U.S. MARKETING PLANS ARE CHURNING IN CHINA

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When Commerce Secretary Ronald Brown and his coterie of 24 U.S. business executives hit China last week, they had Chee-tos to munch on. But not the homeland-puffed variety.

Instead, Guangzhou Frito-Lay provided samples of what it said is the first international snack food brand produced in China specifically for local tastes.

Even before the Clinton administration's intensified resolve to promote business deals with China, scores of U.S. companies were already there, marketing to this population of 1 billion-plus.

"Everyone's running to try to do business in China," said Carl Spielvogel, chairman of New York-based Bates Worldwide, which has assignments from Heineken, B.A.T Industries and other clients. "It's almost as if the Clinton administration has made a marketing decision that the mature markets are in Europe and the growth markets are in Asia."

The Sept. 1 introduction of Chee-tos in China had been in the works for a long time by the joint venture of PepsiCo Foods International and Xin Jiao Agriculture Co. It was serendipity that the rollout happened to coincide with Secretary Brown's six-day trade mission.

Chee-tos made its debut in Guangzhou, capital of thriving Guangdong province, whose 70 million consumers represent a market one-third the size of the U.S.

Numbers like those make China impossible to overlook. Zenith Me dia predicts China will become the fifth-largest country in terms of ad spending by 1996, hitting $10.5 billion, up from No. 15 last year.

Major marketers "can't ignore that many people in that part of the world in terms of what future opportunities might be," said Jerry Roberts, network development director at BBDO Worldwide, New York.

The idea that the Clinton administration is separating the issues of human rights and trade made U.S. marketers more comfortable in being open about their plans.

"Of course, it helps if the business environment is positive," said Barry Jones, DMB&B China managing director, based in Hong Kong.

"Once you start a wave of this size rolling, it's very difficult to stop it," said Jim Oates, group president, Asia-Pacific, at Leo Burnett Co., Chicago. "The economics are driving the issue more than politics." Burnett handles a long list of multinationals in China, including Philip Morris Cos., Kellogg Co., United Distillers and United Biscuits.

Mr. Oates added: "When you have a population that size, with that much consumer product development, if you drop the ball in front of four or five players, you'll see everyone going after it."

Guangzhou Frito-Lay's aggressive marketing effort for Chee-tos also includes TV spots by Ogilvy & Mather, Hong Kong, and consumer promotions centering on the Chester Cheetah character.

For Procter & Gamble Co., which sells many of its well-known brands of bar soaps, shampoos, detergents, diapers and feminine pads through joint ventures, China is its fastest-growing market in the Asia/Pacific. P&G claims market leadership in haircare and will be the country's largest detergent manufacturer with the completion of several planned joint ventures.

Fast-food outlets also abound. McDonald's Corp. has 20 restaurants; Pizza Hut, seven; and KFC Corp., 28, with plans to open 200 more in 30 cities.

KFC parent PepsiCo, in fact, plans to invest nearly $1 billion in China over the next eight years.

"There isn't a market with a higher priority in our book ... no one surpasses the potential of China," a spokesman said. "It's the biggest consumer market in the world, and one of the most predisposed to American products."

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