China Outdoor Advertising Industry

At the same time, China also witnessed a fast expanding outdoor advertising industry. Based on the data from China’s State Administration of Industry and Commerce, the CAGR of outdoor advertising from 1994 to 2002 was about 19%. Currently, outdoor advertising has become the third largest medium after TV and print media, and will play a more important role in the future. It indicates a great investment opportunity for foreign investors and local companies as well.

Although China as a whole is a big market for outdoor advertising, there are big gaps between the various regions. Generally speaking, growth rates for outdoor advertising are positively correlated with the consumer spending power. Beijing, Shanghai and Guangzhou are the top three advertising markets in China, and Beijing occupies the largest share of outdoor advertising. In 2003, the top two industry sectors in terms of outdoor advertising expenditure are Post & Telecommunication and Real Estate.

It is estimated that there are around 50,000 outdoor advertising companies in China, with operations highly scattered. Most of them are local enterprises. Through a series of acquisitions and expansion, four outdoor advertisers have grown to be nationwide operators, namely, Clear Media, Media Nation, Media Partners International and Tom.com. They are all joint ventures and listed on the Hong Kong Stock Exchange.

The performance of these four companies can be viewed as benchmarks for potential foreign investors. Clear Media enjoys monopoly in bus shelter advertising in Guangzhou and Shanghai. This reveals a potential entry barrier to new investors since outdoor advertising’s resources are geographically limited and are not easily replaceable.

In accordance with China’s WTO agreements, the SAIC and the Ministry of Commerce have, on March 2, 2004, issued the Administrative Provisions on Foreign Investment in Advertising Enterprises. The foreign party is entitled to own controlling share in the joint ventures, but the proportion of capital investment cannot exceed 70%. Wholly foreign-owned advertising enterprises may be establishedafter December 10, 2005.

In addition, the Closer Economic Partnership Arrangement (CEPA) between Hong Kong/Macao and the Chinese Mainland, which is a free trade agreement under WTO rules, allows Hong Kong and Macao advertising companies to set up wholly-owned advertising enterprises in the Mainland as from January 1, 2004, some two years ahead of their foreign counterparts.

Nevertheless, ambiguities can be found in the regulation of outdoor advertising in China. Various government organs claim certain power in governing outdoor advertisements. Foreign investors must pay attention to the procedures for seeking local approvals and observe operational rules to avoid unnecessary risks.

The overall economic picture for China’s advertising industry is optimistic. With an increasingly stronger purchasing power, and with the 2008 Beijing Olympics and the 2010 Shanghai Expo upcoming, China’s outdoor advertising will grow at a greater pace.

Outdoor Advertising Industry in China

Executive Summary

Part One: Industry Overview

Chapter 1 China’s Advertising Industry

Chapter 2 China’s Outdoor Advertising Industry

2.1 Outdoor Advertising: an Effective Medium in China

2.2 Categories of Outdoor Advertising

2.2.1 Street Furniture Advertising

2.2.2 Billboard Advertising

2.2.3 Transport Advertising

Part Two: Current Situation and Development

Chapter 3 Outdoor Advertising: A Fast Expanding Sector

3.1 Growth in Outdoor Advertising Sector

3.2 Factors Favoring Sector Growth

Chapter 4 Regional Segmentation

4.1 Regional Economy

4.1.1 Provincial-/Municipality-Level Analysis

4.1.2 City-Level Analysis

Chapter 5 Industry Segmentation

5.1 Outdoor Advertising in Beijing, Shanghai and Guangzhou

5.2 Seasonal Trends in Outdoor Advertising Expenditure

Chapter 6 Comparison among Media

6.1 Effectiveness and Cost

6.2 Media Comparison in terms of Industry and Brand

Chapter 7 Earning Potential and Future Outlook

7.1 Earning Potential

7.2 Future Outlook

Part Three: Main Companies in the Industry

Chapter 8 White Horse Outdoor Advertising Limited

8.1 Introduction

8.1.1 Corporate History

8.1.2 Shareholders

8.2 White Horse’s Operations

8.2.1 Competitive Strengths

8.2.2 Business Operations

8.2.3 Market Performance

8.3 White Horse’s Future Expansion

8.3.1 Primary Objectives

8.3.2 Growth Strategy

Chapter 9 Media Partners International Holdings

9.1 Introduction

9.1.1 Corporate History

9.1.2 Scope of Operations

9.2 Media Partners’ Operations

Chapter 10 Media Nation

10.1 Introduction

10.1.1 Corporate History

10.1.2 Scope of Operations

10.2 Media Nation’s Operations

10.2.1 Services and Operating Growth

10.2.2 Financial Position

Chapter 11 TOM Group

11.1 Introduction

11.1.1 Corporate History

11.1.2 Scope of Operations

11.2 TOM’s Operations

11.2.1 Acquisition Strategy

11.2.2 Win-win Strategy

11.3 TOM’s Expansion History

Part Four: The Regulatory Environment

Chapter 12 The Legal Framework

12.1 Regulation of the Advertising Industry in China

12.1.1 Prohibited Activities

12.1.2 Basic Restrictions and Requirements

12.2 Regulation of the Outdoor Advertising Industry in China

12.2.1 Registration Management

12.2.2 Management of Outdoor Advertisements and Neon Signs

12.3 Regulation of the Outdoor Advertising Industry by Local Governments

12.3.1 Beijing: No Bus Body Advertisements in Designated Downtown Areas

12.3.2 Shanghai: Electronic Panels Allowed for Display for Six Years

12.3.3 Guangzhou: Neon Signs Encouraged

Chapter 13 Impact of the WTO and CEPA

13.1 Regulation of the Foreign Investment in the Advertising Industry

13.1.1 General Catalog

13.1.2 Foreign Investment Advertising Enterprises

13.2 CEPA: A Free Trade Agreement under WTO Rules

Chapter 14 Ambiguities in the Regulation and Risks

14.1 Multiple Regulatory Authorities

14.2 Ambiguity in the Ownership

14.3 Policy risks

14.4 Sales through “Guanxi” Create Monopolies

Appendix

Appendix 1 Glossary

Appendix 2 Advertising Trade Fairs/Exhibitions/Forums in China, 2004

Appendix 3 China’s Outdoor Advertising Companies