Oscar Zhao Profile: Who's Afraid Of China's BlueFocus?
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Oscar Zhao Profile: Who's Afraid Of China's BlueFocus?

Oscar Zhao's Chinese PR juggernaut BlueFocus is ready to take on the world. Is the world ready for Oscar Zhao?

Arun Sudhaman

Oscar Zhao Profile: Who's Afraid Of China's BlueFocus?

In 1996, Oscar Wenquan Zhao and three classmates from Peking University decided to spend RMB50k (US$6k) each to launch one of China’s first homegrown public relations agencies. A decade later, BlueFocus PR Consulting had established itself as one of China’s largest and longest-running local agencies, with revenues of around RMB100m ($12m).

It was good growth, enough to attract the attention of a number of international agency suitors. Yet it was difficult to shake the feeling that BlueFocus had reached its ceiling in China’s cut-throat PR agency market, where it still ranked below the likes of Ogilvy PR and other international PR giants.

Given the overtures that BlueFocus was receiving from international groups, hungrily eyeing acquisition as a way to keep building their China operations, it was a strange time to be making grandiose assertions about the agency’s long-term goals. That, however, was not about to stop Zhao, as chief digital officer Xiong Jian recalls.

“At the beginning of the year, he said our revenue will grow to US$100m,” recollects Xiong. “We don’t believe him. We said he was crazy!”

Within four years, BlueFocus had achieved Zhao’s “crazy" goal, vindicating his vision of an agency that could truly integrate digital marketing with traditional public relations. Indeed, the $100m target almost looks quaint amid the jaw-dropping growth that BlueFocus has experienced since it dispensed with the idea of a sale and listed on the Shenzhen Stock Exchange in 2010.

The group has grown tenfold in four years to reach a market capitalisation of $4bn, with Zhao forecasting expansion by another factor of 10 within the next decade, enough to see BlueFocus reach $3bn in revenue, rubbing shoulders with the likes of WPP and Dentsu. 

Numbers like those can provoke bemusement, particularly for a Western-centric PR world that sometimes seems conditioned to view China’s rise with suspicion. Zhao, who is only 44, belies much of this with an understated, accessible approach. Still, his aggressive ambitions will require BlueFocus to continue the global expansion that has begun with its investment in Huntsworth and acquisition of We Are Social.

"His biggest problem is what he has said to the markets: 10 times bigger in 10 years is a big, big task,” says Huntsworth CEO Lord Peter Chadlington, who is better acquainted than most with this particular quandary. In the 80s, Chadlington delivered on the bold claim that we would turn Shandwick into the world’s first £100m PR firm, at a time when it was worth less than £10m in fees.

“But then they were asking that of him when his market cap was $250m,” adds Chadlington of Zhao’s expansionary zeal. "He’s a very far-sighted, intelligent chap.”

The confluence of factors leading to BlueFocus’ rise amount to a perfect storm of modern geopolitical and social trends: A local Chinese PR firm invests heavily in digital and technology, expanding beyond its home market in a bid to challenge the dominant holding group hegemony. It is a narrative that has sparked plenty of speculation about how far Zhao can take his outfit.

“The question about Oscar Zhao is whether he will be first global comms chief from China at the same kind of level as (Sir Martin) Sorrell,” observes Chadlington. "Oscar will make as much of an impact in the comms world in the next 10 years as Sir Martin Sorrell in the last 10 and Maurice Saatchi in the 10 years before that. He is going to be the icon that drives this industry forward but he’s going to do it from China.”

Chadlington, of course, probably has something of a vested interest in this outcome, given the BlueFocus stake in Huntsworth.  At the very least, though, it seems clear that Oscar Zhao is ready to take on the world. Is the world ready for Oscar Zhao?

‘He is the harmoniser'

Zhao was born and raised on Zhaoshan Island, a sleepy town in Zhejiang Province that, as he describes with an infectious chuckle, “is not so famous, but very nice”. The son of middle school teachers, Zhao left for university in Beijing in 1987, harbouring dreams of becoming a foreign diplomat.

It is probably to the Chinese PR industry’s gain that those plans did not quite materialise. Unable to study international politics, Zhao focused on political science, where he learned at least one principle that has helped guide his progress ever since.

“In the political and and PR areas, the word ‘compromise' is very important,” he points out. It is a theme that recurs often in Zhao’s story, not least because of his focus on finding a consensus. That Zhao ended up in the public relations business should not, perhaps, be that remarkable after all.

"If you want to get results, you do things through communications, but also in your personal relationships,” he explains. "You always use communication to solve the problem. You will be very nice.”

“Oscar is always the one to harmonise, to find an acceptable solution for everyone,” says Lenovo China CMO Arthur Wei, who has known Zhao for 20 years. “To understand others and bridge different ideas."

This approach may seem at odds with the popular perception of a Chinese juggernaut that is looking to steamroll the PR world. Yet it also explains how Zhao has been able to strike the audacious deals with Huntsworth and, more recently We Are Social, the digital hotshop that BlueFocus bought earlier this year.

After doubling in size every year, We Are Social was hardly short of suitors. Yet the firm chose BlueFocus above other, more predictable buyers. To hear Zhao tell it, neither was it the hefty price tag that clinched the deal, but rather an ability to listen to and understand the motivations of agency founders Robin Grant and Nathan MacDonald.

"It's not only the money, which is very important but it's not all,” says Zhao. "My personal observation is that (the founders) used to work in big groups. So when they were planning to sell, they didn't want to sell their company to the big guys. They will just be a small part of the group.”

At BlueFocus, meanwhile, Zhao has assured We Are Social of flagship brand status and independent management.

“The most important thing is to build the trust so we will not bring in our own managers,” says Zhao, warming to his theme. “Both sides should learn to compromise. Step by step, you have to do it slowly."

The long game

While BlueFocus is often viewed as a sudden success story, in a region that frequently favours shortcuts to growth, a thorough understanding of the agency’s rise demonstrates that Zhao is unafraid to play the long game. Or, at least, a much longer game than many of his agency rivals within China and without.

Indeed, the very fact that the firm can casually discuss eight-figure acquisition deals would surprise anyone who remembers the firms origins in 1996. By then, Zhao had spent two years as GM of local PR firm Lucun, an agency whose circumstances could not contrast more starkly with BlueFocus’ gleaming new 2000-person campus in Beijing.

“We had only one person, no clients, no people, and no money,” recollects Zhao, when we meet at London’s Landmark Hotel in April. "That was a very popular situation in China at that time.”

Zhao had taken the Lucun job at the behest of friends who founded the firm, and had little idea of what the PR business entailed. “We just survived and tried to make money. I did have an advantage — because many of my classmates had IT connections, and only the IT companies were spending on PR.”

By 1996, Lucun was operating successfully, backed by clients such as Apple, Intel and Wyse. Zhao could see potential in the country’s emerging PR market, and joined together with three friends to found his own business.

“It didn’t matter what went wrong, just call Oscar and your problem was solved,” recalls Lenovo’s Wei. “He was a one-man show, who helped us to craft the graphic ads and also knew all the editors.”

Charting Zhao’s vertiginous ascent since that era can be a little dizzying. "The change was doing everything himself to finding the talent and capability to deliver against customer expectations,” says Wei. “It was dramatic. Surprise is not the appropriate word; I never thought a PR company could go that far."

By 2007, BlueFocus had become China’s largest domestic PR firm, and found itself at the centre of a bidding war that included Huntsworth, Edelman, Omnicom and WPP.

"Huntsworth showed the passion for working together with us,” notes Zhao. "They were very careful negotiators. Also the price was good, compared to Omnicom and WPP."

In keeping with its predecessors in the Chinese PR scene, everyone — myself included — expected a painless deal. At the last minute, though, Zhao chose not to sign the contract, stunning many in the communications industry. After spending two years negotiating with the major holding groups, he had begun to wonder why BlueFocus could not compete with these companies, rather than be gobbled up by them.

“We learned about how these companies had developed,” explains Zhao. "Huntsworth was very small when they listed — they grew through acquisition. WPP as well.”

“We were thinking, we can sell BlueFocus anytime,” he adds. “But if we list, maybe we can do the same thing as WPP or Huntsworth. We decided, at least we should try. So we didn’t sign the contract. I think at that time Peter [Chadlington] felt lots of disappointment." 

There is no tiptoeing around the sheer chutzpah the decision entailed, even if China’s economic rise had expanded the options available to an agency like BlueFocus. Still, few believed that the firm would successfully list, given the typical objections that capital markets often hold against people-based businesses of that size.

"Nobody trusted us at that time,” admits Zhao. "In the industry, nobody thought we could do it. We were very small and never before had such a company listed in China."

Zhao spent a year finding the right advisor and investment bank, a lengthy period that delivered a stroke of luck when the China Next market opened in mid-2009. "If it hadn’t, we would not have listed. They welcomed different companies, and we caught the opportunity.”

It remains difficult, however, to reconcile BlueFocus' success since listing in 2010 — in particular it's market cap of $4bn — with the typical experiences of PR businesses that have gone public. Zhao thinks that two factors have worked in his favour. First, he has little competition from communications businesses on the public markets and, second, “we were the first to tell investors that we will focus on acquisition, not just organic growth.”

"They didn’t trust us at first, but through these three to four years, we grew very quickly,” he points out. "In the past four years since listing, we have grown tenfold."

Thinking big

As BlueFocus expanded after listing, Zhao realised that the company would soon need look beyond its domestic borders. “The core of the industry is in New York or London and, also, more and more Chinese companies want to go outside.”

Global expansion also serves as a useful insurance policy. "China has grown very quickly for 30 years, but nobody knows if it will last for another 20 to 30 years. If you get bigger, you should consider this as safety.”

The question is whether all of BlueFocus’ domestic achievements, and Zhao’s obvious aptitude, will translate into international success. Zhao has ambition aplenty, but does he really have the drive to fight the difficult battles abroad?

"The most important thing about him is he is totally, absolutely and completely focused,” says Chadlington. "He’s got very high growth which is a result of him being focused.”

Chadlington, who has seen a few PR entrepreneurs in his time, believes this quality is  "extremely rare.”

"We all get so carried away by the latest idea,” notes the Huntsworth CEO. "He just has a very clear focus and he measures everything against that."

That focus should provoke some trepidation amongst BlueFocus’ rivals. The agency's recent growth has been led by the kind of digital marketing prowess that many Western PR firms talk about, but far fewer deliver.

Its next phase will involve a specific focus on creativity and technology, says Zhao at our second interview, which takes place at BlueFocus’ sprawling, futuristic Beijing campus. The 44-year-old cuts a slightly different figure in his office, compared to our first interview in London. He is more assured, more at home, chain-smoking heavily and clear on the goals for his business.

It does not hurt that he is surrounded by a state of the art office complex, featuring a gym, art gallery, canteen, expansive terrace and — thankfully — a highly useful floor guide, surely a first for a PR firm. 2000 people work here, making it — by some distance — the largest PR agency operation in the world.

“I don’t care so much about traditional PR agencies or ad agencies,” he explains, suggesting that competition is more likely to arise from internet giants like Baidu and Tencent.

"That's the big challenge. They have more money than us. They have data, they have technology. We have deep relationships with clients. We have creative. But we do not have the technological engine. We will focus on four main areas: big data, e-commerce, mobile internet and video.”

"He has really big ideas,” says Gloria Li, comms SVP at JD.com, China’s third-largest internet company. "I didn’t expect him to make his company so big now. Not only domestic market, but also international market. Not only PR but also advertising and digital marketing. From my point of view, he is thinking big.”

Unsurprisingly, Zhao is seen as something of a visionary in the Chinese marketing communications world. Wei puts this down to a remarkable ability to adapt.

"20 years ago, when PR was about media relations, BlueFocus was the first one to memorise all the birthdays of the editors in chiefs and their children,” recalls Wei. "Right now he believes that technology is the way to bring BlueFocus to the next level, so he invests to buy companies in social, digital and other areas. That requires not only financial strength but also the vision to become a better service provider."

“There’s nothing cool about Oscar Zhao"

Zhao has certainly demonstrated that he can deliver on those ideas within China. Doing the same outside his home market will throw up many more challenges for his fledgling holding group, particularly if acquisition remains the preferred route.

"Based on what he’s trying to achieve, to turn BlueFocus into a global icon, his biggest challenge is his team,” says Wei, recounting the difficulties that Lenovo faced after it bought IBM’s PC division. "If the management team doesn’t share his vision, that’s the biggest challenge for him to move forward."

Seven years ago, meanwhile, Zhao could barely speak English, but now he must handle an FT interview with aplomb. These, says Chadlington, are necessary skills if he hopes to crack the global market.

“I think it’s something you gain with experience,” he points out. "He’s a thoroughly sophisticated man. He’s more socially aware and more socially capable than he was 10 years ago. And he also believes in himself more. He’s a more confident man.”

Few would begrudge Zhao a touch of arrogance after everything he has accomplished, but fewer still would find it, given the ease with which he appears to glide through life, waking at 9am so that he can avoid Beijing’s notorious traffic on his drive to work.

“He is still quite relaxed, he’s still the same guy he was 10 years ago,” says Li. "One thing that is good is that although he has become very famous now he keeps the same style with us as before.”

That style may yet prove to be Zhao’s biggest trump card as he attempts to plot global growth for his group. “Some people find Chinese people rather cool,” says Chadlington. "There’s nothing cool about Oscar Zhao. He is extremely straightforward, very warm in the way he deals with you.”

Perhaps that has something to do with Zhao’s roots in Zhaoshan Island, which he still visits every year. "If you want to have a meeting with me, you need to request it one month earlier,” explains Wei. "For Oscar, make a phone call, and then he’ll say next Wednesday let’s go for lunch. He always has time. He is head of a 6,000 employee company, but he can still manage his calendar. That’s the capability a successful leader has to have."

The kind of quality, presumably, that applies irrespective of industry. Zhao is only 44, young enough that he can conceive a future outside the PR industry. Surprisingly, he is perfectly happy to discuss this.

"My personal plan is I hope I can retire before 50,” he states. "I do wish to have time to do something quite different in the rest of my life. For example, education — I'd like to do something there.”

Even here, though, there is some intelligence in play, because Zhao thinks a technology specialist might be the right person to drive BlueFocus to another level. And all the talk of retirement should not obscure the hefty ambitions that Zhao has for his company.

“In the next six or seven years, I hope we can finish the first step of our strategy,” he adds. “We have the opportunity to be the number one in the world. I don’t like the WPP comparison. It is not the objective; we want to be the new WPP in the digital area.”

All of this is delivered with Zhao’s trademark chuckle. He professes to have few hobbies beyond his work, which keeps him at the office until 10pm despite the late start, and his wife and three children. Even if he does retire at 50, it would take a brave person to bet against his singular focus and track record. The spectre of BlueFocus may intimidate some in the Western PR world; a better approach might be to embrace the group’s desire to turn public relations into a more business-focused, tech-enabled discipline.

“After BlueFocus went public, Oscar is very rich,” explains Wei. “But his real drive is that he believes BlueFocus will be as successful as the other global companies."

"We had a big argument about what is the best way to be successful,” continues Wei. "I said, join a big company, big workforce, learn and grow and become a successful businessman. Oscar wanted to be an entrepreneur — that’s the reason he was the only one driving BlueFocus back then. He’s the one that risked everything to form this company."

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