SHANGHAI: In a move to elevate itself above the heavy discount
practices of China's over-supplied television market, TCL has signed on
J. Walter Thompson Shanghai to a one-year advertising contract.
JWT China chief executive, Tom Doctoroff, said the price war that
erupted last year had reinforced the urgent need for manufacturers of
television sets to decommoditise this category.
"That said, TCL was least hurt by the discounting. The company has a
healthy reputation for innovation, which puts it in the upper tier
colour television market," Doctoroff said.
Advertising for TCL's television products was previously handled by the
company's inhouse agency.
However, as competitive pressure from China's imminent membership in the
WTO builds up, companies like TCL have begun looking outside for brand
building expertise.
JWT won the TCL assignment without a pitch, but on the basis of a
credentials as well as strategic and creative presentation.
The agency will handle domestic advertising to position TCL above rivals
such as Konka and Chang Hong.
The advertising will need to take into account the two television
markets that co-exist in China - the rural market, where penetration is
still an issue, and the urban market, where the emphasis is on upgrading
to a better product.
Significantly, TCL has chosen to sign a one-year contract instead of
handling its advertising on a project basis, which is favoured by
state-owned enterprises (SOEs).
But even as Chinese corporations accept the need to build up brands for
domestic and overseas consumption, their relationship with multinational
4As agencies have rarely been smooth in the past. "Of course our
cultures are different and there will be challenges ahead as we
establish a smooth working style," said Doctoroff.
Aware of pitfalls that have dogged agency-client ties in the recent
past, the JWT chief said the two sides have agreed to structural set-ups
which have been put in place to reinforce the building of a long-term
partnership.
It has been agreed that the key point of contact for the agency will be
with the marketing department and the general manager of the television
division.
"We have streamlined the process. Typically, SOEs are hierarchical,
where the ultimate control is divorced from the group and executives in
sales have a lot of power in terms of what gets sold and produced as
they control profitability," Doctoroff said.
JWT, he added, had looked at several key points, including compensation,
before taking on TCL as a client. He said JWT had secured fair
compensation consistent with international standards."
The agency also asked for exclusivity as TCL's advertising agency for
its television brand - something that is "rarely guaranteed" in
client-agency arrangements in China. Apart from televisions, TCL also
manufactures computers, air-conditioners and other electronic
appliances.
