The recently announced merger of two of the world's largest advertising and marketing groups, Omnicom Group and Publicis Groupe, has aroused widespread discussion in the Chinese advertising and marketing industry.

Should Chinese firms be worried? How can they react? China Daily talked to Liu Jianping, a senior advertising industry executive. Liu is president of Meihua Information, a Chinese website specializing in reporting about the advertising and marketing industry.

Question: What impact do you think the proposed Publicis-Omnicom merger will have?

Answer: We have to first of all check its impact in the world. I think worldwide, it will change the industry's overall picture, to feature more tie-ups and greater dominant powers.

In China, more tie-ups among the large groups and more acquisitions of small firms may also occur.

There will be some client changes because of the potential conflicts of interest between clients of the former Omnicom and those of the former Publicis. For instance, Publicis' advises Coca-Cola Co while Omnicom' advises Coca-Cola's key rival, Pepsi. Normally rivals won't use the same agency.

There is also the possibility of layoffs as the merger is to integrate resources, which includes business and staff.

Q: How would the merger affect the digital advertising market?

A: Hugely. A key factor driving the merger is new media. It has been a trend in which the big ad firms are taking over the emerging digital media firms for their potential and solutions and for the future expertise they need.

Acquisitions of digital ad firms will increase. They will only further highlight the rising importance of new media.

Q: How, in your opinion, would the changes to come affect the Chinese market?

A: For many small local firms, to be acquired by the global giants is actually not a bad choice, because the acquisition will add to their branding power and help them attract more clients.

For the large local firms, on the other hand, it is a challenge simply because competition will become stronger. They will have to learn to grow in a tougher environment.

Q: How should the local firms react to the changes?

A: There is no need to panic. Because of the nature of the advertising and marketing industry, it is unlikely for the new global companies just to eat up the whole market. There is always space for the nimble and agile local firms to develop their businesses.

(China Daily USA 10/02/2013 page14)