China's media market is very complex and fragmented with rapid growth. Television has the largest reach with over 2,000 terrestrial channels and 40 satellite channels. Internet and mobile phone usage are also growing dramatically with over 100 million internet users and 388 million mobile subscribers. Advertising expenditure is increasing significantly each year across all media, with China becoming the 3rd or 4th largest global ad market by 2006-2007. Traditional media like newspapers and magazines are still developing nationally but are well established in major cities. Effective communication requires an integrated, localized approach that considers China's diverse media landscape.

1. MEDIA IN CHINA

2. A Whole Different World! Probably the Most Complicated Media Market in the World Today...

3. Ad. Spend Increasing Every Year = Pressure On Media Costs, Inflation And Ad Clutter… Source: Nielsen Media AdQuest +37% +33% +17% +41% +24% +22% +23% +20% +42% +21% RMB ‘000

4. In 2006-2007, China Will Become The 3 rd - 4 th Largest Global Ad Market! Already The 2 nd - 3 rd Largest ‘Volume Market’ For Many Marketers… Billion US$ Source: General Industry Forecasts / Ad Age

5. Top 20 Advertisers Reflect China’s Full Embrace Of ‘CONSUMERISM’… *Pepsi Group instead of Pepsi beverage only # Category 1 P&G 宝洁 FMCG 2 HAYAO NO.6 哈药六厂 Pharmaceutical 3 UNILEVER 联合利华 FMCG 4 JIANTE PHARM 健特生物 Healthcare 5 COLGATE PALMOLIVE 高露洁 FMCG 6 CHINA MOBILE 中国移动 Communication 7 SANCHINE PHARM 三精药业 Pharmaceutical 8 L'OREAL GROUP 欧莱雅 Skincare 9 LAFANG 拉芳 Skincare 10 PEPSI GROUP* 百事 Beverage 11 COKE 可口可乐 Beverage 12 ARCHE 雅倩 Skincare 13 KFC 肯德基 Fast F ood 14 TAITA 太太 Healthcare, Pharmaceutical 15 HAOJIXING 好记星 PDA 16 AOQILI 奥奇丽 FMCG 17 CNICE 纳爱斯 FMCG 18 JIANGZHONG PHARM 江中药业 Pharmaceutical 19 E BAIFEN E 百分 PDA 20 McDONALD'S 麦当劳 Fast Food Advertiser 2005 Top 20 Advertisers Source: Nielsen Media AdQuest

6. China Mass Media Development… 0 10 20 30 40 50 60 1979-1983 1984-1989 1989-1993 1995 + Local Production Quality + More TV Channels CCTV Outdoor Imported Programs Cable/Satellite Explosion Consumer Market Media Options 2006/07 2000+ TV Channels 165 Million Internet Users 450 Million Mobile Users

7. Media 2002 2005 TV Coverage 94.6% 95.2% # of CCTV Channels 12 16 # of Satellite Channels 30 40 # of Terrestrial Channels 1,800+ 2,000+ Average HH TV Ch Penetration 18+ 30+ # of Radio Channels 1,400+ 1,800+ # of Newspapers 2,137 2,119 # of Magazines 8,000+ 9,000+ # of Internet Users 45.0 mil 100.0 mil Mobile Phone Penetration 16% 26% PC Penetration (HHI %) 26% 29% China Media Scene – Very Fragmented

8. TV Rating Measurement Print Measurement OOH Monitoring Net Ratings Lifestyle & Media Consumption Nielsen Media/CSM 100+ Markets CMMS - 30 Key Cities 20+ Markets Nielsen Media Net Ratings CMMS - 30 Key Cities China New Rich (H3) - 12 Key Cities China Media Fragmentation Surprisingly Well Researched…

11. CHINA TV SCENE

12. ‘ Blue-Print’ For TV Media In China…

14. Rapid Growth In TV Media… Average HH Has Access To 30~50 Channels

15. Different Levels of TV Coverage… CCTV Satellite TV Provincial TV Local City Terrestrials 16 Channels… National roll-out, cost efficient 200+ Channels … Cost effective regional coverage 33 Provincial Satellite Channels Secondary National Coverage 2000+ Terrestrial Channels… High Reach and Frequency... Enhance efficiency & frequency

16. China TV Channel Share By City Tier… Data Source: CSM/Target 25-55/ Whole day average viewing National level, CCTV viewing share ↑ Tier 1: Local TV maintain stronghold Tier 2: Satellite TV steals share from Local TV

17. Time Spent Watching TV Is Steadily Declining As TV Fights For Consumer Attention. We Need To Integrate Communication Messages With Other Media…

18. NO TIME : “I go to school, I have extra classes & homework after school, I hang out with my friends on weekends… When do I get time to watch TV?” SH 17 y/o Female High School Student MULTI-TASKING : “I sometimes create my own world to surround me. I listen to my music on my MP3, read my favourite magazine and chat with friends online at the same time...’ SH 19 y/o Female University Student STRICT CONTROL : “When I do get to watch TV I have to watch the programs my father allows. He won’t let me watch Korean drama as he thinks they have too much sex!” BJ 16 y/o Female High School Student Source: Starcom Media Pathways and strato sphere Consumers Are Not Simply Passive TV Viewers…

20. CHINA IP SCENE

21. Number Of Internet Users Soaring… Source: CINIC NB: User defined as person who accesses Internet at least 1 Hour per week. If individual accesses from multiple outlets counted each time

22. My Consumption Habit Has Changed… Time Spent On Media (Hours) Source: CMMS 2005, All Adults

23. 46% Of All People Look At The Internet First For Information… Source: CMMS A/W 2005 We are Sourcing Information Faster… More Than 60% Connected Through Broadband… 6.2 Billion Hours/Month Are Spent On The Net…

24. Did You Know… Internet & Instant Messenger Source: CNNIC, 17 th Internet Survey

25. 5 million bloggers 3 million blog accounts Surged from 1 million in 2004 Source: CINIC June 2005 & Analysys International 2005 & China Daily 4/3/2005 5% of all Chinese Internet users blog Did You Know… Blogs

26. Did You Know… Search Engine Marketing

27. Search is Becoming as BIG as all other forms of Online Advertising China – Search & Online Advertising Comparison Source: iResearch - All figures in USD million

29. Did You Know… Impact of Gaming “ Last year a 40-year old man used a real knife to stab to death a younger man who had borrowed his virtual sword from an online videogame and sold it for $870. There are no laws in china protecting virtual property; so Qiu Chengwei, the man whose sword had been stolen, got no help from the police.” Fortune Magazine, October 2005

31. 30 – 40% of Mid Tier and Above Beauty Product Consumers are Online Data base: All female who have accessed internet in past one month Internet usage Source: CMMS, top 30 cities

32. China Leads The World in Mobile Subscribers Currently there are 388 mil subscribers

33. Always In Touch… Source: CMMS A/W 2005 Mobile Phones Making People Accessible 24/7… 388 million subscribers; 1-in-3 own a mobile phone vs 1-in-15 5 years ago Chinese Consumers Sent 280 Billion SMS In 2005…

36. CHINA OOH SCENE

37. Explosion of IMPACTFUL OOH Catches Eyeballs of The Modern Mobile Chinese Consumers…

38. Increasing OOH Media Exposures… Data Source: China Media & Marketing Survey 2005 A/W Wave

39. High Traffic Area, High Awareness COVERAGE HIGH AFFINITY Role of OOH = High Traffic Area; Extended Reach Targeted Reach White Collars Frequent Travelers Upscale / Trendy Group MTR Stations City Centre Bus Shelters Downtown Billboards

40. New Innovative Media Formats Will Further Flourish the China OOH Scene…

41. OOH…The Last Frontier: Chaotic, Lack Of Regulation, Opaque Pricing…

42. CHINA PRINT SCENE

46. … NEEDS A ‘LOCALISATION’ APPROACH – Market-by-Market Integrated Considerations Media In China Highly Fragmented / Growth In Emerging Media…