Starting tomorrow, the industry will adopt the standards of the European Society for Opinion and Marketing Research (ESOMAR), which has been used by more than 100 countries and regions, said Li Li, secretary general of China Marketing Research Association.

"This is the most important job the association has done since its establishment in April," Li said.

In the last decade, domestic research companies have been operating without any authoritative standards, causing many irregularities.

Now they have to face the ever increasing challenges brought by China's accession into the WTO, Li said.

Currently, foreign research companies are only allowed to establish joint ventures or at most holding joint ventures in China.

"But foreign research companies should be allowed to establish sole-owned ventures in a foreseeable future," Li said.

Half of the world's top 10 research companies, including AC Nielsen in the United States and Research International, TNS and IPSoS in Europe, have entered the Chinese market in the last decade.

The future will be bittersweet for the domestic research industry provided it is well prepared, experts said.

If well prepared, the industry will be able to take a larger share of the pie because more foreign investors will seek market research for their investment policies when they come to China, Li said.

"Otherwise, the industry will lose the battle to foreign research companies," who are rich in experience, management, expertise and especially services, said Zhang Jun, president of Horizon Research.

But Zhang also said that foreign research companies, which are expected to flow into China in increasing numbers in the coming years, need two or three years to adapt to China's social, cultural and marketing conditions, over which Chinese companies have advantages.

Ruan Sining of RI China doesn't think that foreign rivals will pose much of a challenge during this period. Instead, they will provide opportunities for domestic enterprises to learn from advanced management and expertise, Ruan said.

So the industry must seize the opportunity to build itself up to face the upcoming challenges, Zhang said.

Adopting internationally accepted rules is the first step towards positioning itself favorably against the fierce competition from foreign rivals, Li said.

But the ESOMAR is only a basic and general code for the industry, which outlines the minimum calls to be obeyed by the profession.

"All countries and regions that have adopted ESOMAR have their own standards and rules concerning their own conditions," Li said.

As part of the next step in the industry regulation process, Li said his association will draft China's own professional rules as the maximum standards.

Work will begin next year and will be finished within two years, Li said.

With a short history of little more than 10 years, the domestic research industry lags far behind its foreign peers, who have been around for about 80 years.

The industry now has 1,500 companies, mostly small and medium-sized. Almost all of the industry's largest 50 companies are in Beijing, Shanghai and Guangzhou.

The industry has maintained a 30 percent annual growth rate since 1995, Li said. He had predicted a 30 percent increase for this year, mainly dragged down by the slump in the international information industry.

The industry's total business income increased by 36 percent in 2000 over 1999 to reach 1.5 billion yuan (US$180.7 million), most of which was contributed by foreign-funded enterprises.

But the income is only 15 percent of Japan, 3.3 percent of the European Union and 3.1 percent of the United States, according to the China Marketing Research Association.

Li anticipates that more domestic enterprises will turn to research for sound market information and predicted an annual growth rate of 30 percent for the coming years.

Zhang of Horizon Research is more optimistic, putting future growth between 30 to 50 percent annually.

(China Daily December 31, 2001)