Oscar Zhao can’t quite find an English word to express what he likes to do outside work, so he settles on Chinese. “I’m a PR guy,” he says, “but I’m a zhainan.” The term is often translated as nerd, geek or otaku – a person with bad social skills and little craving for human contact. Mr. Zhao offers his own translation: “It means you stay at home.”
A zhainan, in other words, doesn’t seem like the person you would want building brands or crafting ad copy, much less leading the company.
But Mr. Zhao used his unlikely personality to create an unlikely company, as the man who built a small Beijing marketing company called BlueFocus Communication Group into a Chinese powerhouse with a reputation for setting, and then beating, outrageous growth goals on its way to becoming what might one day be a Chinese WPP Group PLC or Dentsu Inc.
Mr. Zhao is a heavy-spending buyer who expects to pour $1-billion (U.S.) into annual acquisitions in the coming years as he assembles his Beijing-headquartered firm into what he calls a “new-style holding company of the future.”
The scale of his accomplishments already makes him a pioneer: No other Chinese creative company has built the international presence he has assembled, with clients that include PepsiCo Inc., Lenovo Group Ltd., Volkswagen AG and BMW. And few other agencies, be they in London, New York or Beijing, are doing the sorts of things he is doing.
At 45, Mr. Zhao is a young face in the cloistered old boys’ club of global marketing. And he is building a company that may well be the future for an industry struggling to adjust to a world where a microtargeted Google ad can be as effective as a splashy Super Bowl commercial. The average age of his employees is 28 (on par with Facebook and Google), and they are doing things few others have yet tried, like moving beyond advertising client products to actually selling them – and then taking a cut.
It’s a digital world, one where a zhainan might be exactly the person advertising needs.
Mr. Zhao “is going to change the face of communication and marketing services in the world,” says Lord Chadlington, former chief executive of London’s Huntsworth PLC agency and a friend of Mr. Zhao (BlueFocus has also invested in Huntsworth). “What people see in Oscar is they see a young man who has got the pulse of 21st-century selling.”
Canada plays a pivotal role in those plans: Late last year, Mr. Zhao’s BlueFocus bought storied ad agency Cossette Inc. (and its Quebec City-based holding company Vision7 International) for $210-million, and he expects to use it as his base to expand into the United States.
Modishly dressed in black with a youthful face framed by a sparse goatee and a shock of trim emo-cut hair, Mr. Zhao is an unlikely marketing trailblazer. His parents are middle-school teachers. He is no grand showman, nor even a social butterfly. Over lunch in a private room off the cafeteria in his company’s 2,000-person headquarters, he explains: “I’m not so open, I’m not good at making relationships quickly.”
What he possesses instead is an outsized ambition, a chief executive’s unflagging confidence and an underdog’s willingness to win contracts by throwing out the rulebook. He is everything the dyed-hair, beer-bellied functionaries at the helm of China’s state-owned firms are not. As if to underscore the point, he has made no attempt to hide the traces of grey slipping into his hair.
As office staff bring out a flood of plates – an assortment of Chinese dishes, accompanied by orange-glazed salmon with asparagus, then peppercorn steak with snow peas – Mr. Zhao reveals that he is considering abandoning plans for a stock listing in Hong Kong later this year.
He is thinking New York, instead, a place more suited to the scale of his drive. “We need a global capital market position outside China,” he says in good English, a testament to the global nature of China’s modern entrepreneurial class.
Mr. Zhao was born in Zhoushan, a coastal centre 150 kilometres south of Shanghai that was among the first in China to conduct foreign trade, dating back 1,000 years ago with the Japanese, and to the 16th century with Europe. Zhoushan remains home to one of the largest ports on Earth, the kind of place that can breed in a child a lust for wider horizons.
Mr. Zhao wanted to be a diplomat and was smart enough to get into Peking University, China’s finest, where he studied international political science. He fell into marketing by accident, through a classmate who was running an empty shell of a PR company aimed at the IT sector.
“I didn’t know the IT industry, I didn’t know PR at all,” he says. “But at that time in China, opportunity was everywhere.”
He used his underdog status to his advantage. Where most firms charged for their work, Mr. Zhao was willing to charge by results. He set goals that might include the number of articles he could conjure in local media and was paid according to his success in meeting those numbers. It was an approach born in part of desperation – he had none of the brand muscle of an Ogilvy & Mather or Burson-Marsteller. To compete, he needed something new, an approach that came to form the bedrock of BlueFocus, the company he founded a year later, in 1996.
“BlueFocus took the risks,” says Steven Chen, a vice-president at the company. It also knew China. Foreign firms thought, “Okay, because journalists are independent, we cannot control them,” Mr. Chen says.
In China, though, relationships matter, and BlueFocus had ziyuan – resources, in this case personal connections that could smooth the way for clients to gain press coverage. “Actually,” he says, working in marketing at the time “wasn’t such a tough job.”
China in 1996 had just come off four consecutive years of double-digit GDP growth. Foreign investment was pouring in, rising 20 per cent a year. It was a heady era and it swept up Mr. Zhao, then 26. In the tide of ebullience, he resolved to grow BlueFocus’ profit to 1-million yuan (then $120,000 U.S.) in the first year, revenue of 10-million yuan in the second and net assets of 10-million yuan by the third.
It was all spectacularly aggressive, particularly for a man with no business training and a staff of a half-dozen. “I was very young,” Mr. Zhao says now, looking back and using a Chinese saying: “An ignorant man has no fear.”
“I had only ambition – just go ahead. You will lose nothing.”
Earlier this year, Amazon.com Inc. did something a bit extraordinary. It opened a Chinese online store on Tmall, the giant e-commerce platform run by Alibaba Group Holding Ltd. It was the equivalent of Wal-Mart opening a shop inside a Chinese department store. And Amazon, arguably the most capable e-retailer on Earth, is not even operating its Tmall storefront. “We run the store,” Mr. Zhao says, and begins to describe his big new idea: selling product.
Mr. Zhao is trying to reinvent PR, starting with the revenue model. Instead of merely charging marketing fees, the work for Amazon, which is done through subsidiaries he recently invested in, is paid as a percentage of sales, perhaps 5 per cent to 10 per cent of gross revenue. That gives Mr. Zhao a direct stake. Grow the sales and he also grows his income.
It is an Internet-era approach to PR, one that combines the branding prowess of BlueFocus with the ease of setting up a new online operation. In meatspace, or the real world, real estate drives sales. On Tmall, it’s marketing skill. On a single day last year, the Nov. 11 Chinese equivalent to Black Monday, BlueFocus companies handled $95-million (Canadian) in sales. Mr. Zhao expects e-commerce to account for 5 per cent of corporate revenue this year. In a half-decade, it will be “maybe 20,” and it’s clear the model has potential outside China, too.
Mr. Zhao is at the same time bucking the narrative of China as a country incapable of doing something new. After all, even some of its most prominent domestic exports, like bullet trains, are replete with purloined ideas. China may be the second-largest economy on Earth, but foreign consumers still struggle to name a single one of its brands.
The idea of a global Chinese brand-builder represents a potential break from that past – and Mr. Zhao is doing it primarily with a Chinese work force. In China, out of 3,500 employees, “less than 10” are foreign, he said, although roughly 10 per cent have been educated overseas.
He acknowledges that fostering creativity can be difficult. China’s repressive regime stifles the exposure young Chinese have to creative content in movies, ads and art.
But change is coming, and fast. Last year alone some 460,000 Chinese students were enrolled in foreign universities. “So when the new generation is grown up, they will be quite globalized,” Mr. Zhao says. In two decades, when his children (he has three, two from his wife’s previous marriage; the oldest is 26) reach his age, “China will be quite different,” he says.
Two years ago, BlueFocus moved its Beijing headquarters into a renovated Panasonic factory, an unmistakable symbol of his own efforts to move China from manufacturer to creative force.
Perhaps the chief question for China is how many more people like Mr. Zhao it can produce – and for Mr. Zhao, how well he can expand beyond that office. One of his central ambitions is to find people who can help him build a globe-spanning PR empire (his revenues remain less than 10 per cent those of WPP). That’s part of the reason he bought Cossette – “I really like the team,” he says.
His chief hurdle lies in convincing the world that a Chinese firm can do this. “Let’s be honest, not everybody wants to be part of a Chinese company. It’s a difficult conversation sometimes with agencies in the U.S. or Europe that didn’t see their future being run by Chinese,” said Greg Paull, principal at R3 Worldwide, a consultancy that has worked with BlueFocus in its acquisition hunt.
It’s not all roses at home, either, as Mr. Zhao faces ideological tightening led by President Xi Jinping that has crimped the space for expression, a potential concern for a company that operates in the public space.
Still, Mr. Zhao brims with confidence. In 2012, he said he intended to grow corporate revenues 10 times in a decade. Three years in, he is already roaring toward the five-fold mark. He expects revenues of $2-billion (Canadian) this year, and has begun noodling a new and bigger goal (he won’t yet say what).
Unlike many of his fellow wealthy, he holds only a Chinese passport. “I have confidence in China’s economy, the Chinese political system,” he says. “I think things will only get better. And even if bad things happen, that’s also an experience for life. So there is nothing to fear.”
Place of birth: Zhoushan, China
Family: Married with three boys (26, 23, 16)
Education: Peking University, international politics
His first customer:
Apple Computer. It was 1995 and Apple was in its long dark period, being trounced by Windows PC-makers; Steve Jobs was gone and that year, it suspended its dividend amid spiralling finances. The company was selling Macintoshes in China to schools and designers and wanted to expand – but was too cash-strapped to spend heavily on ads. “So they decided to invest more in PR,” Mr. Zhao says. And they were willing to bet on a twentysomething who promised to get stuff done.
On retiring at 50:
“I want to retire in five years. It’s a promise to myself.” The hours are long and he wants time to try something different. But he’s also not sure a middle-aged man is suited for the brave new world of digital marketing. “If I’m more than 50 years old and still sitting in this position, maybe it’s not a good thing for the company. The world is changing, our industry is changing.” When he leaves, part of his criteria for his successor is age. “I want the next CEO to be maybe 35.”
On rebuffing foreign acquirers:
In 2007, he backed out of a deal to sell BlueFocus to a big Western agency. “We selected one company, and we were ready to sign the contracts and everything.” He backed out, figuring he owed himself a chance to get as big as the competition. “If we couldn’t do this, the company would still be very good and we could just sell two years later,” he says. “But we wanted to try.”
On the prospects for Chinese soccer, perhaps his most optimistic bet of all:
“I have confidence it will improve very quickly.”
On what he sees in Cossette:
“We will help them to expand their business to the U.S. We told the management team very clearly they should not be focused on their market only in Canada.”
On his integration strategy:
“Integration is not necessary in our industry. If we provide a service to Coca-Cola, and we acquired a company that provided service to Pepsi, we cannot integrate. So, especially with the big brands, they will operate more independently.”Report Typo/Error