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Omnicom Expands in China

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NEW YORK Omnicom Group said it has entered into a strategic partnership with CITIC Guoan Group to form DDB Guoan Communications Beijing Co., a marketing and advertising firm in which Omnicom has a majority stake.

Effective July 3, chairman Yan Gang and president, CEO Dick van Motman will lead DDB Guoan, located in Beijing with offices in Shanghai and Guangzhou. Omnicom's DDB, headquartered in New York, has 206 offices in 96 countries.

WPP Group's Grey Worldwide has had an alliance with CITIC Guoan in China since 1992, and the agreement was set to expire next year. It is believed CITIC executives informed WPP CEO Martin Sorrell yesterday that they wanted to end the alliance as soon as possible. WPP acquired Grey in March 2005.

A Grey representative said, "Our joint venture with CITIC Guoan expires through 2007, and they have decided to bring the date forward. We're in negotiations with them to do just that. As with many joint ventures in China in the advertising business, Guoan has been a supportive but silent partner. So this will mean very little change for Grey China in terms of day-to-day business. We plan to set up a wholly foreign-owned enterprise, which is now legal in China, and Guoan has offered to help us."

Omnicom's Asia-Pacific chairman and CEO Michael Birkin said in a statement: "The partnership reflects the approach Omnicom has taken in every major market—to strive to have the best provider of advertising and marketing services to local as well as multinational clients. This alliance will provide unparalleled reach in China."

CITIC Guoan is a division of CITIC (China International Trust & Investment Corp.) Group—a conglomerate of more than 75 Chinese government-owned companies established in 1978 by then premier Deng Xiaoping. To date, it controls about $90 billion in assets. The CITIC Guoan Group, established in 1987, is the division that facilitates media industry operations in China relating to TV and satellite systems, and advertising, sports and cultural opportunities.

DDB Guoan will handle marketing communications for clients including Phillips, Johnson & Johnson, PepsiCo, China First Auto Works, China Unicom and CITIC Bank.

Omnicom president of Asia-Pacific operations Serge Dumont said the company was "truly delighted" with the new relationship. "This alliance is a clear manifestation of our strategy to become the advisors of choice for multinational brands expanding into China and for Chinese brands expanding abroad," he said. "I am confident that chairman Yan's sterling reputation in the industry will prove a unique asset in realizing our common objective to be the best advertising and marketing services group in China."

Yan Gang called the partnership with Omnicom and DDB "an extreme honor," and praised the holding company's brands for their "outstanding creativity, impeccable integrity, respect for their partners and cultural diversity."

Omnicom companies employ 60,000 staffers for 5,000 clients in more than 100 countries. Besides DDB, it owns BBDO, TBWA Worldwide, Rapp Collins, Ketchum, Proximity, Interbrand and OMD.

Omnicom president and CEO John Wren said in a statement: "This is an incredibly exciting time for Omnicom in China, which is one of the key strategic markets for us globally. This is a perfect alliance, with each party bringing unique and unparalleled capabilities to the table. I very much look forward to a long and fruitful partnership with CITIC Guoan, which offers both groups significant opportunities."