The 10 Biggest News Stories

Hot Topics This Year in China Include Google's Problems, the Shanghai Expo, CCTV's Blockbuster Auction Results, Geely's Volvo Deal, a Fast-Growing Economy and the Rise of Online Video Sites

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SHANGHAI ( -- What do marketers and agency execs in China talk about at cocktail parties on The Bund in Shanghai or during power lunches at Capital M in Beijing? Here's a look at the top 10 stories of 2010.

1. World Expo 2010 draws 73 million
China's government transformed Shanghai for the World Expo 2010 and set a satisfying number of records by bureaucratic standards.

Hao Bao was the official mascot of the 2010 World Expo in Shanghai
Hao Bao was the official mascot of the 2010 World Expo in Shanghai
The most expensive world's fair to date was also the largest, taking up 5.28 sq km on both banks of the Huangpu River.

The fair opened on May 1. By the end of its six-month run, over 73 million people toured the complex, including over 4 million overseas visitors, and 250 countries and international organizations took part, including marketers like Coca-Cola Co., Cisco and SAIC-GM. Their pavilions were designed to attract China's future tourists, business partners, and investors.

2. Google suffers debacle
The spat between Google and China's government ultimately led to Google's partial departure from the mainland, the world's largest internet market. China's dominant search player Baidu rejoiced when Google moved its search operations to Hong Kong to circumvent China's censorship policy. So did execs at other local tech companies like Alibaba and Tencent, which are eagerly moving into the vacuum left by by Google. But the U.S. company's fans in China--tens of millions of Chinese web surfers--lamented the loss of their only major alternative to Baidu and Google's share of China's search market and online ad sales have plummeted.

3. China becomes the world's second-largest economy
In mid-August, China surpassed Japan as the world's second-largest economy after the U.S. The milestone was not unexpected but is a powerful reminder that China's rapid economic development is very real, even though the country is still adapting to its new status as an economic and political superpower.

China's economy has been growing at roughly 10% or more a year, reaching $1.33 trillion in the second quarter of 2010, surpassing Japan at $1.28 trillion for the first time. Even so, China's GDP per capita in 2009 was only $3,566, significantly lower than Japan at $39,573. China only ranks No. 99 worldwide in income per capita GDP, according to the International Monetary Fund.

4. Advertisers pledge nearly $1.9 billion at CCTV auction
In another sign of strong economic growth, advertisers made record bids last month at China Central Television's annual auction in Beijing, China's version of the TV upfront market held in the U.S. The auction is widely viewed as an indicator of economic prospects for China's advertising industry over the next year, as well as for the country's economy as a whole. About 250 companies, including a handful of multinational marketers, committed $1.86 billion for 2011 prime-time ads on CCTV, up 15.5% from last year's auction.

5. Geely buys Volvo
In another important milestone for China, Geely Holding Group acquired Ford Motor Co.'s Volvo unit last summer for $1.5 billion. Chinese companies have scooped up ailing Western businesses before, but those deals are usually done by massive state-owned enterprises looking for access to natural resources, not consumer brands. Geely is a small, young, privately-owned--and very ambitious--Chinese company that wants to become a major global player. The Volvo deal is China's largest foreign auto acquisition to date.

Integrating the two companies has proved difficult, with disagreements with Volvo management about its product plans. Geely wants to develop large cars for China, but Volvo's managers prefer small cars for their fuel efficiency and environmental friendliness. The Chinese owners also prefer to position Volvo as a luxury brand like BMW and Mercedes-Benz, while Volvo's managers insist their target customers are different from those of the two German luxury brands.

6. Media buying is investigated
A paper trail starting with a money-laundering sting in September at a Hilton hotel in Chongqing inadvertently led investigators to two senior Publicis Groupe media buyers, Vivaki Exchange's China CEO Warren Hui and China General Manager Ye Pengtao. While the two have not been charged, their questioning cast an unwelcome spotlight on industry practices in China, where media is often bought through sub-contractors in a complicated system that makes it possible to hide rebates and discounts.

7. The rise of online video
TV sets are giving way to computers and 3G mobile phones. Programming on Chinese TV stations can't keep pace with the sophistication of viewers raised on pirated copies of American series like Prison Break and Korean and Japanese love stories that can be easily viewed online.

About 319 million Chinese watched online videos in China in the third quarter of 2010, with viewers visiting multiple sites, according to Beijing-based research firm Analysys International. Marketers are following them to platforms like and as well as the online video sites of companies like Sohu, Sina, Baidu and Tencent. The value of China's online video ad market rose 148% during the third quarter over last year to $93.5 million, according to Analysys.

8. L'Oreal holds China's biggest advertising pitch
L'Oreal Group, one of China's largest advertisers, ended China's largest pitch when it consolidated its media planning and buying business--excluding digital media--with Mindshare. The French skin care and cosmetics giant spends close to $1 billion in China, not far behind the country's largest advertiser Procter & Gamble, which divides its media business between two agencies, Starcom Mediavest and Mediacom.

The decision was a blow to Optimedia, the main incumbent, but a relief for Mindshare, which lost e Unilever late last year to PHD. Mindshare already handled about 25% of L'Oreal's media business in China--some TV buying as well as the strategic planning business for L'Oreal's Maybelline brand. Optimedia handled TV buying as well as planning for other L'Oreal brands like L'Oreal Paris, Biotherm, Shu Uemura, Yue Sai, Garnier and Vichy.

9. Baidu and Alibaba go head to head
In nearly every sector of China's internet industry--search marketing, e-commerce, instant messaging and social networks--foreign companies have failed to knock a Chinese player out of the No. 1 spot, if they are allowed by local censors to compete there at all. Now two local giants, Baidu and Alibaba Group, are about to compete head to head.

Baidu has an 80% share of online search traffic in China and generated 70% of Chinese search-market revenue in the second quarter of this year. Now it's entering China's $66 billion e-commerce market through online shopping mall Lekutian that Baidu launched in October with Rakuten, Japan's largest e-commerce company.

E-commerce giant Alibaba, partly owned by Yahoo, is also encroaching on Baidu's territory with a search engine called Etao, introduced on Alibaba's Taobao site last month. Etao primarily offers search options for online shoppers but is powered by Microsoft's Bing search engine. Given the popularity of Taobao in China, Etao could be a strong rival to Baidu.

10. Alibaba relaunches Taobao Mall
Alibaba was founded as a platform to connect Chinese manufacturers with foreign wholesale buyers, but made headlines this year and grabbed marketers' attention with a redesigned business-to-consumer site. Alibaba relaunched two-year-oldTaobao Mall last month on an independent web domain

Alibaba has added online stores for companies like P&G, L'Oreal, Uniqlo, Lenovo, Dell, Samsung and Adidas. The mall currently sells merchandise under more than 30,000 brand names, and adds more every day. Nearly 34 million Chinese shopped online for the first time during the first six months of 2010, bringing the total number of online shoppers to 142 million, according to the China Internet Network Information Center. Alibaba forecasts online retail sales will reach $65.9 billion this year.

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