Star TV Gets First WOFE Ad Agency in China
Hong Kong based Star TV, owned by Rupert Murdoch, has
won approval to open a wholly-owned foreign entity (WOFE)
ad agency in Shanghai. This would be the first time that
an ad agency has been allowed to open as a WOFE; up until
now, all ad agencies in China have opened as either Chinese
companies or JVs (joint ventures).
The new ad agency will sell broadcast ad space on the
Mandarin-language Phoenix channel, which is mainly a news
and entertainment channel. Currently, Phoenix is broadcast
to hotels and other mainly foreign compounds using cable
TV. The company eventually hopes to expand broadcast coverage
to China's domestic population.
Star TV, it is believed, was able to get access because
of the Closer
Economic Partnership Agreement (CEPA) between Hong
Kong and China. Introduced this year, it provides favorable
treatment for Hong Kong companies seeking to invest in
China, and often provides a backdoor so that they can
get into China before WTO regulations open up the market.
WTO regulations require that China open up to WOFE ad
agencies, but not until late 2005.
Because of China's strong domestic growth, there has
been consolidation in China's domestic market, with foreign
ad agencies expanding into tier
2 markets.
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