International agencies dominate many aspects of China's marketing industry, but when it comes to digital, local players have the upper hand -- an edge that puts them squarely in the M&A crosshairs.
One reason local players have thrived is the country's unique internet ecosystem. Global platforms like Facebook, Twitter and YouTube are blocked by China's "Great Firewall," replaced by dozens of local players in a highly fragmented space, made more complicated by the language.
"It's not just a matter of adapted Facebook and Twitter (campaigns) for China, it's creating something new for China and that's something the local agencies have done really well," said Greg Paull, principal at Beijing-based agency consultancy R3.
Additionally, local agencies were quicker to build digital capabilities and benefitted by strong personal ties to media owners who provided them with better rates and deals.
Eager to catch up, holding companies have been gobbling up local digital agencies. R3 calculates about half of the agency mergers and acquisitions in the last two years were in China -- and about half those involved digital agencies.
International shops are trying to catch up by hiring locally versus importing foreign talent, but Tony Wang, founder of Beijing-based agency A4A, is pessimistic about that solution, suggesting that many talented Chinese digital leaders want to run their own businesses. "The way things work in China, the really capable people go out and start their own agencies," he said.
Here's four hot local digital agencies in China that are worth keeping an eye on. At the rate of acquisitions though, they may not stay independent for long.