Distribution tops priorities in China

<p>China's economic development has reached a stage where effective </p><p>and efficient distribution is taking precedence over advertising and </p><p>communications. </p><p><BR><BR> </p><p>According to MindShare regional business director Chris Walton, this is </p><p>because new markets are fast opening up in the interior of the country </p><p>far from the primary and secondary cities. </p><p><BR><BR> </p><p>It is a trend spurred on by China's expected entry into the World Trade </p><p>Organisation (WTO) by 2006 and government economic initiatives in the </p><p>less well-off western provinces. </p><p><BR><BR> </p><p>Accession to WTO would result in an influx of new foreign capital, while </p><p>Beijing's initiatives in the western part of the country - including 10 </p><p>major infrastructural projects such as highways, railways and gas </p><p>pipelines under the direct leadership of president Jiang Zemin, plus </p><p>high-tech investments by IBM and Hewlett-Packard - would boost the </p><p>overall standard of living of the general population there. </p><p><BR><BR> </p><p>Mr Walton said the current strategy of having major production </p><p>facilities in Guangzhou, Shanghai and Beijing no longer made sense, </p><p>especially at a time when marketers were targeting the interior </p><p>provinces, where disposable incomes were on the rise. </p><p><BR><BR> </p><p>"Distribution has to be sorted out before communications," Mr Walton </p><p>said. </p><p><BR><BR> </p><p>"It's like making products in Leicester in England and shipping them out </p><p>to Rome and Berlin. It's ridiculous but it's happening in China. </p><p><BR><BR> </p><p>"Companies set up in China with factories in the primary cities and ship </p><p>their products the length and breadth of the country." </p><p><BR><BR> </p><p>The potential of the nation as a whole can be seen from the fact that </p><p>while the primary cities are home to less than two per cent of China's </p><p>population, they account for 17 per cent of its GDP. </p><p><BR><BR> </p><p>The nation's potential can be seen from the fact that Shanghai's average </p><p>yearly income per capita is US$1,300, while in the interior city </p><p>of Guiyang in Guizhou province, it is just US$166. </p><p><BR><BR> </p><p>"What we see is that in a place like Guiyang, the income level is a lot </p><p>higher compared with five years ago, and it is expected to be higher in </p><p>succeeding years," Mr Walton said. </p><p><BR><BR> </p><p>"But the main point is that the gap with Shanghai is likely to become </p><p>smaller and this is where the opportunities lie for smart marketers and </p><p>their agencies." </p><p><BR><BR> </p><p>He also pointed out that the uptake of household products in China is </p><p>extremely fast. </p><p><BR><BR> </p><p>"After just 15 years, almost 90 per cent of households in major Chinese </p><p>cities possess colour television sets - compare that with about four </p><p>decades for the United States." </p><p><BR><BR> </p><p>Government economic initiatives being launched in the western provinces </p><p>were part of an official effort to even out the income imbalance across </p><p>the nation. </p><p><BR><BR> </p><p>"This is necessary, otherwise social instability will ensue if the gap </p><p>is not closed," Mr Walton told MEDIA. </p><p><BR><BR> </p><p>"What foreign investors do not want to see is China turning into another </p><p>Yugoslavia." </p><p><BR><BR> </p><p>He added that another major initiative being undertaken by Beijing is to </p><p>stamp out corruption nationwide. </p><p><BR><BR> </p><p>"We hear of very senior government officials being executed after being </p><p>found guilty of corruption," he said. </p><p><BR><BR> </p><p>"This sends a strong signal to foreign and local businesses that Beijing </p><p>wants to create an even playing field for everyone and this is good news </p><p>for all investors and entrepreneurs." </p><p><BR><BR> </p>