Asian Nations a New Frontier for Ad Shops
Newly emerging Asian nations are proving fertile ground for advertising agencies. Even in China, where last year’s massacre of anti-government demonstrators frightened off foreign investors, multinationals are launching ad campaigns to introduce products.
“In all of the areas of the world, the long-term growth expectations are highest in the Asia-Pacific market,” said William C. Thompson Jr., vice chairman of J. Walter Thompson Worldwide, a New York-based agency. “We see it as one of the great growth opportunities in the 1990s.”
The growth of advertising has been triggered by the economic boom that has fattened the purses of consumers in such countries as South Korea, Thailand, Singapore and Hong Kong. In addition, some countries, such as South Korea, are expanding the number of available television channels, increasing the amount of commercial time available.
Some weak spots remain, however. Economic problems cloud the future of the Philippines, while uncertainty looms over Hong Kong and its pending merger with China near the end of the decade. Meanwhile, nations such as Vietnam, Cambodia and Laos still have a way to go before they prove to be viable and stable markets.
China, despite the potential for growth, has proved a tough market for foreign investors and advertising agencies, many of which began developing contacts after diplomatic relations were established with the United States in the early 1970s. “It is a lot slower prospect than they had originally anticipated,” Thompson said. “It’s been a long-term battle. The development of consumer markets has been very slow.”
Foreign efforts to exploit the Chinese market were set back in June, 1989, after the bloody halt of demonstrations in Beijing’s Tian An Men Square and elsewhere in China. Advertising levels fell but have since bounced back, ad executives say.
“There is no indication of clients pulling out,” said Tony Tse, general manager of Ogilvy & Mather China, which has offices in Hong Kong, Beijing and Shanghai. “There is tremendous growth potential because the base is very small compared to world standards.”
Besides ongoing campaigns, Tse says some of his clients will introduce products to Chinese consumers with the help of new ads. Johnson & Johnson, for example, will introduce Band-Aids, and Seagram Co. will begin selling wine coolers.
Tse says marketing new products in China is much like introducing products in the rest of the world. Television is widely used, and commercial time is cheap. A television commercial on the local station in Beijing or Shanghai can cost as little at $400, Tse said.
The products being pitched to Chinese consumers might be familiar to Westerners, but the ads and marketing campaigns have been tailored for the Chinese, Tse said. Ads for the orange-flavored beverage Tang promote the product as a hot drink during the winter months. Commercials for Maxwell House coffee feature a fashion show in progress while the beverage is promoted as “a drink for modern life.”
However, selling coffee in China is an uphill battle, says Tse. “We are trying to compete with tea.”
Japanese Firms Set to Americanize Images
Two of the most respected brands in Japanese electronics--Sony and Panasonic--will trumpet their American ties in advertising campaigns to appear this fall.
The corporate image campaigns come as aggressive companies from other Pacific Rim nations--such as Samsung of South Korea--have created their owns ads to acquaint the American consumer with their less familiar brands.
Meanwhile, established Japanese companies in the United States want to beef up their image as they get ready to introduce new types of products. For instance, Panasonic’s parent corporation, Matsushita Electric Industrial Corp., is introducing a line of office-automation products into the United States under the Panasonic brand, said Alan Taylor, managing director at Landor Associates, a corporate image consulting firm.
“If both (Sony and Panasonic) want to go beyond selling VCRs,” said Taylor, “they would be well advised to Americanize their image.”
Sony’s corporate campaign will talk about its investment in U.S. manufacturing plants and research laboratories, said Jeffrey Brooks, senior vice president at Sony Corp. of America.
The first image ads for Panasonic are expected to make their debut this October and will try to link the company’s products with images of American life. One of the commercials will reportedly show a daughter being videotaped by her father as she marches in a parade.
Sales Pace Quickening for Sporting Goods
More leisure time and consumer spending power have boosted the sale of sportswear and sporting goods in Southeast Asia.
In the next 12 months, the sporting goods industry is expected to grow 15% to 25% in the six-nation Assn. of South East Asian Nations, which includes Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. Singapore recently hosted the International Trade Fair for Sporting Goods and Fashion, a major trade show.
The demand for sporting goods in Asia has enriched many American firms. L.A. Gear, for instance, depends on Asian nations for about 35% of its international footwear sales, says Killick Datta, vice president of international operations.
“We have doubled sales in all these countries within the last year,” said Datta. “It’s a fast-growing market for us.”
Japanese Seek Top End of Cruise Market
Weighing in at 49,500 tons, the Crystal Harmony is not your typical Japanese import. The $200-million passenger ship is Japan’s latest and largest entry into the luxury cruise market, which is dominated by European and American-owned lines.
Built for NYK Lines of Japan, the Crystal Harmony has been designed to cater to the tastes of affluent travelers with such features as goose-down pillows in every guest room and a Jacuzzi in the liner’s penthouse. A ticket on the Crystal Harmony’s sold-out maiden cruise to Alaska--which will begin later this month after the ship departs San Francisco--will cost $2,900 to $11,400.
The 960-passenger ship is the first of three to be operated by Crystal Cruises, said Arthur Sbarsky, senior vice president of marketing for the Los Angeles-based passenger ship line. An estimated $2-million ad campaign created by Saatchi & Saatchi DFS/Pacific in Torrance has promoted the Crystal Harmony in travel magazines for the past year.
Besides Crystal Cruises, other Japanese-owned passenger ship lines, such as Mitsui, have also invested large amounts of money and time to build oceangoing passenger ships. “It takes a lot of money and it takes a lot of the commitment, and the Japanese have a lot in both areas,” said Sbarsky.
The luxury end of the cruise market represents only about 5% of total passengers but offers a better potential for profit than other segments of the market, says Sbarsky. “It was very clear that the room to come in was in the high end; the middle and lower end were very, very crowded.”
Sbarsky said the line will cater mostly to North Americans, who account for about 90% of cruise line passengers worldwide. In contrast, the market for 10- and 14-day cruises is very small in Japan, where vacationers are accustomed to taking brief vacations.
“The Japanese have not discovered cruising as a vacation form,” said Sbarsky. “But, they will. More Japanese are cruising every year.”
