Rise of Chinese independents

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[Hong Kong] The ad industry's holding companies face growing competition from a rising number of independents in China like Nitro Group, DMG, Eight Partnership and O.N.A.

Although they have different areas of strength, such as branded content, sports marketing, technology and strategic branding, their owners share a belief that Chinese marketers are better served by executives "prepared to roll up their shirtsleeves and get heavily involved in creative executions," said Chris Clarke, the Australian behind Nitro, perhaps the most well-known of China's independent agencies.

"The big holding companies are just that, big. They've got to feed the beast in their business model. Independents are more nimble, fresher, we offer speed and flexibility," added Larry Rinaldi. A veteran of agencies like Ogilvy & Mather, and Motorola's ex-regional marketing director, Asia/Pacific, Mr. Rinaldi is now partner and managing director of a small agency called O.N.A. (an acronym for "office for new advertising") that works with brands like Harley-Davidson.

Speed is important because China's ad market is evolving rapidly, particularly in terms of new media, with the largest Internet, mobile phone and online game markets in the world.

"China isn't a big-fish-eat-small-fish market. The quick fish eats the slow fish," said Hong Kong native Viveca Chan, who recently resigned as Grey Global Group's chairman-CEO, Greater China, and is rumored to be starting her own agency in China.

Ms. Chan wouldn't discuss her future plans, but pointed out China's market is controlled by holding companies "getting bigger and bigger and very small agencies [believed to number 10,000 nationwide]. There is an opportunity for something in between, with experienced staff and resources, but less bureaucracy, closer to clients and the markets."

Marketers in China "need to move quickly, even though the industry is not as set up over here as it is in the U.S.," agreed American Dan Mintz, founder and chief creative officer of DMG. His agency started out a decade ago as a film production company working for other agencies and has grown into one of China's largest local agencies, with 375 staff in five Chinese cities handling brands like Volkswagen, China Mobile and Air China.

Independent agencies with a handful of clients and staff also suffer less from one of the largest headaches for multinational agencies-finding, retaining and training staff.

Marketers working with big agencies "complain constantly that they have 27-year-olds working on their brands with only two years of experience," said Mr. Rinaldi. "I know it's true, because when I was a client at Motorola, I never saw anyone senior at my agencies."

China is growing by "leaps and bounds," he predicted. "An entrepreneurial spirit is alive and well here, and should keep going for the next 10 or 15 years. It's like the 1960s in the U.S. By then, I'll either be broke-or extremely rich."

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