-to-one marketing in China."

Brymer said the stricter rules are welcome because it can improve the quality Chinese advertising. For one thing, he believes the new rules can also been seen as one of the country's moves against counterfeit products, which should encourage other companies still wary of the market.

And, with stricter rules, it will encourage the Chinese market to push existing boundaries on the type of creative advertising campaigns they come up with. While Chinese advertising jobs used to be reserved for ex-pats, he's noting more Chinese nationals over the last decade taking over those jobs.

"I think these regulations are going to actually raise the bar for Chinese advertising in the context of the quality of the work they will be doing and in terms of the accountability of these companies," he said.