Starbucks faces pressure over Forbidden City store

And other news in Greater China

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BEIJING--Starbucks Coffee Co. is facing rampant online criticism on Chinese blog sites and chat rooms, after a prominent China Central Television anchorman, Rui Chenggang, questioned on his own blog whether it was appropriate for a global retail brand to have an outlet at the palace museum in Beijing’s Forbidden City. The Seattle-based coffee chain has operated a store in the palace, one of China’s top tourist attractions, for six years. So far, Starbuks has no plans to close it.

Roger Kejiang Sun, a Starbucks spokesman in Beijing, said, “While we have been welcomed by many Chinese since the beginning, we understand the recent concerns regarding a presence within the museum area. Starbucks believes in entering each community while keeping our core principles at heart, respect, listening and responding to the members of every community.

“Recently, Starbucks was excited to announce that we have increased direct ownership within China, including the Forbidden City location. This new role allows Starbucks to be more connected to the communities by building on the strong human connections that Beijing Mei Da Coffee helped us establish in the market with our local partners (employees) and customers.”

Coca-Cola shifts the creative business for its Coke in China to Leo Burnett-run Red Lounge

SHANGHAI--As part of its Red Lounge project, Coca-Cola Co. has moved a significant portion of its creative business in China to Leo Burnett from McCann Erickson. The value of the business that has changed hands was not disclosed, but Coca-Cola spends more than $10 million on Coke brand advertising in China annually, according to ACNielsen.

Red Lounge is a marketing unit set up by the U.S. beverage giant in China that includes members of its own marketing team as well as several agency partners to oversee marketing for its Coke brand and fine tune its Olympic program. Coca-Cola is one of the global sponsors of the 2008 Olympic Games in Beijing.

Leo Burnett already handles creative for other Coca-Cola brands in China, mostly non-carbonated drinks like Minute Maid, Modern Tea Workshop, a green tea developed by Coke especially for China, an herbal tea line called HealthWorks and the Powerade sports drink. It continues to work on those brands but not through Red Lounge. Until now, it has not worked on brand Coke, however.

Both agencies declined to comment, but a statement issued by Coca-Cola’s headquarters for Greater China in Shanghai said Red Lounge was created to “bring together the best specialists in a single space to drive maximum integration and innovation of marketing programs for the China market. [Leo Burnett] will take the lead on client service and creative management in the Red Lounge, with 35 new Leo Burnett employees sourced from all over the world for various roles.”

Two of the new employees are Red Lounge Managing Director Wasim Basir and Chief Creative Officer Bere Mitchell, who previously led McCann Erickson’s Coca-Cola account team in China as account director and executive creative director, respectively. Both executives are now employees of Publicis Groupe’s Leo Burnett division, through its control of Red Lounge's operations.

“They have previously played key roles on the Coca-Cola account and remain in key management roles in the new offering,” said the statement. While McCann Erickson is no longer handling creative for Coke advertising, “McCann WorldGroup will also play a role in the Red Lounge which will be finalized shortly.”

Other agencies taking part in Coke’s Red Lounge experiment include Publicis-owned Starcom, which will take the lead role on media strategy and planning, Aegis Group’s interactive division in China, Wwwins, and Heartland, an independent outdoor media company.

The decision to remove McCann from Coke brand advertising in China also coincides with the departure of Ilan Sobel, Shanghai-based VP & general manager, strategic marketing and innovation for China, who is returning to South Africa for personal reasons. His replacement has not been named. (See also "Coke promotes Olympic sponsorship with new logo and bottle," January 17, 2007, AdAgeChina)

Chinese diary Mengniu teams up with NBA
BEIJING--One of China’s hottest companies, Inner Mongolia Mengniu Milk Industry Co., has teamed up with the National Basketball Association to connect its dairy products with young consumers in China, where basketball is a hugely popular sport. The NBA and Mengniu will launch a series of grass roots social programs, such as giving away a carton of milk each morning to students at 500 elementary schools.

The agreement allows Mengniu, which means Mongolian cow, to promote its products during NBA programming, which airs on 51 television stations in China. It will also participate in the NBA's road show “Jam Van,” which visited 17 Chinese cities last year, and run promotions on and at retail establishments across the country. Mengniu will also be the official dairy product of the NBA in China.

The dairy has a “very pro-active, positive, energetic style of marketing, they are definitely growing quickly,” said Mark Fischer, the NBA's Beijing-based VP-managing director, China.

Carrefour moves media business to MindShare from Zenith
SHANGHAI--Carrefour, the world's second-largest retailer, has moved its media business in China to WPP Group’s MindShare from Publicis Groupe’s Zenith Media without a pitch. The French hypermarket chain has appointed the media agency to conduct a market analysis of the retail industry in over 30 local markets around China.

One of China’s largest foreign retailers, Carrefour opened 21 hypermarkets in the mainland in 2006, bringing its total to 73 since it entered China in 1995, and it plans to open another 20 stores this year. To oversee its expansion in the mainland, it appointed Eric Legros as CEO, China. He succeeded Jean-Luc Chereau, effective Jan. 17.

Wal-Mart is close on the company's heels, however. Last October, the U.S. retailer acquired the Taiwanese retailer Trust-Mart for an estimated $1 billion. Trust-Mart has more than 70 hypermarket retail outlets in nearly 30 Chinese cities. Other foreign retailers are also scrambling to set up distribution in the mainland, including Ikea, Toys R Us, Home Depot, Kingfisher's B&Q chain, Best Buy Co. and Tesco, which operates 44 hypermarkets in China.

Eastgate launches China Trade Magazine
NEW YORK--Eastgate Media, publisher of Latin Trade Magazine, Latin CEO and South Florida CEO, hopes to capitalize on China’s growing economic ties around the world with the launch of China Trade Magazine.

The first issue, available early next month, will have 116 pages, of which 40 are ads for marketers such as American Airlines, Credit Suisse Group, Lenovo Group, Johnnie Walker, Dewar's and Mandarin Oriental Hotel Group.

“Opportunities within China are exceptional not just for the major players, but for small and medium-sized businesses as well,” said Miami-based Editor-in-Chief J.P. Faber. “And for all U.S. companies, China is no longer just an export market - its rapidly expanding middle class has a growing appetite for Western products.”

The monthly title has an initial controlled circulation of 88,000, of which 55,000 will be mailed directly to U.S. and European corporations doing business in China. The rest will be distributed to World Trade Centers, consulates, economic development agencies and similar organizations, and placed on newsstands in major trade cities and on major airlines flying routes between China and the U.S.

Warner Music and Sony BMG invest in mobile music platform provider
BEIJING--Warner Music Group and Sony BMG Music Entertainment have each made a strategic investment in Access China Media Solutions, a company formed last year by Access Co., a wireless software provider, and Melodeo, which specializes in synchronized digital media delivery, that develops music-based mobile platforms for wireless carriers and handset manufacturers. The multinational music giants hope that added capital and marketplace expertise will enhance the joint venture's efforts to develop mobile music and multimedia entertainment in China and eventually in the rest of Asia/Pacific.

Music companies have long sought a secure, economically viable way to distribute their content in China and throughout the world, but piracy of both physical CDs and online digital music has made these efforts difficult over the past decade. But mobile phone networks are inherently more secure, and have a built-in payment system that is ideal for the sale of high-value, copyrighted digital media.

The investment "demonstrates a strong show of faith in bringing together all the key elements to unlock the power of digital music marketing on mobile platforms," said Wayne Zhang, the joint venture's CEO in Beijing. The partnership represents a pivotal point in the industry "to unleash a new wave in the music business. Together we have the content, proven technologies, and network operators' support."
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