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OMI
investment attention is focused on three of the fastest growing
sectors of the Chinese service economy - the largely state-owned
media, entertainment and leisure sectors. Facing unprecedented
challenges as they grapple with the concept of domestic and international
competition, new technological and investment advances are already
threatening their traditional monopolies.
Major internal changes are inevitable before China's full accession
to the WTO, but these sectors remain highly protected today. They
are slow to enact radical management reforms and best market practices
and unable to release their top performing assets into the market
in the short term.
In this environment, international players are left without suitable
partners or legal structures, limiting their involvement to "project
work" that requires financial investment but does not develop
crucial local talent resources or build assets inside the country.
Through direct and indirect investment mechanisms, OMI is building the foundations for market leading enterprises across its target industries.
To best manage its joint investments
in these sectors, OMI initially develops projects offshore, establishing
new offshore companies to oversee planning for that specific business
before moving into direct investment positions inside China.
Each Offshore Company is headed by senior executives with substantial
experience in their areas of expertise appointed by Odyssey, its
main venture partner or recruited externally. Prior to establishing
a direct presence on the mainland, OMI manages PRC business
development through Beijing-based Odyssey
Investment Consulting and Odyssey Culture.
Subject to successful establishment and funding, OMI Onshore
companies are established with local partners that add real value.
In all cases, OMI demands maximum ownership and management
controls, including making senior appointments. At least one senior
OMI representative is appointed as a director to the Board
of each Onshore company.
In the case of industries in which direct foreign investment is
currently prohibited, OMI supports establishment of representative
offices and/or wholly Chinese owned companies in which OMI
has a priority right to direct foreign ownership as soon as this
is legally permitted. In such cases, OMI appoints a Director
to the Board and signs exclusive contracts for supply of products
and services whose ownership rights vest in OMI.
Revenue growth across our core
sectors is fuelled by the advertising (and PR) industries. Among
the most dynamic sectors in modern China, PRC adspend maintained
double-digit growth throughout the Asian economic crisis and remains
one of the hyper growth sectors today.
Lack of regulation, under-developed research resources and poor
flows of advertising funds make conventional western advertising
models overly conservative in a market that begs for "out of the
box" creativity. As a result, leading multi-nationals are now
employing independent specialists to achieve value-added impact
for their brands.
The most experienced marketers are now taking the next step, entering
long term partnerships with (and acquiring) local media and event suppliers and distributors. Through its network of specialist service companies, OMI is pioneering these moves towards direct brand ownership of media, entertainment and leisure properties in China.
Given our focus on building assets in China ahead of full WTO
compliance, OMI and its partners are committed to consolidating
and expanding operations through re-investment of Group and Project
Company profits over the 2002 - 2006 period. Exit for investors
in Project Companies established 2002-2005 will be via sale or IPO
after that time.
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