It’s growth oriented

China, regional ad spend surges in 2004

BEIJING — A 25% rise in the ad spend in China, the world’s fastest growing economy, was the main factor behind a massive rise in advertising expenditures in greater China, which also includes the giant media markets of Hong Kong and Taiwan.

Regional ad spending on TV and print media, the two largest sources, grew to $43.2 billion in 2004 from $34.6 billion the previous year, according to market research group CTR.

China accounted for 54% of the total ad spend last year, or $23.3 billion; Taiwan notched up 35% while Hong Kong accounted for 11%.

China’s 25% growth rate was slower than in 2003, when ad spending grew 39%, according to the CTR report.

With these growth rates, advertisers are hungrily watching the burgeoning Chinese market.

Foreign broadcasters who own stakes in mass-market TV channels include News Corp., Viacom and Time Warner.

But at 1% of the country’s gross domestic product, China’s ad spend is small compared to the U.S.’ 2.3%, 2.5% in Hong Kong and 3.6% in Taiwan.

With such heady figures emerging every year, there are fears that Chinese ad revenues are reaching saturation point. But most analysts believe there will be no significant slowdown in ad spending until after Beijing hosts the 2008 Olympic Games and possibly for some time afterwards.

There is also potential for advertising growth in China’s TV market, which is dominated by the state-run broadcaster CCTV and a number of smaller players; there are few genuinely national TV networks.

The TV sector expects more consolidation in coming years, however, as it opens up to foreign investment and as domestic operators focus on maximizing profits.

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