Banking on data

It is indisputable that China's information industry is opening up. Foreign participation in China's media ? increasingly in the news? bears witness to this. Today, television news is broadcast in China by the likes of the BBC, USIA, and Hong Kong's TVB, ATV, and StarTV. In radio, Metro Broadcast recently announced a cooperative joint venture with China Radio International to produce multilingual music programming called Joy FM, following an earlier move by AWA Media of Australia to broadcast Easy FM. And, in the world of print, foreign publishers are rushing to make their mark in a range of formats.

While the government still controls a large proportion of China's state information industry, there are signs here too that more and more information is now flowing out into the public arena. There is still a of progress to be made, but things have moved on from the days of ten years ago, when even a simple statistical yearbook was classified. as top secret.

Market research, dependent on free exchanges of information, is beginning to flourish in this gradually opening environment. There are already thousands of state-owned consultancies and information centres, producing good duality research. At the moment, however, few are geared towards using the data for commercial, free enterprise reasons.

To fill this gap, foreign and joint venture market research companies are now beginning to flock to China, eager to use their expertise to cater to the increasingly long term ambitions of multinationals in the China market. "Consultancies and information centres are providing varying degrees of information," says Louis Tong of Survey Research Group China, whose head office is based in Hong Kong. "But, as far as professional market research is concerned, it is still very, very new in China."

Tong refutes the charge that the growing coverage on the movements of the Chinese market in local and overseas media negates the need for market research. "Today, in newspapers and magazines, hardly a day goes by without mention of China ? nevertheless, I think that an in-depth understanding of the consumer market in China is basic to marketing and as a result for companies preparing to invest millions and millions of dollars, it is only logical to find out the dynamics of the market and the competitive situation."

Competition is becoming fiercer by the day, he says, from both local and foreign companies, and it is rapidly developing from a seller's to a buyer's market. 'Today, for example, you see many shampoo brands in the department stores, unlike the old days. And the local products are becoming increasingly sophisticated."

SRG China is probably the largest of the growing band of market research companies to focus on China. While many are still based in Hong Kong, more are now establishing offices on the mainland. Australian. company Frank Small & Associates, for example, has recently set up a Beijing office, having been conducting research into China from its Hong Kong office for the past six years. Much of the China work is done on an ad hoc basis, tailored for the client's particular demands, but there are also a few that conduct wider industry surveys that are syndicated for more general consumption.

Tong says that customised research constitutes the bulk of SRG's work, with the majority of the company's clients being multinationals which produce fast-moving consumer products, or less typically industrial products. Companies new to China can learn about the existing market for their product, exploring its acceptability before launch, and more established companies can follow the progress of their goods, and their competitors' goods. SRG focuses its retail services research on Beijing, Shanghai, Guangzhou, the Pearl River Delta and ?what we call the balance of Guangdong?. Guangdong, explains Tong, is more affluent than other parts of China, and generates the most interest among companies.

The work involves a census of all the different shop types ? "it's a massive job", says Ton ."Every two months, we do reports and work with our clients on their strategies, so that they know exactly what size their market is, exactly what the market share of their brands is, whether their servicemen are doing a good job or not, the whole stock situation in certain shops, as well as where they need to step up their sales activities and their distribution networks. And they can get a final verdict on whether their competitors are doing any better in certain areas and the reasons why."

Conducting market research in a country that has little experience of it, has not been without "certain hindrances", says Tong. Although classified information is gradually being de-listed and becoming public information, "the mentality of the people is still there. A lot of information is still not released to outsiders." This is particularly true in the field of industrial research. The way to get around the problem is to have the right personal connections.

"In China, the pace of life is also very different from other parts of the world, says Tong. "As a result, you must build in sufficient lead time to do the work properly. For example, in Hong Kong, our interviewer can do six interviews in an evening. In China, he'd be lucky to do two.

However, Chinese respondents have immediately taken to product testing. "In our qualitative survey, we are able to achieve a very very high response rate, often of 95 per cent to 98 per cent, compared to Hong Kong's rate of only about 50 per cent. People are very, very keen to try foreign products. In some cases we have had to actually assign someone to stand at the door to screen people from coming back a second time."

This eagerness is abundant, unless more sensitive subjects are touched on in surveys. Taboo areas include reactions to living conditions, views on the government, and questions involving countries that China does not recognise.

Telephone interviews are also very difficult, says Tong. Not only is the telephone penetration very low, but it is also considered impolite to collect information via the telephone. Face to face interviews have to be employed in most instances. "That explains why we need a lot of bodies." SRG China currently employs 200 people full time, 150 of whom work from six offices on the mainland itself, and it is expanding all the time.

Another vital area that SRG China covers is its media research. Peter Miller, national director for advertising agency, McCann Erickson in Shanghai, highlights the gap that is in desperate need of filling when he says, "There are no ratings in China, so it's virtually impossible to get reach and frequency calculations."

SRG's two media products, the China media index and the China index, monitor broadcasting and print media with the intention of supplying clients with information on how best to reach their target audience with their advertising. The China index is an advertising spend monitoring service, for a marketer who 1 wants to find out what his competitors are spending by product categories and media type. SIG can also check that a client's advertisement does actually appear on television when it is supposed to. With demand for advertising time on Chinese television being as high as it currently is, the stations sometimes get away with being a little 'relaxed' about their reliability.

Saatchi's is the only advertising agency to have so far signed up with the index. Clifford Torn, the company's director of client services for China, confirms the need for media surveys ? without them, he says, the clients' investment falls into something of a 'black hole'. The service SRG is expensive, he concedes, but worth it. *

Survey Research Group (China) Ltd, 26/F, Devon House, 979 King's Road, Hong Kong. Tel: +852 956 7333, Fax: +852 516 6856.