Just months after announcing the launch of offices in secondary
cities in China, Carat expressed confidence that it would be running a
profitable operation in the country within a few years.
Mr Douglas Flynn, chief executive of Aegis Group, which is Carat's
parent company, said the media independent is the first media agency to
establish a network of offices outside the key cities of Guangzhou,
Shanghai and Beijing.
He acknowledged that this "looked like a recipe for disaster", however,
the Aegis chief said the expansion was necessary because China was such
a fragmented market that it was essential to have local presence in
secondary cities.
"In Asia-Pacific, media specialists are accepted most in China,
Australia and Japan. With China, the country is so complex - just look
at the number of television stations and publications at the provincial
and city level which you have to look at, not to mention the mushrooming
number of websites - and you know you cannot run the whole of the
country out of a few offices," Mr Flynn told MEDIA.
The move into secondary cities is also accompanied by the fact that
significant disposable incomes are no longer only found in the key
coastal cities.
Wealth is filtering into secondary cities, making more localised
targeting more important.
Carat Asia chief executive officer David Liu said that while the message
is always important, in China the medium is more important.
"More importance is placed on the delivery than the packaging. This is
underlined by the fact that clients are more worried about which
channels are being used to get the message across.
"This has been the situation in China for a long time. As a result, you
can say that China started out as being media-driven and not, as in most
other countries, creative-driven."
The China operation currently employs more than 90 people and more will
be hired on a needs basis, said Mr Liu.
Carat, meanwhile, has also started new ventures in Japan and New
Zealand.
In Japan, it has acquired a majority stake in Tokyo-based Strategic
Planners International (SPI), an independent media planning and
consultancy business, and renamed it Carat SPI KK.
Mr Flynn said the agency "would give us a good 'look see' into the
market place". However, he ruled out acquiring a media buying company or
setting up a full Carat office in Japan for the time being.
"Every idea has its time. This is the right time for what we've
done.
We might buy some time in the future but it's not about burning
money.
We're taking a step-by-step approach," he said.
In New Zealand, Carat has purchased the country's largest locally-owned
media independent, Strategic Media.
The new company will be known as Carat New Zealand.
"We have worked closely with Strategic Media for many years and share
the same culture of innovation - openly challenging conventional media
solutions," Mr Flynn said.
"This acquisition is a natural step and establishes Carat New Zealand as
a major force in this market."
The new developments in China, Japan and New Zealand reflect the fact
that Carat is stepping up its bid to be the leading player in the media
specialism field.
"Although we came to Asia a bit late, we now have a comprehensive
geographic network, but there are challenges ahead," Mr Flynn said.
These include introducing more of its network clients to the
Asia-Pacific region, making the China operation profitable, determining
the next step in Japan and how to enter the Korean and Indonesian
markets.
