CPM and China Post reach advertising deal
China Post Media has formalised a 10-year exclusive agreement with Hunan Copote Corporation, a majority owned company by the China Post Group, to commission a nationwide advertising and retail product distribution network through 38,000 retail post office outlets located throughout China. ChinaCast Education has said that its 43% owned subsidiary, China Post Media (CPM), together with the China Post Group, will co-own the branding of the “China Post Information Broadcasting Network,” which will be utilised as a commercial media platform for advertising media sales, retail product distribution as well as to provide information on the China Post Group to the general public.
The agreement is renewable after the initial ten-year term upon mutual approval.
Since 2009, CPM has deployed approximately 1,590 LCD media panels in over 1,000 China Post Offices located in Hunan province and Beijing to provide advertising from various sponsors and a variety of programme content.
Content is deployed from a centralised location providing enhanced control and operating leverage. During 2010, CPM plans to install an additional 4,000 LCD media panels in existing and new post office locations, with an additional 26,000 LCD media panels expected to be installed during 2011. CPM hopes to have over 53,000 LCD media panels installed by the end of 2013.
In addition to the advertising media sales, CPM plans to enhance its revenue through retail product distribution sales by offering a variety of consumer products through collaboration with TV shopping networks, selected brand products and direct marketing operators at China Post Offices throughout the country.
Through this network, CPM will offer a nationwide marketplace for these products while leveraging China Post logistics for customer ordering, payment and delivery. CPM will earn a commission without any of the associated expenses for typical retail sales such as inventory management and delivery.
Stephen Lai, CEO of China Post Media said: “In 2009, China Post spent over $220m in nationwide advertising for its own products and services and generated $870m in revenue through distribution of retail products and agency services. We hope to capitalise on our relationship with China Post to capture a portion of this revenue. In addition, China Post has over 20m customers collectively walk through its 38,000 locations each day who also pay bills and conduct banking transactions at the China Postal Savings Bank, the fourth largest bank in China. The majority of these postal offices are located in the rural areas of China, which covers 60% of the total China population (780m consumers). These consumers generate 40% of the country’s total retail spending (over $600bn). Thus, we believe the China Post Media network, with its large, captive audience and broad demographics, will create one of China’s first nationwide turnkey platforms for product advertising, order placement, product delivery and payment services for global retail companies.”
Ron Chan, chairman and CEO of ChinaCast Education, said: “We invested approximately $630,000 in initial capital in China Post Media more than five years ago to establish a joint venture to resell our services to the China Post Group and are pleased with the progress they have made to date with the signing of this landmark agreement. While China Post Media is a separately managed and operated company from ChinaCast and we do not currently plan to consolidate CPM’s financials, we believe our 43% ownership stake in CPM will demonstrate our ability to unlock shareholder value from our balance sheet and that the return to our shareholders from this investment will be significant in the future.”
