For marketers in search of growth, China is calling

After a year of Covid-induced commercial limitations for so many businesses, compounded with more recent Brexit export issues, many firms are feeling battered and bruised. Market conditions have been challenging – to put it mildly – and so global companies are putting more focus on markets or regions where there is greater growth potential.

But global businesses building in regional territories need to be in robust order, with a clear and firm grip on their working practices, strong accountability and governance in each market. More than ever in this economic crisis, marketing budgets need to be invested efficiently and effectively.

There is a particular appeal to the Chinese market thanks to growth of 2.3% last year – the only economy to grow during Covid – but it can be a complex place to operate in with particular regional nuances and cultural anomalies.

So when considering operating in China there are a number of areas that clients need to think about: broker management – as middlemen are often used to broker client and agency arrangements but this needs to be transparent; keeping track of unbilled media; taxes are often changed by the government so companies need to be sure the correct taxes are being paid by their agency; AVBs and media benefits and how they should be passed to the client.

As contract compliance is so integral to good business, understanding and navigating this marketplace and gaining a clearer view of trading, I have five best practice points, that will help global clients and in particular their CMOs.

Develop an audit programme

Auditing contracts is the most effective way of ensuring that all parties are adhering to their contracts – regular and careful monitoring of this means the client and their agency partners can be confident that dealings are going ahead as promised. For global clients this means marketing procurement teams must monitor multiple regions – which all may have different arrangements, various levels of complexity, and sizes of budget.

So, the best way of managing this is to rotate which markets are audited when – this way each region knows that it will part of the process, but not necessarily exactly when their turn will arise – keeping it both transparent and flexible.

Call in specialist help

There are various companies that can help with contract compliance, from the big four accounting firms to smaller, boutique operators. What’s most important is that brands find a partner which understands the trading environment specific to their business. The people interrogating the contracts should be doing it from a position of experience so that the appropriate rigour and processes are in place for that specialism – be it in media, creative, production, merchandising, ecommerce or something else.

Share the learnings

The value for the business does not stop with the audit. Indeed, the audit gives some understanding, but the next stage is to share any findings internally to help a business improve – especially the expertise in local teams. Information garnered can be used to train local teams so they better understand the market, everyone can learn from the process and internal teams can understand more about their agency practices and be more aware when they engage with their partners.

Refine and renegotiate

Another stepping-stone from the audit is to use it to improve contractual terms. Use the results to refine and renegotiate contracts – be that globally (at a Master Services Agreement (MSA) level) or locally – to ensure that there is better financial transparency moving forward. Locally there may be differences to the MSA such as amendments to fees or the use of Proprietary or Inventory media and these may introduce transparency – and therefore business – risks.

Work with global industry bodies

Brand businesses often work in a silo so getting involved with industry bodies and peers to share ideas, learn from each and join initiatives can be useful. For example, the World Federation of Advertisers (WFA) is currently working on establishing some contractual best practices for those companies operating in China, a project which, with our deep expertise of agency contracts in this market, we are supporting. Working at an industry level can establish better processes for everyone, ensuring learnings are shared and transparency is therefore more likely afforded.


This article was featured in The Marketing Society