A Smart New Opportunity

Robert Hsu, May 23, 2008

While I was in Beijing last month -- one of our stops on the InvestorPlace Media Investment Cruise -- I spent a day checking out the city's newly enhanced public transportation system. I know that Beijing has recently spent billions of dollars on improving its subway lines to not only make life easier for Chinese who use it every day, but to also have the lines ready to transport visitors of the upcoming Olympic Games. So I was curious to see the results.

The subway stations were very clean, their design was stylish and modern, and the stations were very well lit, which is important for safety. Beijing subways are now a lot cleaner since the renovations.

In addition, I also noticed that there was at least one TV display inside every subway train. This was something that I had never seen before, and at first I thought the displays were another Focus Media (NYSE: FMCN) advertisement. But in addition to ads, the monitors displayed news and entertainment from Beijing's CCTV Channel One in real time. And between the news and information updates, there were several minutes of advertisements. Focus Media's products only display advertisements, so I knew that these TVs did not belong to them. So I did a little research and discovered that the TV displays were provided by VisionChina Media (NASDAQ: VISN).

I thought that the way that VisionChina was broadcasting content and advertising was smart because it is combining the popularity of TV with the high use of Beijing's subway system to form a new advertising outlet.

China has the largest advertising market in Asia outside of Japan, and is one of the fastest growing advertising markets in the world. Television advertising accounts for the largest portion (about 60% to 70%) of the total advertising spending in China. And according to ZenithOptimedia, spending on television advertising in China was $5.1 billion in 2006, and is projected to grow to $8.2 billion in 2009. So advertising on Chinese TV is a very profitable business.

But VisionChina has taken this one step further and added the popular use of China's public transportation to the mix. As people living in China's major cities move around more, advertisers are spending a larger portion of their advertising budgets to reach consumers via mass transportation systems. In Beijing, nearly five million people commute by subway on any given weekday during peak traffic hours. On average, they spend 40 minutes to one hour on the subway on the way from home to their work places.

And also consider that with the upcoming Beijing Olympics, more people will be riding Beijing's subway system this summer than ever before. As you can see, public transportation systems give advertisers like VisionChina a prime platform for exposure to reach huge captive audiences.

Looking forward, I think that VisionChina's advertising method could potentially be more effective than the displays inside elevators and office buildings, because they may attract more viewers since there is actual programming with the ads. That is why I am recommend buying this VisionChina. Do you want to know more about VisionChina and ways it is set to profit from the upcoming Olympics? Then become a member of China Strategy today!