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The two top places where WPP will be putting ad dollars this year, according to CEO Sorrell

  • Tech and pharma are the few sectors driving the market rally, says WPP CEO, Sir Martin Sorrell
  • Chinese tech firms are dominating China's economy, he says
  • Chinese companies with focused strategies will win in international expansion

Despite the stock market rally, technology and pharmaceuticals are the main sectors actually chalking up growth, said advertising and public relations company WPP's CEO, Sir Martin Sorrell.

"Growth is there, but it's in limited sectors of the economy despite what the stock market is saying," Sorrell told CNBC's "Squawk Box" on Thursday.

The advertising guru said most growth is coming from technology with the "Fearsome Five" of Google, Apple, Microsoft, Amazon and Facebook dominating. Meanwhile, in the U.S. pharmaceutical industry, contract manufacturing organizations are also posting rapid growth, he added.

Sorrell said WPP is investing in more digital services, and Facebook and Google will be the top two destinations to which the firm directs media spending this year.

As for Chinese tech companies, they are also establishing global import as they already dominate the market in the world's second-largest economy, he said, pointing to the "BAT" trio of Baidu, Alibaba and Tencent.

"We in the West tended to think China copied technology, or even stole technology. If that was the case, that's no longer the case," he said.

Just like in the U.S., Chinese companies firms are also dominating the world's second largest economy.
VCG | Getty Images
Just like in the U.S., Chinese companies firms are also dominating the world's second largest economy.

"Clearly, China is becoming a major, if not one of the two major forces in the world — not only economically and politically, but technologically too," he added.

Citing information and communications technology solutions provider Huawei, Sorrell said that a highly-focused strategy has helped the company succeed outside the U.S.

Heading straight to the world's largest economy may not be the most suitable strategy for all firms, the British executive added.

"Going to America and taking the heaviest competition on may not be the most intelligent thing to do. The most intelligent thing to do may be to focus on contiguous markets and proximity markets, which, you know, which have commonalities to the Chinese market," he said.

"(Don't) jump into the biggest, the most obvious market, but focus on Asia or Southeast Asia first — then fan out from there," he said.

Away from tech, traditional businesses are facing tougher times.

Packaged goods companies in contrast are experiencing far tougher times with those firms eking out just 1 to 3 percent growth from price changes rather than increasing sales volume, Sorrell said.

"If you track consumer staples margins over the last four to five years, they have gone up very substantially, but volumes have gone down," he said.

Clarification: This article has been updated to clarify Sir Martin Sorrell's comments on Huawei.