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Rumor: Putian-based Private Hospitals to Cease Search Engine Marketing

National Business Daily, 3/26/15

An unsigned document attributed to the Putian Healthcare Industry Chamber of Commerce and dated March 21 claims that chamber president Lin Zhizhong, at a recently held meeting, called for all members to cease all paid internet promotions on April 1. The chamber of commerce will hold a more general meeting on April 4 to further discuss the matter, which was merely a proposal and not a decision, according to Wu Xidong, executive president of the chamber and an attendee at the meeting.

The Putian Healthcare Industry Chamber of Commerce is an association of privately run hospitals opened by people from the city of Putian in the southern coastal province of Fujian. The city has over 60,000 people engaged in the healthcare industry and has founded nearly 80% of China's 11,830 private hospitals, according to statistics updated through the end of July 2014 from China's National Health and Family Planning Commission. The approximately 8,000 Putian-based private hospitals primarily specialize in cosmetic surgery, gynecology, and men's health.

Over the past several years, many Putian-affiliated hospitals have relied on search engine marketing for brand awareness, said a director of one maternity hospital which is a member of the Putian Healthcare Industry Chamber of Commerce. Generally speaking, about 60% of a hospital's advertising budget goes towards search engine marketing and some hospitals' advertising costs take up 70-80% of operating revenue, according to the same source. The collective annual expenditures of Putian-based private hospitals on search engine ad placements could be as much as RMB 20 bln, according to an industry insider.

Editor's Note: According to a real name verified Sina Weibo microblogging account belonging to e-commerce industry veteran Gong Wenxiang, an industry insider revealed to Gong that the cost per click (CPC) of medical industry keywords has reached as high as RMB 999 in some big cities. Liang Jianyong, the mayor of Putian, once said to the press that Putian-based private hospitals spent RMB 12 bln on Baidu in 2013, while Baidu's total advertising revenue in that year was RMB 26 bln (NB: Based on Baidu's Q1-Q4 2013 earnings reports, the company's total revenue for 2013 was just over 31.9 bln, while its total online marketing revenue was approximately 31.8 bln).

Keywords: Lin Zhizhong Putian Healthcare Industry Chamber of Commerce Wu Xidong Liang Jianyong Gong Wenxiang Internet healthcare Baidu online search search advertising BIDU

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The information contained in this newsletter is based upon sources that Marbridge Consulting believes to be reliable, and we have made every effort to translate the original articles or article excerpts as faithfully as possible. However, Marbridge Consulting makes no warranty of and assumes no legal responsibility for the accuracy of either the original source material or the English language translations.

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