Business life: My finance news blog

France’s Publicis Groupe, the world’s No. 3 advertising group by revenue, is looking to China to underpin long-term growth as the global advertising market slows, an executive said on Saturday.

China now makes up less than five percent of Publicis’ global revenue, but in as little as five years the fast-growing market could be its second or third largest market, Chief Executive Maurice Levy told Reuters on the sidelines of the World Economic Forum.

“Without China we will have a limited future,” said Levy, who plans to double the current 3,000 staff in China within the next two or three years.

“China is crucial,” Levy said.

Publicis and bigger rivals such as Britain’s WPP are racing to establish themselves in China, a relatively new battleground where market share is still fluid and expanding, compared to mature markets in Europe or the United States.

“To win a new client in Europe is very painful,” he said.

The comments come after Publicis reported a first half like-for-like drop in sales of 6.6 percent, beating the 8.3 percent decline posted by WPP and the U.S. group Omnicom’s 8.8 percent fall.

While most analysts say global ad spending could be down 8 percent to 10 percent this year, China’s market is still growing, though down from the more than 20 percent growth in 2008.

Publicis recently maintained its 2009 financial goals, while Levy said he expected a “slow and gradual recovery” in 2010.

The French company is racing with competitors to sign up Chinese clients who are building brands domestically, but also increasingly need help in penetrating the larger, but more competitive markets in the United States and Europe.

Publicis and other foreign advertising specialists first came to China on the heels of their multinational clients, but the focus is now turning toward Chinese companies who are growing in clout and advertising budgets.

“If I am relying only on international companies, it will mean (the China strategy) will have failed,” said Levy.

Chinese companies now contribute only about one third of Publicis’s total revenue in the mainland market, a slice Levy hopes to double in five years, or longer.

“It has to be two thirds,” he said.

China has been Publicis’s fastest growing market, but this year other markets in Latin America and the Middle East could overtake the mainland, he said. 

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