Local agencies leverage good relationships with company executives to ensure payment and use connections with local media to save money. To avoid a price war, many foreign agencies charge Chinese clients a fee for each portion of the job. Still, some foreign agencies are making money in China. Change is coming, albeit slowly. Younger Chinese, many of whom have studied overseas, are moving into management positions and pushing for more professional ad campaigns.
More competition is also on the way.
After China joins the World Trade Organization, expected late this year, currently restrictive rules on wholesale and retail distribution will loosen. But don't expect China's advertising industry to mature overnight. The exec at the international agency in Shanghai estimates it will take 10 years for more professional standards to truly take hold. Meanwhile, foreign ad agencies that must maintain offices in Shanghai to serve their multinational clients will keep trying to attract local clients to help pay the bills. If we do the business, our clients won't pay us back.