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Opinion
Opinion... Forget 'downturn', let's just view it as a little 'dip'
by David Wolf 13-Nov-08, 18:04
Over the past two weeks I have probably been asked by half a dozen people to predict what the current economic crisis is going to mean for marketing and advertising in China.
Now, I claim to have no special insight, no crystal ball and no inside information that would lead me to make the call one way or the other. But after diving into this issue for the past 60 days, I have identified five factors that suggest that the coming advertising downturn in China is overrated.
The first is local consumption. The Chinese Government at last looks set to abandon its long-held reliance on exports and foreign investment to grow the economy, laying out a platform of policies designed to encourage consumer spending.
For years, the nation and its leaders have pointed to the national savings rate as a sign of economic and cultural superiority over the spendthrift cultures of the West. While it would ill serve the country’s economy to go to the other (US-style) extreme of abandoning savings in favour of consumer credit, there is plenty of room in the middle, and China’s leaders are beginning to see that a high savings rate alongside high factory unemployment is no real virtue.
The second factor is infrastructure growth. It also appears likely that we are looking at massive Government investment in infrastructure projects. While this won’t directly add to the bottom lines of any ad agencies, these expenditures will help keep the economy growing, sustain consumer confidence and keep consumers spending.
Third, local companies are going local. Whatever form Government action to pump consumers might take, local businesses are already shifting focus toward the home market. This change is set to increase competition across nearly all consumer sectors. There are normally two plays in the face of head-to-head competition in China: cut prices or pump up marketing. Enough will do both - or the latter - to raise demand for advertising.
Fourth, advertising rate cuts are good. While I think we can expect rates to ease, especially in television and print, this is not a bad thing, either. Rate drops - even drops that last only a short time - are superb opportunities to attract advertising business from companies who have never advertised before. Think of it as an industry-wide business development exercise.
The fifth factor is the foreign wave. As the US and European economies contract, China starts looking to CEOs around the world to be the engine of business growth for the coming two to three years. Short of an economic crisis in China, we can expect this to mean at least higher marketing budgets for China for the companies healthy enough to consider spending money anywhere.
Add those together, and it seems to spell a dip in business, not a downturn.
But just in case you don’t buy into any of the above, I have one last reason for all of us to just drop the gloom and doom. Ideas have a way of generating lives of their own. Call it buzz, call it a meme, the result is the same: the more we talk about the coming advertising downturn of China, the more it becomes the common perception, and the quicker that perception becomes reality. Now, if you want to use the ‘downturn’ meme to justify getting rid of some of the deadwood lying around the office, I understand. But unless you are determined to talk us all out of business and jobs, it is time to turn off CNN, stop reading the Wall Street Journal, and start reminding ourselves why things are looking pretty good around here.
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David Wolf, CEO, Wolf Group Asia
wolfgroup@mac.com
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