FYI 1.27.2010

Baidu and Rakuten Will Build B2B2C Mall; BBDO Promotes Carol Potter; Amway Appoints GroupM; IKEA Retains MEC; Changyu Pioneer Wine Appoints Grey, Shanghai; Aegis Buys 17.7% of China's Charm Media Agency; Suntory Signs Distribution Deal With PepsiCo; Fleishman-Hillard Hires Alex He and Ma Shijun in Shanghai; Disney Launches 3-D Ping Pong Arcade Game

By Published on .

Baidu, the leading Chinese-language internet search provider, and Japan's largest e-commerce web site Rakuten will invest $50 million over three years in a joint venture to build a B2B2C online shopping mall for Chinese internet users. A B2B2C mall is an online marketplace that links and provides services to both business-to-business and business-to-consumer.

"As the Chinese internet space continues its rapid development, an increasing number of businesses and consumers are engaging in e-commerce," said Ren Xuyang, Baidu's vice president of marketing and business development.

For years, Baidu has eyed China's e-commerce market, which is currently controlled by Alibaba Corp., a Chinese company that operates highly successful B2B site,, and a popular B2C service, China's internet market grew 30.7% last year to $10.9 billion, according to iResearch, mainly from online shopping.

Baidu says its online mall, expected to go live in the second half of 2010, will provide customers with merchandise at competitive prices from both Chinese and foreign manufacturers as well as small and medium sized enterprises.

Rakuten, which operates Rakuten Ichiba, Japan's leading internet shopping mall with over 30,000 merchants, will own 51% of the joint venture, and Baidu 49%.

BBDO Worldwide has expanded China CEO Carol Potter's responsibilities to include Hong Kong and Taiwan as well as mainland China. Her new title is CEO, Greater China. She will remain based in Shanghai and still reports to Chris Thomas, BBDO's chairman-CEO, Asia in Singapore.

"This promotion makes sense because many of our clients already are structured with a Greater China division," Mr. Thomas said.

Ms. Potter joined BBDO in China three years ago and presides over BBDO Worldwide and Proximity. Since her arrival, BBDO has opened offices in Beijing to work with advertisers like Mercedes and Hewlett-Packard and in Guangzhou, to handle brands owned by William Wrigley Jr. Co. and Procter & Gamble Co. Before she joined BBDO, she was a global business director at JWT, London, where she worked with Unilever.

Amway has moved the TV buying business for its corporate branding and product advertising for Artistry and Nutrilite in China to GroupM Trading in Guangzhou. Amway spent $200 million on TV advertising in China for its Artistry brand in 2009, according to Nielsen Media. Previously, TV advertising was handled by OMD, which continues to handle other media media for Amway in China.

Another GroupM company, Mediaedge:cia ( MEC) will retain media planning and buying duties for IKEA in China, following a six-month review that included OMD, Zenith Media, Starcom MediaVest Group and Maxus. The final shoot-out was between MEC and Starcom.

China's largest wine company, Changyu Pioneer Wine Co., has appointed Grey Group in Shanghai to handle creative for its products, including red wine, brandy, champagne, ice wine and Chinese healthcare wines.

The WPP agency will also handle above-the-line communications for ChangYu's corporate image, said Bernard Wong, general manager of Grey, Shanghai.

Previously, Leo Burnett Worldwide's Black Pencil unit and local agencies developed creative for Changyu. Media planning and buying is handled in-house. Grey was hired without a pitch following a strategic brand presentation.

The ChangYu Group, founded in Yantai in Shandong province in 1905, has been making wine in China for more than 100 years. But the market has taken off in recent years as incomes have risen and the palate of local consumers has grown more sophisticated. China has surpassed Japan as Asia's largest wine market, and is likely to become the third-largest in the world over the next three years.

Although China is one of the world's biggest importers of wine, its leading local wine makers like Changyu, Dynasty Fine Wines Group and China Great Wall Wine Co. dominate the domestic wine market through extensive sales networks. Many local companies are also trying to create their own luxury wine brands.

ChangYu cooperates with wineries in Italy, France and New Zealand. During the first half of last year, the company's net profit rose 14.15% from a year earlier to $66.6 million. Sales grew 8.14% to $288.5 million, according to Chinese press reports.

To beef up its Vizeum division in China, Aegis Group is buying 17.7% of Charm Communications, a leading TV buying agency in that market.

For the past six years, Charm was the largest broker for China Central Television (CCTV), the country's national, state-owned TV network. Charm also brokers advertising media inventory for Shanghai Dragon Satellite TV and Tianjin Satellite TV. Established in 1995, the agency works with some of China's top local advertisers, such as China Life, China Telecom, People's Insurance, China CITIC Bank, ICBC, Bosideng Men's fashion and Yunnam Baiyao Pharmaceutical.

Aegis and Charm will also establish a joint venture that will operate as Vizeum China. The initial shareholding will be split 40% Vizeum and 60% Charm, and Charm will transfer local clients into the new agency. He Dang, Charm's founder and CEO, will be chairman of Vizeum China.

"China is already the second largest advertising spending market in the world and continues to experience strong growth," said Aegis Media CEO Jerry Buhlmann in a statement.

Suntory Holdings wants to expand sales in China using PepsiCo's distribution network. The Japanese beverage giant has signed an agreement for PepsiCo to distribute two flavors of its Suntory Rich coffee drink, Caffe Latte and Strawberry au lait, in supermarkets and other retailers that sell Pepsi drinks.

Suntory started selling beverage in China in 1995, such as Oolong Tea and Rich, mainly in Shanghai and Beijing.

Fleishman-Hillard has appointed Alex He senior VP and general manager of its Shanghai office. Previously, he spent six years as a consultant at McKinsey & Company in Shanghai. He succeeds Elan Shou, who has resigned from the agency for personal reasons.

The Omnicom agency has also appointed Ma Shijun as VP and deputy general manager in Shanghai, to work on Fleishman-Hillard's business-to-consumer client portfolio and grow the agency's corporate communications and strategic integrated marketing offerings. Previously, he held the same position at MS&L Worldwide in Shanghai.

The Walt Disney Company's Disney Interactive Media Group and 3D Group's 3D Gaming division have released their first product in Greater China, "Disney 3-D Ping Pong."

"Disney 3-D Ping Pong" is the first Disney "pop-out" 3-D game station for which no glasses or other aids are needed to experience the 3-D effect. Disney and Hangzhou-based 3D Group started their cooperation in China, leveraging the technology developed by 3D Group to develop "Disney 3-D Ping Pong," which 3D Group is licensed to manufacture and sell in China, Hong Kong, Macau, and Taiwan.

The arcade game "combines the most popular Disney cartoon characters and the most adorable sport in China, ping pong. It's an integration of entertainment and sport," said Song Ming, game development manager at Disney Interactive Media Group in China.

Return to the Ad Age China home page.

Most Popular
In this article: