China's Northeast perseveres through tough times

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Located at the center of the industrial northeast on the basin of the Liaohe and Hunhe rivers, Shenyang, the capital of Liaoning province, is China's fifth-largest city.

Once known as Mukden, when Shenyang was the capital of Manchuria (1625-1644), today it is the center of the region's commerce, science and culture. The city's main structures, including the Imperial Palace, were completed by Qing Dynasty founder Huang Taiji (1592-1643). The palace now functions as a museum, with exhibitions of ivory and jade artifacts, musical instruments, furniture and Ming and Qing paintings.

Shenyang is stocked with natural resources, including coal, oil, gas and iron ore, and its advanced railway and highway systems have turned the city into an industrial hub, surrounded by Anshan (a steel-rich city), Fushan (coal), Benxi (iron) and Fuxin (electricity).

China's industrial sector in general has faced a rough transition from state-sponsored planning to economic reform and Shenyang is no exception. The darling of the Communist party in the 1950s, it nearly disappeared from site by the 1980s, when it was seen as hopelessly old-fashioned and out-of-date.

But the city found new life in the car industry. By the end of 1990s, Shenyang was one of the main light automobile bases in China, with over 120 auto-related firms churning out light trucks, large and medium-sized passenger automobiles and engines for local automakers as well as foreign ones such as General Motors, Mitsubishi, BMW and Toyota.

Its population is about half the size of Shanghai and its residents are still less wealthy and less exposed to foreign products than China's richer cities. The region is a stronghold for working class values, conservative spending and value brands such as Snow beer, usually purchased in low-priced retail chains. Items like DVD players and computers remain uncommon, according to Rita Chan, director, client service at Nielsen Media Research in Shanghai.

Shenyang residents are “forthright, confident and enjoy life,” but they generally steer clear of risk, ambition, fashion and admit to be “easily swayed by others,” said Lucy Zhang, director of insights at WPP Group's MindShare in Shanghai.

However, Shenyang has the sixth-largest number of TV households among Chinese cities, following Wuhan, and the rate of ad revenue growth exceeded the national average in 2005. Its residents may be less affluent, but disposable income is gradually on the rise, which has helped raise spending for food, beverages and clothing. It also has an unusually high proportion (62%) of substantial shoppers in the 35-55 age bracket compared to other Chinese cities, where young adults tend to be the biggest spenders.

Shenyang is similar in some ways to other major northeastern cities like Harbin and Changchun.

“These places share more or less the same dialect and a personality that is more aggressive and straightforward. It's easier to establish an intimacy with Shenyang people but it's also easier to run into trouble with them if you violate some social norms, such as looking into a stranger's eyes directly for a long time,” said Guan Haidong, Shanghai-based strategic planning director at WPP's JWT.

Like most Chinese cities, income distribution is very uneven in Shenyang. An elite class has emerged, populated with entrepreneurs and corrupt government officials, who are the main target of designer brands, luxury cars and even real estate firms promoting properties in cities such as Shanghai and Beijing.

“Many of them sent their kids overseas for education, who end up as the foppish rich Chinese kids in Australia, U.K. or Canada,” said Mr. Guan.

On the other end of the spectrum, industry restructuring and a saturated job market has created a sizable poor population and a relatively high crime rate, compared to the developed coastal cities in China. In between, said Mr. Guan, there is an emerging middle class helping it “cope with the competition from other cities and find a new position for Shenyang in China's new market economy.”

Fast Facts: Shenyang

Population: 7.204 million
GDP (2005): $26.99 billion (224 billion RMB)
TV households (2005): 1,137,000
Adspend (2005): $1.02 billion (8.44 billion RMB)
Adspend (2004): $0.81 billion (6.69 billion RMB)
Year-on-year increase: 26.1% (based on NMR’s media coverage)
Ad spend as a percentage of GDP (2004): 3.8%
Average minutes viewed per day per viewer of all channels (aged 4+): 178.0
Basic cable subscription cost (per month): $1.45

Average cost of 30”spot during prime time on Shenyang TV 1 - News, the city’s most-watched local channel (based on rate card):
18:55-19:30 - $2,048
19:30-20:30 - $1,807
20:30-21:00 - $1,928
21:00-21:30 - $1,747

Top 10 brands by ad spend on TV (2005)
1. Colgate (Colgate Palmolive)
2. Oil of Olay (Procter & Gamble)
3. Crest (Procter & Gamble)
4. Gai Zhong Gai (Chinese OTC)
5. Rejoice (Procter & Gamble)
6. Pantene (Procter & Gamble)
7. Safeguard (Procter & Gamble)
8. Shenyang TianQiao Hospital
9. Tide (Procter & Gamble)
10. HuTong Pharm (baby pharmaceutical)
(Local channels only, based on rate card.)

Top 10 advertising categories on TV (2005)
1. Professional Services
2. Tonic & Vitamin
3. Shampoo & Conditioner
4. Toothpaste & Oral Hygiene
5. Skin Care
6. Chinese OTC
7. Cough & Cold Preparation
8. Education & Schools
9. Stomach Medicine
10. Laundry Products
(Local channels only, based on rate card.)

Top 5 Local Channels by Ad Revenue
1. Liaoning TV Satellite
2. Liaoning TV Drama & Movies
3. Liaoning TV Variety
4. Shenyang TV 1 - News
5. Shenyang TV 3 - Movie

Sources: Nielsen Media Research & AGB Nielsen Media Research
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