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WPP executive bullish on China's digitalization

By ZHENG XIN | China Daily | Updated: 2021-03-05 09:26
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Tencent Holdings Ltd showcases its image recognition technology during an internet expo in Wuzhen, Zhejiang province.[Photo by Tian Jianming/For China Daily]

WPP is eyeing further growth in the Chinese market by making a bet on short video apps, gamification, entertainment marketing and more, said Mark Read, chief executive officer of the company.

The company said that while its businesses and operations in China are already recovering from the COVID-19 pandemic, it aims to further strengthen its business in the country through innovative creative offerings and integrated client solutions.

"To strengthen our capabilities, WPP is investing in expertise that includes programmatic, social, performance and e-commerce, with offerings comprising short video apps, gamification, entertainment marketing and more. Digital is already the dominant media channel and the pandemic has only accelerated its growth relative to the traditional media channels of TV, radio, newspapers and magazines," Read said.

WPP is the world's biggest marketing services group with a network of more than 107,000 people across 112 countries, with agencies including AKQA Group, BCW, GroupM, Hill+Knowlton Strategies, Ogilvy, VMLY&R and Wunderman Thompson. They work with many of the world's biggest corporations, including almost 70 percent of Fortune Global 500 and FTSE100 companies.

WPP estimates that digital operations will account for 90 percent of media expenditures in China by 2024, far higher than the digital share in most of the world.

The company said it is facing new demands from its clients in China as they look to recover in a technology-driven world that has been rapidly reshaped by the pandemic.

"China is the world's largest e-commerce market, with more than 25 percent of total retail activity taking place online last year, and the actions that we have taken, including machine learning, AI and dynamic content, have positioned us well, underlining both the global and open nature of the Chinese economy and the country's importance to us," he said.

Read said WPP's clients are already looking at China as a media, technology and e-commerce innovation center. They are seeing China's high penetration of e-commerce and use of digital payments and technology in marketing as future models that will soon exist elsewhere.

Streaming, gaming and e-commerce have witnessed rapid growth in China in the past year and will shape the media landscape for many years in the country, he said.

"China is a market of significance for us and has been so for quite some time. There is no doubt that China will continue to grow in importance on the world economic stage. We anticipate China advancing its sophistication and expertise, particularly in the areas of technology and innovation, while more local brands will experience tremendous growth and evolve to become international names over time," Read said.

According to Read, Chinese brands have grown in both presence and value over the past decade, with China's top 50 brands having risen 225 percent in brand value, more than double that of the global top 50 over the past decade.

While they are becoming stronger in China, they are also expanding abroad, Read said.

He referred to the first-ever global campaign created for AliExpress, during which the company has taken advantage of its global network and launched its retail campaign in Europe, including in Poland, France and Spain.

According to a recent research report on the 10-year performance of Chinese brands released by WPP and Kantar, the value of some Chinese brands has grown in importance despite the impact of the pandemic, with the top 100 Chinese brands increasing their worth by $106.8 billion to reach $996.4 billion by 2020.

Justin Teo, chief digital officer of VMLY&R Commerce China, an end-to-end creative commerce agency, said hyper personalization will also allow Chinese brands to carve out a unique niche as they expand overseas in the next decade.

WPP said earlier that it would expand further into high-growth areas of commerce, experience and technology, from 25 percent of their business today to 40 percent by 2025.

Read said he believes China will continue to serve as an important driver of global economic growth and its long-term development plans will help the country achieve stable growth and balance. Under such conditions, WPP will continue to invest in local growth and build capabilities that can cater to the market and client demands.

"There is no doubt that 2020 has been a challenging year for everyone due to the pandemic, not just in China but globally. However, it was also impressive for us to observe the speed and effectiveness with which the COVID-19 situation was managed locally and how our teams there were able to get back to some semblance of normality. China's new dual-circulation development pattern that emphasizes boosting domestic demand and further opening up the domestic market, will further bolster demand in the consumer economy and provide support for Chinese firms looking for success overseas," he added.

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