DM Emerges, by Access Asia
China’s 1.3 billion inhabitants boast a variety of dialects, cultures and values. For example, the languages spoken in the three most developed cities are Mandarin in Beijing, Shanghainese in Shanghai and Cantonese in Guangzhou. Moreover, with a territory 1.5 times the size of Europe, distance is another issue. Organising any national direct marketing (DM) campaign is sure to pose headaches in terms of organisation and operation. To add to this headache the data that companies claim to hold on individuals is invariably incomplete, outdated, illegal or poorly profiled.
However, the healthy prospects for the consumer market bode well for China’s fledgling DM industry. Yet direct marketing remains a largely under-utilised and fragmented business in China, with few major international players prepared to venture into the market on a large scale. Why? Part of the problem stems from the absence of specific industry legislation – itself an indication of the government’s ambivalence towards (and ignorance of) the sector. The lack of legal protection has so far deterred major foreign investors unwilling to operate in legal grey areas. The only significant players so far are international advertising agencies with DM departments – varying widely in expertise and scope.
Access Asia and the newly formed, Shanghai-based China Direct Marketing Association have produced a new analysis of the DM industry in China looking at the operating environment, the major industry players and China’s consumers – the primary target of the DM practitioners.
As yet, China has no specific legislation governing DM. Instead, the industry is covered through a patchwork of indirectly relevant laws in sectors such as postal services, advertising, direct sales and the Internet. The absence of industry-specific legislation is both a burden and a blessing. On the one hand, foreign firms seeking to set up and run DM operations in China find it difficult to plan a failsafe strategy in a market that appears to have few legal boundaries. On the other hand, the fact that companies are operating in a grey legal area enables them to work more freely. However, the government is seeking to introduce new laws to cover DM within the next three years.
The DM market is still dominated by direct ‘junk’ mail – an increasingly important part of China Post’s business. Direct mail sections have been established nationwide with training courses for staff in direct mail techniques and fulfilment being run in major cities such as Shanghai. Still, at present direct mail is an underdeveloped business in China by international standards. However, China Post has realised the benefits and potential of the market and estimates that by 2005, direct mail will become the fifth most used advertising method in China.
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Now a growing number of smaller companies are starting to experiment with new technologies, including SMS messaging and email, in terms of both testing the regulatory environment and consumer response rates. It seems that the development of DM in China will be a slow process with practitioners constantly testing the boundaries and China’s lawmakers responding to each new development.
