China shuts down drug ads as it copes with ad explosion

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There's a world out there that doesn't know the Super Bowl telecast took place last night, let alone give a fig about who won or, heaven forbid, which ad was the favorite among viewers polled by USA Today. Pretty much everywhere outside America, the real event of 2002 is this summer's soccer World Cup in Japan and Korea. In this respect, the U.S. appears very out of kilter with the rest of the globe. The challenge this presents to us all is to celebrate our differences rather than attempt corporate-driven homogeneity.

Nowhere is this difference more apparent than in China. My previous column in this space (AA, Jan. 21) ended with a warning that "in China, nothing is at it appears." This past week the Chinese government proved the point. It arbitrarily imposed a total 67-day ban on the advertising of pharmaceuticals.

The reason cited by the Beijing Municipal Administration for Industry & Commerce, the watchdog of the ad industry in the Chinese capital, is the recent, unusually high tally of complaints about false and misleading promotion in the health-related sector.

This would be fascinating enough under "normal" circumstances. However, in the last five years the list of China's leading national advertisers has ceased to be dominated by American multinationals, such as Procter & Gamble Co. and Coca-Cola Co. They've been outspent by local advertisers, and six of the top ten of these are Chinese pharmaceutical brands. The ban is the inevitable consequence of the largest, most concentrated explosion of brands, across all sectors, in the history of marketing. It's the dark side of the Chinese marketing gold rush.

Every multinational you can think of has for the past decade thrown itself into launching brands in China. This is not just famous-name American marketers, but also French, German, Italian and Japanese marketers-plus all manner of local Chinese companies. In that time, the list of top ten advertisers has been transformed. There is now not one foreign name on that list. The biggest spender of the "laowai" (foreigners) is currently Motorola-at No. 16!

One inevitable consequence of this brand explosion is a terrible price war that only local brands can win short-term, given lower labor costs and their wider distribution networks. Another consequence is an ever more competitive claim-and-counter-claim game only too familiar in the West. The difference is that in China the government simply shuts down the country's largest ad sector. Imagine the U.S. government halting all healthcare product advertising for two months while it investigated the claims. Outrageous!

Now consider the claims we see in the U.S. for weight-loss products, hair-restorers and cellulite removers. Suddenly, China's dracon-ian reaction makes the U.S. look complacent. The relative newness of the mass advertising phenomenon in Chinese society and culture requires a more profound debate there about its merits and consequences. Put that way, the notion of China asking advertisers to prove claims doesn't sound so outrageous after all.

Stefano Hatfield is editorial director of Ad Age Global and Creativity.

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