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UPDATED: 14:04, June 25, 2004
Ad expenditure soars in 2003
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Expenditure on advertising in China soared to 107.868 billion yuan (some 13 billion US dollars) in 2003, covering 0.92 percent of China's Gross Domestic Product (GDP) for the year, sources with the China Advertisement Association said.

In the past 20-plus years, the average growth rate of China's advertising expenditure was nearly 40 percent, one of the highest in the world, and the personnel involved reached 870,000 in 2003, according to the association.

China's advertising industry featured by "small-size, thin-spread and low-efficiency" is, however, facing serious challenges from foreign counterparts, most of which are international giants with huge capital and rich experience, said Liu Fan, deputy director of the General Administration for Industry and Commerce of China.

Companies from overseas have been allowed to hold controlling shares in joint venture ad firms from Dec. 10, 2003, and will be allowed to set up solely-funded ad firms in China from Dec. 10, according to its commitments under the World Trade Organization (WTO).

There are still some qualifications for the foreign firms and limits on the percentage of controlling shares held by foreign firms, not higher than 70 percent. But companies from Hong Kong and Macao have been permitted to set up sole-funded ad firms sinceJan. 1 of 2003, said sources with the administration.

"So far, there is no advertising joint venture which has been controlled by foreign firms," said Liu Fan, deputy director of theadministration.

But China's advertising turnover makes up less than one percentof the GDP, as against approximately three percent in developed countries.

In order to cope with the growing international competition, China's advertising industry should emphasize brand building on a specialized base. A competitive employment mechanism and enough investment in technology should be guaranteed for sustainable growth, said Liu.

There are many illegal business activities in China's advertising industry, especially in the medicines and health food advertising fields, which has brought harms to the whole industry,Liu acknowledged.

Improving the service has become the priority of local companies. China will hold the annual World Congress of the International Advertising Agencies (IAA) for the first time in Beijing from Sept. 3 to 10.

"This will be a congress that adds to the reputation of China as a powerful brand builder," said Shi Xuezhi, spokesman for the upcoming conference, also secretary-general of the China Advertisement Association.

The congress will help promote exchange and cooperation home and abroad companies, which will benefit all parties, said the secretary-general.

Source: Xinhua

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