FEATURES: Government relaxes restrictions on foreign ownership and investment - MNCs increase investment in Korea

Apart from the easing of limitations on non-Korean companies, the country's economic recovery has given the green light to advertisers - especially multinationals - to start spending in a big way again Foreign advertising agencies in Korea are increasingly breaking away from their local joint venture partners and standing independent, or pouring large sums of money into new JV set-ups. The impetus for this trend has been due to the government's lifting of its foreign investment limitation. Added to this has been the fact that the country's economic recovery has given encouraged advertisers - especially multinationals - to start spending in a big way once again. Ogilvy & Mather and Leo Burnett are leading the charge towards independence, while two Japanese agencies, Hakuhodo and Dentz, have struck joint-venture deals recently. The higher adspend by multinationals is highlighted by the fact that more than 10 per cent of Korea's ad billings originated from foreign or JV agencies. In addition, some 15 per cent of the TV commercials aired in the country in 1999 came from foreign advertisers. Multinationals' market share has, therefore, been growing; three per cent in 1996, five per cent in 1997, almost eight per cent in 1998. The figure is estimated to have exceeded 10 per cent last year and it is forecast to break the 20 per cent barrier in 2000. Based on these bright prospect, McCann-Erickson bought out its JV partner last October. "We believe very much in the future potential of the market and will cater to the new market requirements," said McCann Korea president and CEO John Down. "As companies restructure, many will need strong communications partners to help them with growing the consumer demand end of their business." Meanwhile, Cordiant Communications Group (CCG) - a global advertising, marketing and communications specialist, which holds Bates Worldwide in the US - has purchased an equity stake in Diamond Ad, worth US$120 million. The agreement follows a restructuring at Diamond's largest client, Hyundai, and the partnership is aimed at improving the local agency's financial structure. Under the deal, Diamond's management and business operations will remain unchanged, however, CCG will take charge of Hyundai's international ad campaigns. On another front, Japan's Hakuhodo has established JVs with Korea's largest ad agency, Cheil Communications, and Cheil Bozell. Hakuhodo's aim is to be among the top five agencies in the country within three years. Its chance of achieving this is seen as good because it will be playing a pivotal advertising role in the import of Japanese cars into the Korean market this year. Of special note is the success of one of Korea's newest agencies in attracting foreign capital. Set up in 1998, Lee & Partners has signed a 50:50 JV contract with DDB Worldwide. DDB Worldwide chairman and CEO Keith Reinhard said the JV aims to be within the top 10 agencies in the country by year-end. "We have set this year's billings target at US$90 million, 40 per cent up compared with last year, and this is entirely possible because of the synergies we bring from our global network and because Lee & Partners' creative work is very competitive," Mr Reinhard said.

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