As China becomes more open to global trade, it presents opportunities and obstacles to research, reports Mike Savage.
Chinese membership of the World
Trade Organization would open up the last remaining communist superpower to the global market. Acceptance of China’s application to join the WTO is expected to be a formality after the US Congress voted last month in favour of normalizing trade relations with China. And for the multinational research buyers already in the country, lured by its dynamic economic growth, the real impact will come from the psychological boost that membership confers.
“In China many people feel joining the World Trade Organization is a good thing, ” says Asian Commercial Research’s MD, David Bottomley. “It will stimulate trade, bring in foreign goods and act as a pat on the back for China”.
Until specific terms of entry are hammered out over the next few months, it is difficult to predict the precise effect of WTO membership. The move in likely to energize the relatively dormant financial services and telecom sectors, It could also stir up the automotive and healthcare markets.
China’s estimated top 10 agencies
1.ACNiclsen
2.Central Viewer Survey and Consulting Centre*
3.RI China
4.Asia Market Intelligence
5.Gallup China
6.Taylor Nelson Sofres
7.Loya International Marketing Research
8.East Marketing Research
9.X & L Marketing Services
10.All China Market Facts
*includes CSM, a joint venture between CVSC and Sofres Media Sources. Not all agencies in China will disclose their turnover-this table has been complied by the Marketing Research Association of China, based on conversations with the heads of the major market research firms and the association's annual industry survey.
It will probably not affect the consumer market, however, which already has its own momentum, fuelled by growing competition and branding. There's no shortage of demand as things stand, " says Millward Brown's Catherine Barnes. "WTO membership does not affect our plans for China."
The growing appetite for brand research persuaded Millward Brown to take the plunge into China last June, having coordinated its Chinese work from its office in Hong Kong. The move has paid off and Barnes says China is one of MB's most profitable markets.
Researchers say that the Chinese government will have a far greater impact on the shape of market research in China, through its decisions on business regulation or currency evaluation.
Currency devaluation is looking less likely than it was, though it is a move that international research groups are wary of, stung by their experience of devaluation in Latin America. And researchers are still fearful of heavy-handed state regulation after the Chinese government announced last year it would be vetting prospective market research projects.
As one research buyer observes: "The Chinese government itself should be mature before the industry can follow."
A shortage of skilled local staff could also inhibit agency plans. Many research practitioners are non-Mandarin speaking ex-pats from Hong Kong. Taiwan and Singapore. MR in China can only grow as fast as it takes to train experienced people.
But the way could be open for foreign research firms to snap up local Chinese ones, as China is expected to relax its rules on foreign ownership of Chinese companies. At the moment "there are a myriad of companies doing research in China and a handful of international groups", observes Henri Wallard, board director at Taylor Nelson Sofres. When TNS started TV measurement in China there were already 100 local TAM companies servicing local markets. Such local services could be swallowed up into larger foreign conglomerates, as China becomes part of the global economy.
The initial euphoria of the dash into the vibrant Chinese market has been replaced by pragmatism. China may have a billion-plus population but the number of consumers, usually urban dwellers with enough money to buy branded products, is far less. Unreliable national statistics obscure the size of the potential market, thought to be no more than a quarter of the overall population.
Increased competition is likely to affect the research agencies as much as their paymasters. "Because it is a large and major market there are a number of people fighting for a limited share of market," says Richard Silman, MD of BMRB, which has been running TGI in China for three years. "There will be fallout. " He feels competitive pressure may force agencies to strip down their service offerings.
The new pragmatism in China should therefore favour MR, as companies look for harder information on which to base their strategies. However, China's accession into the WTO is only the first step to becoming a mature market Researchers will find the opportunities it offers are offset by obstacles on the way. |
