Hong Kong No Longer Only Portal to China for Global Marketers

Territory Thrives Post-Handover, but Mainland Cities Shanghai and Beijing Lure Likes of Coke, VW

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HONG KONG (AdAge.com) -- Ten years after the handover of Hong Kong to Chinese rule from British, Hong Kong is thriving but is no longer most marketers' gateway to mainland China as cities such as Shanghai and Beijing have become both bigger players and more livable for key executives.
Handing it over: Hong Kong has been under Chinese rule since July of 1997.
Handing it over: Hong Kong has been under Chinese rule since July of 1997. Credit: Chen Hui

Shanghai, long the country's most cosmopolitan city, is already the Chinese headquarters for consumer-products marketers such as Unilever, Coca-Cola Co., PepsiCo, Nike, Adidas, Visa, McDonald's Corp. and Starbucks.

Beijing, the formerly drab Chinese capital, is fast gaining a reputation among expatriates as an artistic center through areas such as the 798 district of former factories converted into residential lofts and cafés. And Beijing is a popular headquarters for marketers in industries that rely on relationships with the Chinese government, such as automotive and telecommunications, including Volkswagen, Motorola Corp. and Nokia.

For Hong Kong, it hasn't been an easy decade.

Hard knocks
"During the [former and widely disliked Chief Executive] Tung Chee Hwa days, Hong Kong got constant knocks -- SARS, bird flu, the financial crisis, the stock- and property-market collapses, 9/11, the dot-com bust ... these all hit Hong Kong very hard," said Ian Thubron, managing director of TBWA Worldwide's Hong Kong office. He said Hong Kong is performing extremely well at the moment.

Like a poor relation who is invited to holiday meals but seated at the kids' table, Hong Kong has mostly been left alone. And the territory -- called a Special Administrative Region -- has avoided many pre-handover fears and surpassed expectations.

Chinese rule hasn't quelled Hong Kong's lively, good-time-capitalist attitude; instead, the territory's local economy is thriving, and shops are full of mainland tourists who arrive by the busload and clean out pricey luxury-goods shops such as Louis Vuitton in minutes. Employment is high, tax rates low, and cash registers are stuffed with Chinese renminbi notes. But it's unclear whether Hong Kong is an international city located on the edge of the world's fastest-growing economy or a Chinese city whose fortunes depend on rich mainland tourists and financial markets.
Ian Thubron, managing director of TBWA Worldwide's Hong Kong office
Ian Thubron, managing director of TBWA Worldwide's Hong Kong office

"When it comes to ad budgets and media spending, a good economy, strong stock market and high consumer spending would ordinarily lead to high ad spending. But that's not happening," said Guy Abrahams, regional-communications-planning director for ZenithOptimedia in Hong Kong. "The profit being made in this boom in very recent times is being exported out of the country back to China so the advertising market is quite flat."

Modernization
Beijing and Shanghai are growing more sophisticated and easy to maneuver; their residents are learning foreign languages; and infrastructure such as public transportation and telecommunications is improving. After entering the World Trade Organization, China is beginning to take seriously issues such as corruption and intellectual-property rights, and it's opening the economy to financial services and other industries such as advertising.

"In the last 10 years, there has been a massive move of advertising business and people to China," Mr. Thubron said. "The [size of Hong Kong's Accredited Advertising Agents] has declined from 5,000 employees to 2,500. Why? Because 10 years ago, we all had departments called 'China,' and now we all have Beijing, Shanghai and Guangzhou offices."

Newer entrants, such as Bartle Bogle Hegarty, Wieden & Kennedy and digital shop AKQA, have bypassed Hong Kong and set up their only China offices in Shanghai.

Hong Kong still has advantages over its mainland rivals. As bad as its air and water pollution are, conditions in mainland Chinese cities are far worse. And the territory has mostly wiped out corruption, protects intellectual-property rights, and boasts one of the world's best airports.
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