SHANGHAI (AdAgeChina.com) -- In the face of strong local and foreign competition, China's Aokang Group conglomerate has hired a multinational ad agency for the first time.
Aokang has worked with a Guangzhou-based agency, Blue Flame, for the past five years. By appointing Leo Burnett's Shanghai office to help strengthen its branding in China, Aokang has joined a small but growing number of local marketers working with foreign agencies.
Companies that have already made the switch include PC-maker Lenovo Group, China Mobile, the white goods and electronics giant Haier Group, and two sportswear marketers, Li Ning Co. and Anta Group.
Chinese companies still tend to work with local agencies, which are less expensive than their foreign counterparts. While local agencies do possess strong local market knowledge, their reach tends to be regional and focused more on tactical executions rather than branding expertise.
By hiring a multinational agency, Aokang was looking for "strategic insights, in-depth market knowledge and brand-building expertise," said Aokang's chairman and president, Wang Zhentao, "while we continue our rapid expansion."
Aokong operates in several fields such as commercial real estate, but is primarily known as one of China's largest private shoe manufacturers. Founded in 1988, it is based in Wenzhou in Zhejiang province west of Shanghai. Wenzhou is one of the leading centers for shoe production in China.
The company produces shoes under several brands, including its flagship brand Aokang, Kanglong casual shoes, Meirie's fashion shoes and Redess shoes. It has design centers in two Chinese cities, Wenzhou and Dongguan, as well as Milan, Italy.
The transition is a "natural process" for many Chinese companies, said Eric Lee, operations director at Leo Burnett, Shanghai. "When we talk to local companies of this size, they start working with local agencies. Once they have more needs about branding and developing the whole brand experience, they want to go beyond the local agency's expertise and start working with an international agency."
Leo Burnett's assignment currently only covers China, but could expand overseas, as Aokang recently embarked on an aggressive international strategy. The company has subsidiaries in Hong Kong, India and the U.S. and its products are sold in over 60 countries. Aokang was also the official leather goods supplier for the 2008 Olympic Games in Beijing.
"Aokang is certainly trying to build a global brand name, but the focus now is on China. There is still lots of work to do here," Mr. Li said. Although Aokang is one of the largest shoe marketers in China, its strength is in the men's shoe market. So the company "wants to develop further in the women's shoe market," where Aokang competes against foreign shoe brands as well as Belle, another large local shoe company, in China's fragmented and fiercely competitive retail environment.
Billings were not disclosed, but the Publicis Groupe agency was appointed to handle strategic planning and creative following a pitch against several undisclosed foreign and local agencies. Media planning and buying was not included, it is handled in-house or through local brokers.
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