WPP hedging bets on Chinese e-commerce for rapid growth

Marketing giant spurs innovation in world's largest digital economy

Advertising and public relations agency WPP is expecting further growth in the Chinese market, betting on e-commerce, social media-based commerce, digital innovation and the rise of the metaverse, said its top official.

The metaverse can present numerous opportunities in China, especially for brand and consumer experiences, and WPP is committed to working with partners to tap more potential within the meta-verse, said Mark Read, chief executive officer of the company.

WPP will further strengthen its business in China through creative offerings and integrated client solutions and will also further tap the exciting opportunities offered by metaverse in a safe way, Read said.

He raised the example of the recent unveiling by Chinese kids' clothing label Balabala of Gu Yu, an adorable kid who exists only in virtual reality and doubles as a social media influencer and brand ambassador. Read believes shifts like these－away from the traditional fashion marketing playbook and toward innovative, tech-infused marketing solutions that resonate with the new generation of digitally literate parents－are the future of brand rejuvenation. Gu Yu was created in partnership with Ogilvy, a WPP subsidiary.

"We are building the metaverse from scratch and the opportunities are enormous, especially for branding and consumer experience," Read said.

"For more than 30 years, WPP has witnessed the rapid development of China's economy, growing in step with what has now become the company's fourth-largest market globally, and the country's resolve to further improve its business environment is expected to offer more opportunities in the years to come."

WPP is the world's biggest marketing services group with a network of more than 110,000 employees across 110 countries. Its affiliated agencies work with many of the world's biggest corporations, including more than 60 percent of Fortune Global 500 and FTSE100 companies.

China, however, is one of the most important markets for the global strategy of WPP, and digital operations in the country are estimated to account for 90 percent of media expenditures by 2024, far higher than the digital share in most of the world, said the company.

"If you look at the forecast growth in the global advertising market over the next decade, China leads the world in digital advancement," Read said.

According to eMarketer, China is the largest e-commerce market globally, generating almost 50 percent of the world's transactions. The country's e-commerce market last year was estimated to be larger than those of the United States, the United Kingdom, Japan, Germany and France combined.

China's booming e-commerce industry has provided the rest of the world with massive opportunities, and the sector still has a lot of potential to be tapped as around 56 percent of the people are still not used to online shopping, said WTO Deputy Director-General Zhang Xiangchen.

The country's online retail trade volume accounted for around 50 percent of the world's total in 2020 with transaction volume reaching $2.29 trillion. The figure is expected to further rise to $3.56 trillion by 2024, he said.

WPP has recently established a tech team in China to work across its business to identify opportunities and innovate to keep it at the leading edge of the industry.

It has also recently made a strategic investment in StarEngine, a Beijing-based social content-marketing technology startup, which will work exclusively with WPP in China to provide better data and online visibility for local clients, aiming to give advertisers more control over investments in social media marketing.

The strategic investment lights WPP's emphasis on the Chinese market and marketing technology, it said.

Read said China's policy initiatives over the last five years have played an essential role in boosting domestic and international consumption.

"China has advocated for liberalization and eased trade and investment facilitation, including further developing a free-market economy and leveraging its vast domestic market to promote global economic growth.

"These policies have aided many of WPP's local client partners in their overseas expansion ambitions while helping our international client brands thrive domestically," Read said, adding that the company was pleased with its Chinese market success in 2021, earning revenue of 12.8 billion pounds ($14.7 billion).

The company is currently focusing its investment on high-growth areas. Experience, commerce and technology now account for 26 percent of its business and the figures are expected to increase to 40 percent by 2025, it said.

As a leading marketing communications group in China, WPP works with many of the country's top brands and has increasingly attracted multinational clients wishing to better develop their presence in the country, said Read.

Over the last two years, China's dual-circulation economic strategy, which highlights consumption and innovation within the country, has facilitated the rise in importance of many local brands, creating a prime opportunity for their domestic and international expansion. WPP's relationship with local clients continues to grow from strength to strength as a result, he said.