Ogilvy buys Chinese PR firm


Though advertising is now hard to escape in China, public relations and marketing are nascent arts

By Alex Frew McMillan

HONG KONG, China (CNN) -- Ogilvy Public Relations Worldwide is expanding in China's public-relations market, with a deal to buy H-Line Public Relations.

Ogilvy said on Monday that it has bought a majority stake in a joint venture, H-Line Ogilvy Communications Co.

That will take over all the operations of Beijing-based H-Line Public Relations. An overseas company typically must partner with a local company to operate in China.

Ogilvy says H-Line's founders hold a "significant portion" of the joint venture. The company will be run by H-Line chairman Henry Huang.

Gaining ground fast

Ogilvy's deal gives its parent, WPP Group, a beachhead in an increasingly important market that is largely untapped by overseas firms.

Now China has joined the World Trade Organization, overseas companies are looking for good exposure in China. Chinese companies are also keen to position themselves internationally. The public-relations market in China is pegged at about $240 million a year.

But Chinese companies tend to favor local PR firms, which have gained ground fast on their overseas competitors. Multinationals still lean toward companies that they deal with elsewhere in the world.

"The next five to 10 years will see a greater imperative to localize western brands, as well as the emergence of Chinese companies as strong international competitors," Ogilvy wrote in a release.

Huang, a former reporter, founded H-Line in 1994. Ogilvy entered the Chinese market in 1997 and said in a press release that it has tripled its fee income since that point.

Three city approach

After this deal, H-Line and Ogilvy will employ 130 public-relations and consulting workers. They will operate in H-Line's three bases, the cities of Beijing, Shanghai and Guangzhou.

The deal is expected to usher in a wave of mergers between overseas and domestic agencies. In industries such as car making, the expansion of one competitor from Japan led all the top-four carmakers to ramp up production (full story).

Terms of the H-Line sale weren't disclosed though observers pegged the price at several million dollars.

Public-relations is a nascent art in China, where many companies do not have a dedicated staff to handle queries from the press or the public. Under the state-owned enterprise system, companies had little incentive to market themselves strongly.