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5 White Paper on the Business Environment in China
the National Bureau of Taxation capping corporate advertising Measures on Foreign-Invested Book, Newspaper and
expenditure to at 2 percent of gross annual revenue, leading Periodical Distribution Enterprises” opened retail (in 2003)
to protests from the State Administration of Industry and and wholesale (in 2004) operation in China for foreign-
Commerce, which is o cially tasked with oversight of the invested enterprises, although administrative approval by the
advertising industry.21 General Administration of Press and Publication on a case-by-
case basis was coupled to the relaxation of the regulations.33
Despite certain hiccoughs, the advertising sector is More recent gures provided by Financial Times indicated
without a doubt promising. In 2006 statistics indicated that by 2010 newspaper circulation had surpassed 50 billion
that the overall output value of the industry was nearly in 2010.34
$15 billion.22Furthermore, despite reported cutbacks in
global advertising spending by between 10 and 15 percent Television spending is apparently also declining, rounding
(advertising budgets are often the “ rst against the wall” when out the trend observed in other ‘traditional’ media:
cash ow becomes an issue), a study cited by China Daily
indicated that advertising expenditures in fact grew by 15 China Central Television, the country’s biggest
percent in China during 2008, reaching a total of 441 billion television network, sat quietly Monday on the sidelines
yuan.23 of its annual advertising auction, a fanfare event
typically seen as a barometer for the economy and
Despite the global economic slowdown, advertising a muscle show for the state broadcaster. It broke 20
spending reportedly grew by 13.5 percent in 200924 and 2010 years of tradition by declining to disclose the auction’s
expenditure was reported to grow by nearly 20 percent over
2009 values25 to reach $442 billion.26 PwC forecasts this value nal total sales gures, inviting only a handful of state
to increase to $578 billion by 2015.26 reporters to the event and downplaying what it has
hyped every year before.
e online segment is of particular interest to many,
having grown 52 percent year-on-year in 2008 to account Marketing experts say CCTV is silent because it has
for $1.4 billion of spending on its own.27 A later report from little to cheer about. Some key advertisers are pulling
Shanghai-based iResearch Consulting Group indicated that back amid a government-led austerity campaign that
the online advertising market had grown by nearly 60 percent began last year. Companies—once willing to pay
in 2010 to account for more approximately $5 billion in premium rates for mass marketing to CCTV’s big
revenue (albeit less than a fth of the estimated $26 billion audiences—are also taking their money to the Web,
in online advertising revenue recorded in the United States following their viewers.35
the same year).28
Unrelated regulatory pressure on ‘infomercials’ 36may also
2009 marked the rst time “Recommended Usage play a factor in media buyers’ decisions; regardless, the world
Standards” for online advertising had been compiled by the wide web is clearly becoming a dominant platform upon
China Advertising Association. e standards came into which brands reach out to Chinese consumers.
trial operation on January 1, 2009 pending a review for
amendments a year later.29 In 2011, the Chinese government announced a new law
that would prohibit outdoor advertisements that “promote
By the rst quarter of 2012, “ e market size of China’s hedonistic or high-end lifestyles”. e Jing Daily reported:
online advertising reached 14.03 billion yuan ($2.22 billion) “ e Beijing Administration for Industry and Commerce said
[… representing a] 56.2 percent year-on-year increase [but a] in a recent statement that businesses were given an April 15
5.6 percent decrease compared to the last quarter of 2011.”30 deadline to rectify such ads, along with any that excessively
promote ‘foreign’ things. It gave no details on which ‘foreign’
A 2012 report by PriceWaterhouseCoopers predicted that things were deemed objectionable. Such promotions help
“Investment in China’s Internet advertising [would] grow by create a politically ‘unhealthy’ climate, it said. Newly
32.1 percent annually over the next ve years.”31 forbidden words include ‘supreme’, ‘royal’, ‘luxury’ or ‘high
class’.”72
In contrast, other platforms like newspapers, magazines,
TV and outdoor appeared to have far dimmer futures on e banking industry was ‘fully opened’ to foreign
the Mainland: “advertising expenditure in traditional media, participation in December 2006, and international nancial
including newspapers, magazines, TV, radio and outdoor, institutions were not slow to enter the market: the China
increased just 1.4 percent in the rst quarter, the lowest in Banking Regulatory Commission reported that by the end
nearly ve years,” according to a market research service cited of that year, 74 foreign banks had set up branches, and 186
by China Daily.32 others had established representative o ces.37 By the end of
In 2005, there were reportedly 40.4 billion copies of
newspapers, 2.75 billion magazines and 6.4 billion books
published nationwide, and the 2003 “Administrative
216
the National Bureau of Taxation capping corporate advertising Measures on Foreign-Invested Book, Newspaper and
expenditure to at 2 percent of gross annual revenue, leading Periodical Distribution Enterprises” opened retail (in 2003)
to protests from the State Administration of Industry and and wholesale (in 2004) operation in China for foreign-
Commerce, which is o cially tasked with oversight of the invested enterprises, although administrative approval by the
advertising industry.21 General Administration of Press and Publication on a case-by-
case basis was coupled to the relaxation of the regulations.33
Despite certain hiccoughs, the advertising sector is More recent gures provided by Financial Times indicated
without a doubt promising. In 2006 statistics indicated that by 2010 newspaper circulation had surpassed 50 billion
that the overall output value of the industry was nearly in 2010.34
$15 billion.22Furthermore, despite reported cutbacks in
global advertising spending by between 10 and 15 percent Television spending is apparently also declining, rounding
(advertising budgets are often the “ rst against the wall” when out the trend observed in other ‘traditional’ media:
cash ow becomes an issue), a study cited by China Daily
indicated that advertising expenditures in fact grew by 15 China Central Television, the country’s biggest
percent in China during 2008, reaching a total of 441 billion television network, sat quietly Monday on the sidelines
yuan.23 of its annual advertising auction, a fanfare event
typically seen as a barometer for the economy and
Despite the global economic slowdown, advertising a muscle show for the state broadcaster. It broke 20
spending reportedly grew by 13.5 percent in 200924 and 2010 years of tradition by declining to disclose the auction’s
expenditure was reported to grow by nearly 20 percent over
2009 values25 to reach $442 billion.26 PwC forecasts this value nal total sales gures, inviting only a handful of state
to increase to $578 billion by 2015.26 reporters to the event and downplaying what it has
hyped every year before.
e online segment is of particular interest to many,
having grown 52 percent year-on-year in 2008 to account Marketing experts say CCTV is silent because it has
for $1.4 billion of spending on its own.27 A later report from little to cheer about. Some key advertisers are pulling
Shanghai-based iResearch Consulting Group indicated that back amid a government-led austerity campaign that
the online advertising market had grown by nearly 60 percent began last year. Companies—once willing to pay
in 2010 to account for more approximately $5 billion in premium rates for mass marketing to CCTV’s big
revenue (albeit less than a fth of the estimated $26 billion audiences—are also taking their money to the Web,
in online advertising revenue recorded in the United States following their viewers.35
the same year).28
Unrelated regulatory pressure on ‘infomercials’ 36may also
2009 marked the rst time “Recommended Usage play a factor in media buyers’ decisions; regardless, the world
Standards” for online advertising had been compiled by the wide web is clearly becoming a dominant platform upon
China Advertising Association. e standards came into which brands reach out to Chinese consumers.
trial operation on January 1, 2009 pending a review for
amendments a year later.29 In 2011, the Chinese government announced a new law
that would prohibit outdoor advertisements that “promote
By the rst quarter of 2012, “ e market size of China’s hedonistic or high-end lifestyles”. e Jing Daily reported:
online advertising reached 14.03 billion yuan ($2.22 billion) “ e Beijing Administration for Industry and Commerce said
[… representing a] 56.2 percent year-on-year increase [but a] in a recent statement that businesses were given an April 15
5.6 percent decrease compared to the last quarter of 2011.”30 deadline to rectify such ads, along with any that excessively
promote ‘foreign’ things. It gave no details on which ‘foreign’
A 2012 report by PriceWaterhouseCoopers predicted that things were deemed objectionable. Such promotions help
“Investment in China’s Internet advertising [would] grow by create a politically ‘unhealthy’ climate, it said. Newly
32.1 percent annually over the next ve years.”31 forbidden words include ‘supreme’, ‘royal’, ‘luxury’ or ‘high
class’.”72
In contrast, other platforms like newspapers, magazines,
TV and outdoor appeared to have far dimmer futures on e banking industry was ‘fully opened’ to foreign
the Mainland: “advertising expenditure in traditional media, participation in December 2006, and international nancial
including newspapers, magazines, TV, radio and outdoor, institutions were not slow to enter the market: the China
increased just 1.4 percent in the rst quarter, the lowest in Banking Regulatory Commission reported that by the end
nearly ve years,” according to a market research service cited of that year, 74 foreign banks had set up branches, and 186
by China Daily.32 others had established representative o ces.37 By the end of
In 2005, there were reportedly 40.4 billion copies of
newspapers, 2.75 billion magazines and 6.4 billion books
published nationwide, and the 2003 “Administrative
216
