Madison Avenue has a field day playing to the China market

Advertising is alive and well and flourishing in, of all places, China. There are a few things that could be considered more indigenous to free-enterprise capitalism than advertising -- unless of course it's the profit motive itself. So it may come as something of a surprise that advertising is establishing such a firm foothold in the People's Republic of China.

The return of private advertising to China began in 1978, when Chinese leader Deng Xiaoping promulgated a new group of ``open door'' policies to aid China's recovery and growth.

It has sparked a lively interest on the part of Japanese, and more recently American, advertisers. The result has been a tremendous spurt in advertising activity in China in the last year or two.

When, for example, this year's Super Bowl was re-broadcast early in March over China Central Television (CCTV), the state-owned national network, the program carried commercial spots for American advertisers at the beginning and the end.

In size alone, the audience represented a real catch for advertisers. More than 300 million Chinese, or more than double the audience for the original broadcast, watched what they dubbed ``olive ball'' and also saw television ads for Gould, Hewlett-Packard, McDonnell-Douglas, Nike, and the State of Illinois.

In addition to watching commercial spots on China's rapidly expanding city and regional TV stations and network and cable systems, the Chinese public is receiving commercial messages via more than 150 radio stations and ads placed in more than 300 newspapers and 600 magazines.

Although the number of TV sets in use in China -- estimated at around 65 million in homes, factories, and community centers -- is small compared with the United States, the number is growing rapidly. China's 65 million sets represents a 70-fold increase since 1978.

But only about 1 in 4 of the 13 million television sets delivered in 1985 was a color set. That is not too surprising, when one considers that the price of a color set represents well over a year's wages for the average worker in China today.

With a vast market like this and its great potential for further growth, it's not surprising that entrepreneurs from around the world were quick to seize on it.

First the Japanese and now American companies are developing campaigns and advertising aimed specifically at the Chinese market -- in some instances before they actually had products ready for distribution or sale in China.

CBS was one of the first to offer commercial time in China. It agreed with CCTV to swap 64 hours of reruns (for airing over the course of a year beginning in December 1984) in exchange for five minutes of commercial time for each hour, or a total of 320 hours. CBS planned to sell this commercial time to 10 American advertisers for $300,000 each -- a real buy in terms of the cost-per-thousand of audience.

But the art of demographics, so highly prized by American marketers, is still an enigma to the Chinese. So the actual value of advertising spots is difficult to determine.

Still, CBS and its advertisers -- which include Boeing, Kodak, Stauffer Chemical, and Weyerhaeuser forest products -- are so pleased with the first year that they are preparing to expand broadcasts in China. Among the new advertisers this year are Colgate-Palmolive, Du Pont, International Hydron contact lenses, and Philips BV electronic products.

``Demographics are not really a problem,'' says Charles E. Walsh, who heads CBS worldwide advertising sales. ``Our advertisers and prospects are those already in China, or about to be, and they know the market and the problem the Chinese have with data like this.''

He notes that advertisers cannot be sold on the market by the argument that ``You guys ought to be in China.''

Not everyone who has been following the Chinese market and seen what Japanese advertisers have already accomplished would agree with Mr. Walsh.

Clifford Jones Jr., chairman and chief executive officer of China/USA Communications Inc., based in Dedham, Mass., feels that American corporations are being taken to the cleaners by the competition in the Chinese market and that now is as good a time as any to redress the balance.

Mr. Jones qualifies as an old China hand in the advertising marketplace, having traveled there seven times in the last year and a half.

His firm represents a joint venture at includes as its partners China's CCTV and Dancer Fizgerald Sample Inc., one of the world's 15 largest ad agencies.

Jones points with pride to the progress Boeing has already made as a result of a corporate advertising campaign that has been running on Chinese TV for two years. ``It's not at all unusual today to hear travelers when booking flights ask if they will be flying in a Boeing aircraft,'' he reports.

Already the television programming has improved beyond the reruns of American-made soap operas and the like, according to Jones. He singles out ``One World,'' a weekly, 15-minute travelogue that is produced and edited by Yue Sai Kan, a Chinese television personality.

Ms. Kan's programs, which have taken place in such diverse locations as New York and Rome, have proved equally popular with the Chinese viewing audience and advertisers.

One Jones clients now actively pursuing the Chinese market is Xerox Corporation, which is working hard to overcome an earlier lead set by Canon, Ricoh, and Toshiba, the Japanese manufacturers of photocopy equipment.

Present plans call for Xerox to produce an all-Chinese TV commercial in Peking later this year.

Capitalistic or not, clearly the Chinese are taking to 20th-century advertising methods. One measure of the rapid increase in advertising activity is that more than 4,000 Chinese and foreign companies were advertising in 1984, compared with a scant 100 only two years earlier.