Star TV and PCCW to develop Internet TV

And other news in Greater China

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[hong kong] Two Hong Kong-based media companies, PCCW Ltd. and News Corp.'s Star TV, have revealed they are working together to explore Internet Protocol Television (IPTV) pay-TV opportunities in overseas markets. With IPTV, a digital television service is delivered to subscribing consumers using a broadband Internet connection. The alliance leverages Star's background in the pay-TV business and content creation and distribution with PCCW's experience in building and operating an IPTV business.

Star is Asia's largest media and entertainment company, distributing 59 channels in nine languages to over 300 million viewers across Asia. PCCW's Now Broadband TV service in Hong Kong, meanwhile, has signed up more than 550,000 users since its August 2003 launch, representing over 25% of Hong Kong's TV households. Now carries more than 110 TV and audio channels, including 17 channels provided by Star and its joint ventures.

"Telecom and broadband companies from around the world visit us regularly, to explore how PCCW can share its experience with them," said PCCW's executive director, Alex Arena, in Hong Kong.

GM on the road to offering auto financing in China
[shanghai] General Motors Corp. (GM) has been granted approval by the Chinese Insurance Regulatory Commission to establish a wholly-owned representative office for its financial services subsidiary, GMAC's Motors Insurance Corp., in Shanghai.

Managed by Chief Representative Henry Dai in Shanghai, previously GM's insurance manager in China, it will allow the U.S. auto giant to officially conduct market research, undertake feasibility studies and build relationships. Following a two-year waiting period, it will be eligible to apply for an insurance company license.

GM has been offering retail and wholesale auto financing in China since 2004, through its joint venture with Shanghai Automotive Industry Corp., GMAC-SAIC Automotive Finance Co., China's first auto financing company

The new office will give GM greater opportunity "to develop our presence and capabilities in China, [where the] financial services sector is developing very quickly," said William Noll, president of GMAC Insurance in Southfield, Michigan.

Financing has become a hot issue in China. Car sales growth has slowed significantly since 2002, in part because the Chinese government clamped down on credit facilities for consumers to cool off the country's overheated car market. The industry remains highly restrictive and regulated. However, financing is the only way most Chinese consumers can afford to buy cars, given the relatively low level of income in the country.

Rolling Stone publishes second issue in China
[shanghai] Rolling Stone magazine has survived a close encounter with China's press and publishing authorities. The Chinese edition's first issue was a hit with readers, selling out just days after it appeared on local newsstands in early April, but the rebellious title broke too many rules, creating concern that the debut issue could also be the last.

However, Peter Brack, CEO of One Media Group, the Hong Kong-based media company publishing Rolling Stone in China in cooperation with Wenner Media in the U.S., confirmed that the magazine's second issue was published in May with 146 pages and "the third issue is out in early June. The English lettering [on the cover] has been removed, but other than that the content is unchanged."

The cover design raised the largest red flag among the authorities, as the English name "Rolling Stone" was far larger than the title's Chinese name, a sensitive gaffe in a Communist country still coming to terms with the influence of foreigners in its domestic affairs, particularly media.

The cover art on the second issue featured the magazine's namesake, The Rolling Stones band, who performed in China for the first time last month. Advertisers in the latest issue include Chivas, Franck Muller, Diesel, Absolut and Audi.

It's easy to run afoul of China's media authorities, according to publishing industry veterans like Jeremy Goldkorn, co-director of Standards Group, an independent ad agency in Beijing, because all foreign titles except those covering science and technology operate in a "gray area" in China.

He and other industry experts predicted last month that Rolling Stone would survive the ordeal through "a lot of groveling. [But] once the authorities start looking at them, they'll maintain a close watch. Rolling Stone will lose a lot of ground now as it's starting out, so this market will be tough for them."

Nitro wins InBev business in China
[shanghai] Belgium-based InBev, the world's largest brewer by volume, has appointed Nitro Group in Shanghai to handle creative for Baisha, one of its key local beer brands.

"Baisha beer has about a 70% share in its home province of Hunan but faces increasing competition from foreign invaders like Budweiser and national players like Olympic Sponsor Tsingtao and Snow," said Stephen Drummond, Nitro's group managing director and head of planning in Shanghai.

Since entering the Chinese market in 1997, InBev has become one of the largest brewers there and is the market leader in eight provinces: Fujian, Guangdong, Hebei, Hubei, Hunan, Jiangsu, Jiangxi and Zhejiang. InBev's most recent acquisition in China was Fujian Sedrin Brewery Co, the largest brewer in Fujian province with a 45% market share in 2004, for $735 million (RMB 5,886 million) last January. It owns three breweries in Fujian as well as Jiangxi province, where it had an 18% market share in 2004.

"Fujian Sedrin is one of the most profitable Chinese brewers," said InBev CEO Carlos Brito. "The Sedrin brand will be one of InBev's top five selling brands globally by volume with significant potential for growth and expansion."

In the past three years, global brewers have flocked to China, the world's largest beer market by volume, but also a highly fragmented one with about 400 brewers. Pricing is rock bottom, with a bottle of beer costing as little as 16 cents.

But the local beer market is growing by up to 8% annually, Mr. Drummond added, a pace that is expected to continue for the next five to 10 years, particularly due to strong growth in the number of restaurants. The market's total per capita consumption is expected to double in the next decade from 23 liters a year now, compared to 100 liters in Australia and 60 in South Africa.

GroupM buys Chinese interactive media agency
[beijing] WPP Group media division, GroupM, has acquired 49% of Beijing Hua Yang Lian Zhong Advertising Co., one of the largest Chinese agencies specialising in online and interactive media. Founded in 1994, the Beijing-based agency and its Shanghai branch employ 99 people and generated $2.6 million in revenue in 2005, working with companies such as China Mobile, Motorola, BMW and Ebay.

Breaking news added to AdAgeChina since the last issue was published on May 18, 2006....

Li Ning retains Leo Burnett after three-way pitch
[beijing] The Chinese sportswear brand Li Ning has retained Leo Burnett Worldwide in Beijing as its creative agency following a three-way pitch against Ogilvy & Mather and Bates Asia. Billings were not disclosed but Li Ning spends up to $25 million on advertising. Leo Burnett and its media arm, Starcom, have worked with Li Ning since 2002.

"They have the passion and commitment for Li Ning necessary to make the brand stronger, especially ahead of the Olympic Games in 2008. They also provided good results in the pitch for specific questions about how to make the brand more cool and give it more attitude," said Abel Wu, Li Ning's VP-marketing and international business in Beijing.

The company trails Nike and Adidas but Li Ning is intensifying efforts to give its brand a more global image. Earlier this year, for example, it inked a deal with the National Basketball Association's Damon Jones to promote a new shoe series, Fei Jia (Flying Armor), marking the first time a current NBA player has been sponsored by any Chinese sports brand. At the same time, it is trying to make its Asian origins seem more stylish to young consumers, with sophisticated ads, for example, that feature a stylized form of Chinese calligraphy.

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