Is going solo becoming a real option in China?

<P>Grey's declaration that the time has come for it go it alone in China following its public break-up with Citic Guoan, its local partner of almost 15 years, could signal a new chapter in agency strategy in the Middle Kingdom.</P> <P><br><br><BR>After decades where foreign agencies had to partner with a local firm to do business in China, regulations have relaxed, allowing all agencies to take 100 per cent control this year for the first time.</P> <P><br><br><BR>While many agencies have taken a majority share in their Chinese joint-ventures for a variety of reasons, most still maintain the relationships that, until recently, were obligatory for conducting business in China. </P> <P><br><br><BR>The most common reasons cited by MNC agencies for doing so are that their partners still provide valuable networks of local business and Government contacts.</P> <P><br><br><BR>For some areas of business these are still vital. Few people feel that international PR shops would still be able to make much headway in China without local support. For advertising, however, regarded as a more mature industry than PR in China, agency heads are starting to think differently.</P> <P><br><br><BR>"It's not a need or a must; it's a 'nice to have' if you're married to a good target," says Mason Lin, Euro RSCG Greater China chairman. Agencies such as BBH, Euro RSCG and FCB already have a single licence. </P> <P><br><br><BR>Although the timing may have taken Grey by surprise, it has taken the opportunity to become  the latest MNC to pursue an indpendence strategy. Mike Amour, Grey Global Group's regional CEO, declined to comment on the issue when contacted by Media; the agency is thought to be still negotiating with its former partner.</P> <P><br><br><BR>While many agencies still working with local companies argue that it makes little sense to break a partnership that is working well, the bigger picture can be more complex. "The joint-venture issue is much bigger than what you can see from the outside," says Gary Tse, FCB's Greater China CEO.</P> <P><br><br><BR>Buy-out costs can be higher for some agencies than for others, potentially putting a brake on independence plans, while agencies which are still heavily reliant on business sourced through a local partner may find independence attractive but risky. </P> <P><br><br><BR>Who the joint-venture partner is and what they do can also make a big difference. Large players such as Saatchi & Saatchi partner Great Wall can plug into an extensive network but smaller companies, such as Ogilvy partner Shanghai Advertising, can still be effective. </P> <P><br><br><BR>Perhaps most important of all is the chemistry between different personalities in both companies, which can often be the difference between a thriving or a moribund business. What the Citic move does demonstrate is that the case for going it alone varies agency by agency. While Grey is striking out, Citic Guoan's new partner, DDB, welcomes the extra clout Citic brings. "This arrangement gives us the chance to have a significantly stronger local footprint which I think an agency needs in China," says Michael Birkin, regional CEO for DDB parent Omnicom. </P> <P><br><br><BR>Birkin cites Citic Guoan's contacts as especially valuable, <BR>especially in the run-up to the Olympics - Citic Guoan is the advertising arm of a large conglomerate with interests in a wide range of areas - with further agreements with other Omnicom operations a possibility for the future. </P> <P><br><br><BR>With the news stories of Citic's falling out with WPP still fresh, Birkin concurs that the success of relationships between multinational and local agencies hinges on the chemistry between the two. </P> <P><br><br><BR>"One has to look at opportunities as they present themselves," Birkin says. "The answer depends on who the partner is."</P>