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International Advertising Strategies in China
-- A Worldwide Survey of Foreign Advertisers
Jiafei Yin, Ph.D
Assistant Professor
Department of Journalism, Central Michigan University
Submitted to the AEJMC Convention, Aug. 4-7,1999 in New Orleans, LA
March 1999
International Advertising Strategies in China
________________________________________________________________________________
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Name: Jiafei Yin
Mailing address: 300 W. Bellows St., Apts. 104, Mt. Pleasant, MI 48858
Phone number: 517-774-3052 (office),
517-774-5894 (home)
Fax number: 517-774-7114
E-mail address: [log in to unmask]
International Advertising Strategies in China
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Abstract
This paper explores how international corporations advertise in
China. A worldwide survey of foreign advertisers in China, the first
of its kind, was conducted. The study has found that the predominant
majority of the companies surveyed use the combination strategy, that
is, partly standardized and partly localized. Factors that relate to
the advertising strategies used in China are the number of
subsidiaries, the perceived importance of localizing language and
product attributes, and the perceived importance of mostly Chinese
cultural values.
International Advertising Strategies in China
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I. Introduction: The Rise of Advertising in China
China, as a big potential market, is coveted by every business in the world.
The sheer size of its population - more than 1.2 billion people - merits serious
attention from businesses as well as scholars. The best-known dream is: "If I
can sell a toothbrush to everyone in China, I will be rich."
However, that market remained closed for 30 years until late 1978 when Chinese
leader Deng Xiaoping decided to institute sweeping economic reforms that opened
China to the outside world. Since 1978, the reform has helped fuel one of the
world's highest growth rates: an average growth in Gross Domestic Product of 9.3
percent a year.[1] Consumption has more than doubled and the poverty rate has
declined by 60 percent. Reform has also led to increasing and rapid integration
with the world economy. Today, China is the tenth largest trading nation in the
world and attracts more foreign direct investment than any country except the
United States.
For the first time in modern history, China is recognized as a world
economic power. And for the first time in history, the potential of the Chinese
market has become a reality with China's door opened and with its newly acquired
purchasing power. It is predicted that the greatest consumer boom in history may
be about to take place in China over the next 10 years (Economist, 1993). This
prediction is based on the estimation that China has 60 million people with an
annual income above the magic threshold of US$1,000 - the threshold thought to
be necessary for spending on non-necessities like colour televisions and washing
machines. The figure can rise to 200 million by the year 2000 (Economist). Some
visionaries believe it will be possible that by early next century scores of
millions of Chinese will have risen above the US$4,000 threshold. That is when
people begin buying cars (Economist).
The booming economy in China has fueled the growth of its advertising
industry. There was very little commercial advertising in China during the
Cultural Revolution (1966-76). Since its comeback in 1979, the industry has
developed fast, averaging 50 percent growth a year in advertising expenditures
(Aab, Johnston & Lohtia, 1995). Continued growth is predicted to be at least 30
percent a year. In 1995, advertising business volume hit 27 billion yuan (about
US$3.3 billion), 10 times the figure for 1990 (Xinhua, 1996). In 1995, there
were 48,000 advertising companies across the country, as against 43,000 in the
previous year (Xinhua).
The visible growth in the Chinese economy has caught the attention
of businesses around the world. The promise of the market is
irresistible. Today, the world's biggest McDonald's outlet is in China.
Brand names like Coca-Cola, Marlboro, Seiko watch and BMW are household
names. By the mid-1994, there were already close to 150 transnational
advertising agencies working in various arrangements in China, some of
which are joint ventures and representative offices (Chen, 1996).
As foreign advertising explodes in China, research in the area needs to
accelerate also. This study attempts 1) to identify the most popular foreign
advertising strategy used in China, 2) to determine the more important
environmental factors influencing transferability of advertising strategy, 3) to
ascertain the importance of changing advertising components to blend with local
culture, 4) to examine if and how the attitudes, behaviors, or demographics of a
foreign company relate to the advertising strategy used in China; 5) and,
finally, to compare the results of this research with those of earlier studies
to find out any new trends in the field.
To accomplish these research objectives, a survey of foreign advertisers in
China was designed. It is the first such survey undertaken for China.
II. Literature Review: Standardization vs. Localization
This study on foreign advertising strategies in China is a continuation of the
debate on whether advertisers should standardize or localize in foreign markets.
The point of departure in this debate is whether the market conditions in the
world today warrant the standardized approach (Elinder 1965, Dunn 1966, Levitt
1983, Tansey, Hyman & Zinkhan 1990, De Mooij and Keegar 1991) or the specialized
or localized approach (Britt 1974, Marquez 1975, Green, Cunningham, and
Cunningham 1975, Harris 1984, Onkvisit & Shaw 1987, Tse et al 1989). The
standardized approach in international advertising means the adoption of one
advertisement for all markets. A specialized or localized approach refers to the
use of different advertisements for different markets in order to adapt to local
market conditions. Neither camp can convince the other about the effectiveness
of the approach each advocates.
Theodore Levitt (1983) presented the best-known argument for standardization -
"the growing homogenization of needs across borders". He described it as the
globalization of markets. Levitt's strongest support was technology and the
trend toward modernization. He believed that technology had become a powerful
force that drove the world toward a converging commonality.
Yoram Wind, (1986) an advocate for adaptation, cautioned that one could not
ignore the differences in different markets and the need to adapt to them. He
contended that most international blunders stemmed from instances of cultural
insensitivity - lack of awareness of values, and attitudes - that caused a
strategy which was extremely successful in one country to prove wrong in
another. Wind believed that the trend toward a homogenization of the peoples'
wants did not exist and standardization was one of several possible strategies,
along with differentiation and mixed strategies. Wind recommended "think
globally, act locally".
Other researchers, such as Philip Kotler (1986), believed the "mixed approach"
or the combination strategy - partly standardized and partly localized - was the
most effective strategy. It was also called the contingency approach (Agrawal,
1995) because the strategy varied depending on the situation.
Kluckhohn's argument about the human nature lent support for the adoption of
the combined approach: "every man is, in certain respects, (a) like all other
men, (b) like some other men, and (c) like no other man" (Kluckhohn, 1962).
While Levitt was emphasizing common human needs, Wind paid attention to the
differences in cultures. Clark Wissler, an anthropologist, summarized the
relationship between culture and needs - cultural universals stop at biological
needs or drives (White, 1964). "The only thing one might term cultural is man's
response to his innate drives. Thus, eating is biological, but how one satisfies
one's hunger is cultural, and in this respect people are dissimilar in different
parts of the world. Sex, too, is biological; but with whom and how it is
permitted is cultural (White)."
In addition to the theoretical debates, researchers in international
advertising conducted empirical studies to examine the extent of the use of
standardized and localized strategies and the factors influencing the
advertising strategy used.
One study by William L. James and John S. Hill (1991) reflected the trend in
international advertising in the early 1990s. The study found that 40 percent of
the sales platforms and 37 percent of the creative contexts adopted the
standardized approach. Most of the nondurable goods studied were culturally
sensitive and the buying proposals for such goods were adapted. The standardized
approach was found to work better for durable goods. The study concluded that
adapting subsidiaries were typically high in sales (over US$25 million) and were
situated in affluent markets. They were less likely to have American products in
their product lines and were more susceptible to headquarters-initiated product
transfers. And advertising standardization opportunities were most likely to
occur in less affluent, developing markets with per capita annual income less
than US$6,000.
An earlier study by Robert E. Hite and Cynthia Fraser (1988) explored the
extent to which American transnational corporations used standardized versus
specialized approaches. They found only eight percent of the firms used
standardized advertising for all foreign markets. Fifty-six percent of the
companies used a combination strategy and 36 percent used localized strategy. Of
the factors they examined in discriminating firms based on advertising strategy,
they found the powerful discriminators to be "eating patterns of the market",
use of a foreign advertising agency or a U.S. advertising agency, and
involvement in capital goods industries. The study also found components of
advertising executions, demographic differences were only weak discriminators.
Susan H.C. Tai (1997) also conducted a smaller-scale survey on multinationals
that advertise in China, Taiwan, Hong Kong and Singapore. The study found that
on the average among the four markets, 31 percent of the advertising decisions
were made using the same strategy as their home market, while 68 percent used a
different strategy. And product category and country of origin affected
standardization. Personal care, food products and fashion brands were
standardized, while consumer electronics were more likely to adopt a
differentiated strategy, which is different from the results of James's study.
American and European firms were more likely to adopt a "slightly standardized
strategy", while Japanese firms were more likely to adopt a "slightly
differentiated strategy" in the Asian market.
In a review of a 40-year debate in international advertising, Madhu Agrawal
(1995) concluded that practitioners alternated between the adaptation approach
and the standardization approach - preference for localization in the 1950s
because of a lack of familiarity with international consumers and markets, the
shift toward standardization in the 1960s as knowledge of international markets
improved, the reversal toward greater adaptation in the 1970s as a result of the
rising nationalistic forces and some well-publicized advertising blunders during
the 1960s and the second reversal toward standardization in the 1980s which
witnessed the rise of multinational advertising agencies.
Academicians, in contrast, have generally been consistent in advocating
adaptation (Agrawal) because cross-cultural studies have rarely shown
similarities among consumers. Differences in market characteristics, industry
conditions and other environmental variables also have invariably been found in
the empirical studies leading to the conclusion that adaptation is necessary.
The differences between the practitioners and the academics apparently suggest
that practitioners are motivated by a different set of factors in their
advertising strategy decision making than the factors academics consider
important.
This study attempts to find out what is the popular foreign advertising
strategy used in China. And instead of focusing on the factors researchers
consider important, this study was designed to allow practitioners to rate the
relative importance of various factors influencing transferability of
advertising strategy and examine how the attitudes of practitioners relate to
the advertising strategy used.
More specifically, this study 1) examined the extent of the use of the
standardized, localized and combination strategies in China, 2) determined the
relative importance of various factors influencing transferability of
advertising strategy, 3) analyzed if and how the attitudes, behaviors, or
demographics of a foreign company relate to the advertising strategy used in
China; 4) and, finally, compared the results of this research with those of
earlier studies to find out any new trends in the field.
III. Research Methods
1. Samples
Samples were drawn from the Moody's Manual (1995) because a complete list of
international advertisers in China was hard to find. The Moody's Manual (1995)
was chosen because of its comprehensiveness. A very helpful feature of the
Moody's Manual is that it lists all the countries a firm is operating in, and it
also has a comprehensive separate volume for international corporations. Only
those firms that have business in China were selected. Using this method, this
researcher found a total of 873 companies. All of the 873 selected companies
were surveyed in order to ensure adequate number of responses for this study. A
total of 189 questionnaires were returned, of which 186 were usable. The
response rate was about 21.6 percent. One major reason for the low response rate
was that although many international companies do business in China, they,
nevertheless, do not advertise in China.
Companies from 16 countries that engage in 13 types of businesses responded
to the survey (See Table 1). Some of these firms are involved in more than one
type of business. About 50 percent of the companies have total sales between
US$1 billion and US$25 billion (See Table 1). The majorities of the companies
have over 26 subsidiaries across the globe (See Table 1) and are very
experienced in international marketing (See Table 1). Also, for the majority of
the responding companies, more than 50 percent of their total sales come from
foreign markets (See Table 1).
2. The questionnaire
A self-administered, mail questionnaire was the data collecting instrument
for the study. Questionnaires were mailed to vice presidents in charge of
marketing. The survey was conducted between June-November 1996.
The questionnaire was divided into five parts: demographic variables of
each company, advertising strategies used, advertising agencies used, importance
of changing advertising components to blend with local culture and importance of
environmental factors influencing transferability of advertising strategy.
Advertising strategy used is the most important part of the survey. One
major purpose of the study is to determine how international companies advertise
in China and what advertising strategies they use. The purpose of this question
is to determine the general trend of foreign advertising in China. Three
advertising strategies were included in the questionnaire: standardization,
localization and combination strategies.
The demographic variables included in the survey were the place of
headquarters of the firms, types of business, number of subsidiaries, years
involved in international marketing, percentage of sales in foreign markets and
total sales. These variables were included in order to investigate if
demographics of a company relate to the advertising strategy used in China.
In the 'advertising agencies used' category, seven types of agencies were
included: Hong Kong agencies, agencies in Taiwan or other Asian countries,
Chinese mainland agencies, home-country agencies, international
agencies/networks, corporate in-house agencies and foreign affiliates in-house
agencies. Hong Kong agencies were singled out because many international
advertisers in China have their commercials created in Hong Kong. The purpose of
this survey question is to test if types of advertising agencies used relate to
the advertising strategy used.
Items in the variable groups of localizing advertising components to blend
with local culture and environmental factors were adapted from earlier studies
(Hite & Fraser, 1988; Dunn, 1976).
Five advertising components were used in earlier studies (Hite & Fraser,
1988): language, product attributes, models, scenic background and colours of
advertisements. In this study, two more components were added: music and humour,
which vary greatly from culture to culture. The purpose of this part of the
survey is to identify important items regarding localizing advertising
components and to test if attitudes of the firms regarding these variables
relate to the advertising strategy used.
To study the importance of environmental factors influencing
transferability of advertising strategy, this study included 20 items for
measurement, which were based on the eight factors extracted by Watson S. Dunn
(1976). Dunn obtained the eight factors from an original pool of 194 variables
he had gathered from past research studies, from the marketing literature, and
from relevant theoretical works. After two surveys and factor solutions, he
reduced the 194 variables to eight factors. Dunn did the factoring to produce
meaningful dimensions. In 1988, Robert E. Hite and Cynthia Fraser (1988: 9-17)
reorganized Dunn's eight factors and expanded the items to 11. The two
researchers used the 11 items as the measuring tool to study how attitudes of
the firms relate to the advertising strategy used.
Eleven of the 20 environmental items used in this study were adapted from
the two earlier studies (Hite & Fraser, 1988; Dunn, 1976). They included:
acceptance of trademark or brand name, transferability of slogan, level of
consumer education, attitude toward country of product origin, degree of
nationalism in China, competence of personnel in the China office, rate of
economic growth, independence of media from government control, attitudes toward
monetary gain, attitudes toward authority, eating patterns of market. These
items deal with key dimensions of advertising transferability: market
conditions, media conditions, economic environment, consumer attitudes and
lifestyles.
Nine items specific to the Chinese conditions and culture were added: level
of market affluence, media characteristics, level of government regulation, and
attitudes toward work, individual goals, collective needs, face-saving, spending
money, and attitudes toward sex roles. 'Level of market affluence' was added
because earlier studies (James & Hill, 1991) found that market affluence
affected the advertising strategy used. 'Media characteristics' and 'level of
government regulation' were added because media in China are still state owned,
and the level of government regulation is still comparatively high. The six
'attitudes' items were added because they are central to the Chinese cultural
values. The purpose of this survey question is to find out the relative
importance of these environmental factors, and if the attitudes of the firms
relate to the advertising strategy used.
Measurement of the importance of changing advertising components and the
importance of environmental factors was on a five-point scale, with five as
'very important' and one as 'not at all important'.
3. Statistical tests
The statistical package, SPSS, was used for the quantitative analysis of the
data collected. Descriptive analysis and Chi square tests were conducted.
Descriptive statistics was used to profile sample companies, determine the
extent of the use of the standardization, localization and combination
advertising strategies and tabulate the importance of localizing advertising
components and environmental factors.
Chi square tests were done to find out the associations between the
variables and the advertising strategies used in China. As the frequencies in
some of the cells were low, some cells were combined in Chi square tests.
IV. Results
1@ Descriptive
1 Foreign advertising strategies used in China
Out of a total of 186 usable responses, predominant majorities, 140 companies,
use the combination strategy - that is, partly localized and partly
standardized. That makes up 77 percent of the total. Significantly lower in
number, some 22 international companies, about 12 percent, use the specialized
or localized strategy in China, while 19 companies, 10 percent, use the
standardized strategy (See Table 2). The results indicate a clear trend toward
the use of the combination strategy in China.
2 Advertising agencies used
Of the seven types of advertising agencies, international agencies are the
ones used most, followed by home-country agencies and corporate in-house
agencies (See Table 1). A distant fourth are the Hong Kong advertising agencies
followed by agencies in the Chinese mainland and foreign affiliates in-house
agency. The ones that register the lowest frequency are the advertising agencies
in Taiwan. Some of the corporations use more than one type of agencies. The
results show a preference for international agencies. This suggests that foreign
advertisers in China need the experiences of the international agencies in
foreign markets.
(3) Rated importance of localizing advertising components to blend with local
culture
Of the seven advertising components studied, localizing language to blend with
local culture is rated as "most important" in advertising transferability. Next
in order of importance are the need to localize product attributes, models,
colours of advertisements, humor, scenic background and music (See Figure 1).
(4) Importance of environmental factors influencing transferability of
advertising strategy
Of the 20 environmental factors studied, acceptance of trademark or brand name
is rated as the most important in affecting transferring foreign advertisements
to China. Next in importance is the group of factors concerning the economy, the
market and the advertising industry: competence of personnel in the China
office, rate of economic growth, transferability of slogan, level of market
affluence and level of consumer education. Last in order of importance is the
group of factors concerning Chinese cultural values, lifestyles, media and
control - attitude toward country of product origin, media characteristics,
level of government regulation, attitudes toward spending money, monetary gain,
individual goals, face-saving, work, degree of nationalism in China,
independence of media from government control, attitudes toward collective
needs, authority, sex roles and eating patterns of the market. (See Figure 2)
2. Chi square test results
(1) Advertising strategies based on demographic variables
Chi square tests of the relationships between advertising strategy and
demographic variables show that only the number of subsidiaries relates to the
advertising strategy used (See Table 3). Figure 3 illustrates the results, which
show that companies with fewer subsidiaries are more likely to use the
standardized strategy while companies with more subsidiaries are more likely to
use localized strategy.
Chi square test fails to show associations between advertising strategy and
the other demographic variables: years in international marketing, percentage of
sales in foreign markets and total sales (See Table 3).
However, an analysis of Chi square test crosstabs and bar charts (Figure 4,
5, 6) do show identifiable patterns, which show that with the increase of the
number of years in international marketing, the percentage of foreign sales and
the total sales, companies are more likely to use localized strategy while with
the decrease of experience in international marketing and sales, companies are
more likely to use standardized strategy.
(2) Advertising strategies based on place of headquarters, types of
business and agencies used
Chi square test fails to show associations between advertising strategy and
the following three variable groups: place of headquarters, types of business
and advertising agencies used (See Table 3).
However, survey results show more variations in the advertising strategy
used based on place of headquarters than on types of business. For each business
type, the majority of companies use the combination strategy while only a small
number of companies use either standardized or localized strategies. The only
exception is the electronics industry where no company uses localized strategy.
Also, even though Chi square test does not show an association between
advertising strategy and agencies used, survey results show clear patterns in
the advertising strategy used depending on the agencies used. Companies that use
international advertising agencies, home-country agencies and corporate in-house
agencies are more likely to use standardized strategy, while companies that use
Hong Kong, the Chinese mainland and foreign affiliates agencies are more likely
to use localized strategy. In fact, none of the companies in the second group
uses the standardized strategy.
(3) Advertising strategies based on rated importance of localizing
advertising components
Chi square tests of the relationships between advertising strategy and
attitudes toward localizing advertising components to blend with local culture
show that the advertising strategy used relates to attitudes toward only two of
the seven items: localizing language and localizing product attributes (See
Table 3).
(4) Advertising strategies based on the rated importance of
environmental factors
Also run were the Chi square tests of the relationships between advertising
strategy and the rated importance of 20 environmental factors. Chi square test
results show that the advertising strategy used relates to the rated importance
of three of the 20 environmental factors: attitude toward country of product
origin, attitudes toward collective needs and attitudes toward authority (See
Table 3).
Chi square tests also show that the relationship between the advertising
strategy used and the rated importance of attitudes toward monetary gain is
significant at 92 percent confidence level and the relationship between
advertising strategy used and attitudes toward face-saving is significant at 91
percent confidence level (See Table 3).
V. Discussions
1 The general trend of international advertising strategy used in China
The survey results show that the majority of the foreign advertisers in China,
77 percent, use the combination strategy, while the number of companies using
either the standardized or localized strategy is comparatively small. This has
identified the trend of foreign advertising in China as toward the combination
or mixed strategy. The majority of the companies surveyed have abandoned
standardization.
This study shows a higher percentage of companies using the combination
strategy and a lower percentage of companies using specialized strategy compared
with Hite and Fraser study. But samples in this study tend to be larger firms.
The popularity of the combination strategy in China casts doubt on the
arguments for standardization. Levitt's strongest support for standardization is
technology and the trend toward modernization. Today's China is modernizing
fast. Imports of advanced technology are top priority of the country. In 1997,
China is the tenth largest trading nation in the world and attracts more foreign
direct investment than any country except the United States.[2]1 The popularity
of the combination strategy indicates that technology and the trend toward
modernization do not necessarily warrant standardization in foreign markets.
One other factor that relates to standardization is market affluence.
James' study suggested that standardization opportunities were most likely to
occur in markets with per capita annual income less than US$6,000. In 1996, per
capita annual income in urban China was 4377.2 yuan[3] (about US$497). Income in
rural China was much lower. However, the majority of the advertisers still
choose to use the combination strategy. This shows that less affluent market
like China is not necessarily the less competitive market. Whether China is an
exception or part of a bigger trend in the 1990s remains to be explored by
similar studies in other countries, such as India.
The popularity of the combination strategy in China shows that foreign
advertisers recognize China as a distinctive market and thus, the need to adapt.
That is why they believe that it is important to localize advertising components
to blend with the Chinese culture and that most of the 20 environmental factors
in China are important in influencing the transferability of advertising
strategy. The adoption of the combination strategy also shows that foreign
advertisers decide that the characteristics of the Chinese market cannot be
ignored.
The popularity of the combination strategy signals the increasing
sophistication of international advertising when advertisers choose to partly
standardize and partly localize. Future debates can focus more on what to
standardize and what to localize and why, rather than whether to adapt or not to
adapt. The results of this study are part of the picture of where international
advertising is in the 1990s after the dramatic shifts in the last four decades.
2. Factors influencing the advertising strategy used
The number of subsidiaries directly relates to the advertising strategy used.
Companies with fewer subsidiaries are more likely to use standardized strategy,
while companies with more subsidiaries are more likely to adopt localized
strategy. When companies have more subsidiaries, their markets are likely to be
more widely scattered across the world and thus, a standardized strategy may not
be appropriate for all the markets. Also more subsidiaries may mean bigger
operations in foreign markets and more resources for advertising. Adaptation
always costs more than standardization but may result in higher economic
returns, which can justify the cost.
The associations between advertising strategy and the other three variables:
total sales, percentage of foreign sales and years in international marketing,
are weak, but the pattern is there. Higher total sales and percentage of foreign
sales, and more years in international marketing suggest more opportunities for
localization. The reason may be the same as those in the case of the number of
subsidiaries. More years of international marketing also suggest more
possibilities of localization, which may be attributed to the fact that the
longer a firm stays in a foreign market, the better it knows the market. And the
more it feels the need to adapt. But as Chi square test fails to show a
significant relationship here, more studies are needed to confirm that the
pattern does exist.
It is the same case with the advertising agencies used. Although Chi square
test does not show a significant relationship, international agencies, home
country and corporate in-house agencies are more likely to standardize than
localize, while local agencies are more likely to adapt than to standardize.
This may be due to the different perspectives and experiences of the
international versus local agencies. Also personnel in local agencies are more
familiar with the Chinese culture than staff at international, home-country and
corporate in-house agencies.
For types of business, none of the companies in the electronics industry
uses localized strategy. Other than that, types of business fail to be a
significant factor in influencing the advertising strategy used as suggested by
James' and Tai's studies.
Changing language and product attributes to blend with local culture are
rated as the two most important factors in that variable group, which is
consistent with the results of Hite and Fraser study. Given the fact that most
commercials get their messages across through language, the importance of
localizing language is hard to over-emphasize. The majority of the companies
also acknowledge the importance of localizing product attributes. The high
rating of the factor shows that foreign advertisers in China recognize the
possibility that people may need the same product but for different reasons,
depending on the local culture. And even "homogenization of needs" across
borders may not justify standardization. Localizing respectively models, colours
of advertisements, humor, scenic background and music are rated only as somewhat
important. This may be due to the fact that commercial advertising in China was
revived only after the economic reforms and that advertising in China and
consumers' tastes are not perceived as sophisticated.
Of the seven advertising components, only the rated importance of
localizing language and product attributes relates to the advertising strategy
used. Even though most advertisers rate the two items as very important, there
are significant differences among the three advertising strategy groups in the
rated importance of them. Firms using the standardized strategy rate the two
items much less important than firms using either the localized or combination
strategy.
Of the 20 environmental factors, "acceptance of trademark or brand name" is
rated as the most important regarding transferability of advertising strategy,
which is also consistent with the results of Hite's study. The success and
popularity of Coca-Cola, Nike, Philips electrical appliances in China may
testify to the importance of acceptance of brand names. Next in importance are
the group of factors about economic and market conditions. It is interesting to
note that most of the factors in this group are environmental factors. After
all, purchasing decisions are limited by purchasing power, and consumer choices
depend on the level of consumer education. It is interesting to note that even
though most advertisers agree that these factors are very important to the
transferability of advertising strategy, they do not relate to the advertising
strategy used. In other words, there are no significant differences among the
three advertising strategy groups in rating the importance of these factors.
Last is the group of factors concerning Chinese cultural values, lifestyles
and the media. Most of the factors in this group are attitudinal and they are
central to the Chinese cultural values. Of this group, it is the rated
importance of attitudes toward country of product origin, attitudes toward
authority and attitudes toward collective needs that relates to the advertising
strategy used.
Firms that standardize rate the attitudes toward country of product origin
more important than firms using either the combination or localized strategy do.
In its history China had always been proud of its cultural and economic
development and considered itself the center of the earth. But in more modern
times, China was humiliated, invaded and partly occupied by various foreign
powers. The Chinese do remember their history. But their attitudes toward
countries of the world are sometimes complicated by the economic needs they
face.
Firms using the standardized strategy rate the attitudes toward collective
needs and authority much less important than firms adopting the localized or
combination strategy do. In the Chinese culture, authorities are to be respected
and obeyed, and collective needs are more important than individual goals. And
these are not just attitudes or beliefs; they are the guidelines for people's
actions. With the economic reforms underway in China, however, these traditional
cultural values are facing serious challenges.
The relationships between advertising strategy and the rated importance of
the attitudes toward face-saving and monetary gain are weak. But the pattern is
clear - firms using standardized strategy rate the two attitudes much less
important than firms using the localized and combination strategy. When people
in other cultures value money, the most important thing for a Chinese person is
his/her face, which means respect, honor influence or vanity.
Except the attitudes toward country of product origin, firms that
standardiz rate all the factors that relate to the advertising strategy used
much less important than firms using the other two strategies. This suggests
that attitudes of the advertisers do relate to the advertising strategy they
use. It is their attitudes toward mostly Chinese cultural values that relate to
the advertising strategy they use. The more important they rate those factors,
the more they adapt.
More studies can be done to investigate why firms that standardize rate the
attitudes toward country of product origin more important than the other two
advertising strategy groups do. Of the 20 environmental factors, firms that
standardize rate only three factors as more important than firms using the other
two strategies do: transferability of slogan, country of product origin and
independence of media from government control. This suggests that firms using
standardization seems to be less concerned with cultural values in China than
with marketing tools and product characteristics.
In conclusion, this study has found that the general trend of foreign
advertising in China is toward the combination or mixed strategy. Only a small
percentage of foreign advertisers in China use full standardization or full
specialization strategy. This shows that most advertisers in China recognize
China as a distinctive market and the need to adapt.
This study also shows that international advertising in the 1990s is
getting increasingly sophisticated. To the advertisers, it is no longer a
question of standardization or localization, but a combination or mixture of the
two and a question of what is the best combination. The study also shows that
even though China is far from an affluent market, adaptation is much more
popular than standardization in the Chinese market. This suggests that with the
increasing competition for foreign markets in the 1990s, less affluent markets
are not necessarily less competitive markets.
The study also shows that the most important factors influencing
transferability of advertising strategy are localizing language and product
attributes, acceptance of trademark or brand name, competence of personnel in
China office and the rate of economic growth. However, what relates to the
advertising strategy used in China is the rated importance of mostly Chinese
cultural values. The attitudes of the advertisers toward mostly Chinese cultural
values influence the advertising strategy used. The number of subsidiaries is
the only demographic variable that relates to the advertising strategy used.
This suggests that Chinese culture affects foreign advertising strategy used in
China much more than economic or marketing conditions, or demographic variables
do. Similar studies in other countries are needed to find out whether the
influence of culture in international advertising is a part of the trend of
international advertising in 1990s or only specific to the Chinese market
Foreign advertisers in China are recommended to keep in mind that China is a
competitive market even though it is still a less affluent market. If they
believe that standardization is enough for low income markets like China, they
will face serious competition from other advertisers in the market who are
trying to adapt. They are also recommended to pay more attention to the
combination strategy, which may become the most popular and practical
advertising strategy in the years to come.
Foreign advertisers in China are also encouraged to examine their own attitudes
toward Chinese cultural values because what they believe about the Chinese
culture convinces them what advertising strategy to use. As the attitudes of
advertisers relate to the advertising strategy used, those attitudes should be
based on solid knowledge of the Chinese culture rather than superficial
impressions of it, which may mislead in decision making and result in disasters
in marketing.
This is a study on foreign advertising in China. Similar studies can be
done in other countries to find out if the results of this study apply only to
China or if they are part of the trend of international advertising in the
1990s. Future studies can also examine the combination strategy to see what is
standardized and what is localized and how these decisions are made. Separate
studies can investigate the attitudes of international advertisers toward
cultures in foreign markets. Instead of debating on whether local cultures are
different enough to warrant adaptation, it is high time we turned our attention
to topics, such as whether it is generally true that cultural factors influence
advertising strategy more than economic or marketing conditions or demographic
variables of a firm, and why local cultures influence some international
advertisers more than others.
International Advertising Strategies in China
________________________________________________________________________________
______
References
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Agrawal, M. (1995) Review of a 40-year debate in international
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Britt, H. (1974) Standardizing products in overseas markets. Columbia
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Dunn, W. (1976) Effects of national identity on multinational promotional
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James, W. & Hill, J. (1991) International advertising messages: To adapt
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2 Books
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Maddox, R. (1993) Cross-cultural Problems. In International Business.
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[1] World Bank Country Reports, 1997.
[2] 1 World Bank Country Report, 1997.
[3] China Statistics Yearbook, 1996.
Table 1 Description of the sample
Country
number
USA
83
Germany
25
France
11
UK
11
Switzerland
9
Sweden
8
Finland
7
Denmark
5
Japan
5
Netherlands
5
Belgium
4
Australia
3
Italy
3
Norway
3
Austria
2
Singapore
2
Total
186
Type of Business
number
industrial materials
58
capital goods
25
consumer goods
23
electronics
15
medical products
14
automotive
13
business service: non-ad
12
travel/tourism
9
business service: ad
7
natural resources
7
conglomerate
5
other
5
construction
4
food & beverages
4
Preparation of Advertising Campaigns
number
international agency/network
62
home-country ad agency
48
corporate in-house agency
44
HK advertising agency
28
Chinese mainland ad agency
27
foreign affiliates in-house agency
9
ad agency in Taiwan & Asian states
3
Number of Subsidiaries
number
5 or less
12
6-10
16
11-25
29
26-50
39
over 50
84
total
180
Years in International Marketing
5 or less
12
6-10
4
11-15
9
16-20
9
21-25
15
over 25
137
total
186
Percent
of
Sales
in
Foreign
Markets
10% or less
2
11-25%
15
26-50%
54
51-75%
56
over 75%
52
total
179
Total Sales
less
than
$100
million
10
$100
million-$499
million
33
$500
million-$999
million
27
$1
billion-$25
billion
93
$26
billiion-$50
billion
8
over
$50
billion
11
total
182
International Advertising Strategies in China
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Table 2 Advertising Strategy
number
percent
standardized
19
10.50%
localized
22
12.15%
combination
140
77.35%
total
181
100.00%
Table 3 Chi of Associations between ad Strategies and Variables
Pearson Chi-square
Variable
value
df
Asymp. Sig
place of headquarters
28.829
32
.628
Type of Business
9.059
8
.337
Ad agencies used
10.070
6
.122
number of subsidiaries
10.259
4
0.036
*
years in international marketing
2.879
4
0.578
percent of sales in foreign markets
4.551
4
0.337
total sales
5.574
4
0.233
language
22.232
6
0.001
*
product attributes
13.157
6
0.041
*
humor
4.652
4
0.325
models
3.334
4
0.503
colors of ad
2.564
4
0.633
scenic background
3.229
4
0.520
music
1.798
6
0.937
acceptance of trademark
2.714
2
0.257
competence of personnel in China office
1.121
6
0.981
transferability of slogan
8.810
6
0.185
attitude toward country of product origin
13.134
6
0.041
*
rate of economic growth
9.249
6
0.160
level of government regulation
1.775
6
0.939
media characteristics
8.875
6
0.181
attitudes toward face-saving
11.020
6
0.088
level of consumer education
8.287
6
0.218
level of market affluence
1.211
6
0.976
independence of media from government control
6.793
6
0.340
attitudes toward monetary gain
11.321
6
0.079
attitudes toward work
4.037
6
0.671
attitudes toward individual goals
8.611
6
0.197
degree of nationalism
4.243
6
0.644
attitudes toward spending money
9.357
6
0.154
attitudes toward authority
18.925
8
0.015
*
attitudes toward collective needs
17.001
6
0.009
*
eating patterns of market
8.859
6
0.182
attitudes toward sex roles
6.506
6
0.369
Note: * Significant at 0.05
International Advertising Strategies in China
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Figure 1 Importance of Localizing Advertising Components
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Figure 2 Importance of Environmental Factors Regarding Transfer
International Advertising Strategies in China
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Figure 3 Advertising Strategy by Number of Subsidiaries
International Advertising Strategies in China
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Figure 4 Advertising Strategy by Years in International Marketing
International Advertising Strategies in China
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Figure 5 Advertising Strategy by Percent of Sales in Foreign Markets
International Advertising Strategies in China
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Figure 6 Advertising Strategy by Total Sales