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

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