Although his interest in Asia began at age 18, when he served as an infantry soldier in Vietnam, his China career began 13 years later. In 1985, while a Capitol Hill reporter for Knight-Ridder Newspapers in Washington D.C., a backpacking trip through China convinced him that country would be the most interesting place in the world during his lifetime.
After a stint in Taipei, the American journalist moved to Beijing in 1990, as The Wall Street Journal China bureau chief. From 1994 to 2000, he was chief executive of Dow Jones & Co. in China, building the company's portfolio of media businesses in China and Hong Kong. Now a business investor, adviser and entrepreneur, he recently spoke with AdAgeChina about the evolution of China's media and marketing industry.
AdAgeChina: In the past 15 years, China has evolved from a "human rights pariah,” as you describe it in your book, to a massive opportunity for global marketers. What’s the smartest way for multinationals to view the risks and opportunities in China?
James McGregor: When you’re doing business in China, you’re caught between business opportunities and China's system, and the rest of the world. It often looks very rough. China doesn’t have a court system that ensures fairness, the political system is very opaque, there are all manner of human rights violations that make the world unhappy. My advice is don’t violate your own principles but do business there the best you can. The way you do business has a huge impact in making China a better place, so be ethical, honest and fair.
AdAgeChina: What’s the biggest mistake that multinational marketers make in China?
Mr. McGregor: Don’t assume it’s like the rest of the world and you can sell shampoo or automobiles or insurance or other consumer goods in the same way you would in the rest of the world. Of course there are the same aspects of sales and marketing and the aspirational aspects [among consumers] of becoming something better and having a comfortable life, but the cultural cues have been well ingrained there for thousands of years. So be mindful of the government and China's history and the fact that it was under foreign domination for a couple hundred years. That fact is definitely implanted in the minds of Chinese.
AdAgeChina: What are some of those cultural cues marketers should be aware of?
Mr. McGregor: You are always a guest in this country, always an outsider. Foreigners are called laowai, which means "old outsider." They are part of the tribe and the "Middle Kingdom” but you are not, you’re always going to be a guest, so keep that in mind. It’s true even if you feel like you’re really a part of things. Even if you are married into a Chinese family, you’re not part of their cultural core or really part of the family.
AdAgeChina: Couldn’t the same be said for other places in Asia such as India?
Mr. McGregor: Well, India is also a big country, but it’s much more diverse. They’ve got every flavor in the world there. Chinese are a very tight group and they’ve had a couple thousand years to protect that practice; it’s much more tightly knit here.
AdAgeChina: Several Chinese companies like Haier and Lenovo are already selling their products in foreign markets, but they aren’t truly global brands yet. What’s your guess about which Chinese company will be the first to succeed at building a global brand?
Mr. McGregor: The first Chinese company to succeed in building a global brand will be the one that gets the 2008 Olympics right. The foreign companies look at the Olympics as a way to establish their brand in the Chinese market, but Chinese companies look at it as a way to get on the global stage. Several local companies are looking at the Games, but if one of them gets the Olympics right, it will become a household name.
AdAgeChina: Any guesses about which Chinese company will achieve that?
Mr. McGregor: [Laughing] No, if I could see into the future, I’d be working in the stock market.
AdAgeChina: What should multinational marketers do to tap into the Olympics effectively?
Mr. McGregor: When the eyeballs of the world are on China and Chinese eyeballs are on China too, [multinationals] will need to find ways to break through the blur. That's going to be difficult, China is an advertising festival to begin with. Look at Focus [Media, an outdoor media company that has installed flat screen TV screens for advertising in public spaces throughout China]. In any other country, people would destroy those noisy screens, but it doesn't happen in China.
If you stand on the curb in Shanghai, someone will stick an ad on your forehead. It's a major challenge to cut through the clutter, but you’ve got to. At the same time, people do funny things here. In the 1990s, when stores were first opening, retailers hired peasants in groups of ten to ride around on bicycles wearing the store name on their back. Marketers will need to find clever new ways, perhaps employing the manpower of China, to get their message heard and seen. But I think the Chinese will come up with some things that foreigners have never heard of.
AdAgeChina: You’ve said Rupert Murdoch and his Star TV network are the best and worst example of a foreign operator in China. Why?
Mr. McGregor: Murdoch and Star have been very aggressive in this market, but early on, they were an example of a dumb company. He was looking for the one guy who could make a decision to help him. That worked in the U.S. and the U.K., but there’s no one guy in China, there’s a million guys, you’ve got make everybody happy. He wasted a lot of time and money, then figured out you need to do what’s right for China. He helped China modernize its propaganda apparatus, teamed up with Phoenix TV. But now, his eyes are elsewhere, I think he ran out of patience about China.
But where he really messed up, he took his eyes off the internet here. He had ChinaByte, the leading internet news site in China. He could have turned that into a very profitable company but he took his attention off it to focus on TV. That was almost a global move for him, dropping the internet. Now he's coming back to it, very late, by buying things like MySpace.
AdAgeChina: There’s been a lot of talk about internet censorship in China, which is affecting companies like MSN, Google and Yahoo, even though the Chinese government surely knows it’s hurting their global image. Will freedom of speech ever come to China?
Mr. McGregor: Within limits. I thought Google did the right thing though. You can’t not be here, but you have to censor your searches and they tell [Chinese] people that, which drives the government crazy. They don’t want people to know that [is the policy], but Yahoo is caving in, in every instance, in China. They should be tougher. China is a lot more open than it used to be, but the Party believes it has to control information, and that policy seems to be working for them.
AdAgeChina: What’s the right entry strategy for foreign media operators eager to enter the Chinese market?
Mr. McGregor: Foreign media companies have to come in with both eyes open and not leave their brains at the airport. They have to understand what the government wants. It wants control, it wants Chinese people to be entertained in wholesome way, and it doesn’t want news. You gotta work within those parameters. As far as foreign news companies are concerned, it's a pretty tight patch. But there are openings for foreign media on the internet which will converge into broadcast media eventually.
For now, though, all stations are owned by the government, and it controls the terms. So do the best that you can in getting content on those channels and making money off it. But they own the highways, so if you want to put your car on that highway, they’ll tell you how you can do it but be patient. If you think you’ll get rich quick, don’t bother coming here, but if someone like M TV plugs away for 20 years, I think they’ll do fine.
Other appointment news in Greater China
[hong kong] Matthew Semple has relocated to Hong Kong as business development director, ZenithOptimedia in Hong Kong from London, where he was client planning director. He succeeds Christina Park, who has left the media agency to oversee marketing of the global private members' club Quintessentially in Hong Kong and its upcoming launch in Shanghai.
[taipei] Jenny Chang promoted to managing director, Synovate, Taipei from director of the same office. She succeeds Kelvin Gin, now director of Synovate's Shanghai operation.