High-tech city shows strains of development

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HEFEI--The capital of Anhui province in central China, Hefei dates back 2,000 years. Famous for its prime location between the Yangtze and Huaihe rivers, the city was frequently fought over from the 4th to 11th centuries.

Close to the geographic and culture center of China’s past, Hefei “has produced more than its fair share of historical figures,” said Paul McNeill in Beijing, general manager, China of Motivator, a media alliance in Asia/Pacific formed by Euro RSCG and WPP Group’s MindShare, such as Lord Bao, a famously incorruptible government official.

One of four high-tech industrial zones in China, Hefei is also home to some of China’s most well-known universities, including Hefei University of Technology, and is a pilot city for innovation. More than 100 foreign enterprises have set up production centers or technology centers in its National New & High Technology Industrial Development Zone, including Intel Corp., Microsoft Corp. and Unilever.

The city’s gross domestic product, which has grown by double-digits for the past 20 years, reached $10.3 billion in 2005, a significant 44.7% increase over the previous year. Annual average wages equaled $2,060 in 2004, according to Nielsen Media Research, up 17.8% from the previous year, while per capita annual disposable income of urban resident in 2004 was $1,084, up 10.6% from 2003.

Development has come with a price, however. Hefei has one of the highest population densities in China. Migrant workers from all over the mainland are drawn to the city’s machinery, electronics, chemistry, steel, textile, and cigarette industries, in search of work. The province’s economic and population expansion is straining its rich land, water, forest and mineral resources, however, and has led to some of the strictest family planning practices in China.

From a consumer perspective, “Anhui as a whole has become very much a second-tier province, taking a back seat to the richer coastal provinces,” said Mr. McNeill. Product ownership among Hefei residents, for example, is not high. Only 22.5% of its population have a TV set in their home, while computer ownership is 28%, and mobile phone ownership, 60%, less than most Chinese cities of a comparable size.

Fast Facts: Hefei

Population: 4.557 million
GDP (2005): $10.3 billion
TV households (2005): 1.2 million
Ad spend (2005): $980 million
Ad spend (2004): $760 million
Year-on-year increase: 22.4 % (based on NMR’s media coverage)
Ad spend as percentage of GDP (2005): 9.5%
Average minutes viewed per day per viewer of all channels (aged 4+): 172.8
Basic cable subscription cost (per month): $1.81

Average cost of 30"spot during prime time on Anhui TV - Economic & Life, the city’s most-watched local channel (based on rate card):
18:30–19:30 - $1,554.2
19:30 – 20:30 - $2,084.3

Top 10 brands by ad spend on TV (2005)
1. Huang Jin Da Dang (Chinese tonic/vitamin)
2. Nao Bai Jin Pharmaceutical (Chinese tonic/vitamin)
3. San Chi Ne Pharmaceutical (Chinese OTC)
4. Hao Ji Xing (Chinese electronics)
5. Pond’s (Procter & Gamble)
6. Yi Li (Chinese dairy)
7. Ya Shi Li (Chinese baby food/powdered drink)
8. Lux (Unilever)
9. Hua Xin Pharmaceutical (Chinese OTC)
10. Jiang Zhong Pharmaceutical (Chinese OTC)
(Local channels only, based on rate card.)

Top 10 advertising categories on TV (2005)
1. Tonic & Vitamin
2. Professional Services
3. Shampoo & Conditioner
4. Education/School
5. Toothpaste & Oral Hygiene
6. Cough & Cold Preparation
7. Skin Care
8. Chinese OTC
9. Chinese Wine & Spirits
10. Communication Equipment & Service
(Local channels only, based on rate card.)

Top 5 Local Channels by Ad Revenue
1. Anhui Satellite TV
2. Anhui TV - Drama & Movies
3. Anhui TV - Economic & Life
4. Anhui TV - Art & Sports
5. Hefei TV - News

Sources: Nielsen Media Research & AGB Nielsen Media Research
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