About Sinotrust

Sinotrust

Overview

Sinotrust, legally Sinotrust International Information & Consulting (Beijing) Co., Ltd. and known in Chinese as Xinhuaxin, was a Beijing-based provider of business information, market research, consulting and database marketing in China. Founded in 1992, it built its business on a simple proposition that was still unusual in the China of the early 1990s: that information about markets, consumers and businesses could be collected, analysed and managed systematically, and then sold to companies as a professional service. Its own descriptions said that it collected, analysed and managed information about markets, consumers and businesses in order to provide marketing research, business information, consulting and database marketing services through the integration of information, services and technology. It described itself as a leading supplier of both marketing solutions and credit solutions in China. At its largest, in accounts published around 2009, Sinotrust employed about 1,000 people in offices in Beijing, Shanghai and Guangzhou, and by 2010 its company description put the figure at over 700 people in the same three cities. Those numbers make it one of the substantial home-grown information companies of China's first decades of market reform, rather than a small consultancy.

Founding in 1992 and early development

Sinotrust was founded in 1992, a year widely associated with a renewed push for market-oriented reform in China. The company's later anniversary material recalled the early 1990s as the period in which it was created and described a first phase of survival and growth as China's economy expanded at high speed. China joined the World Trade Organization in 2001, a step the company itself treated as a turning point, because accession brought more foreign companies into China and increased the need among both foreign and domestic firms for reliable information about Chinese consumers, distributors and competitors. A company founded in 1992 had, by then, almost a decade of local operating experience to offer clients who were entering or expanding in a market that was large, fast-changing and often opaque to outsiders. That timing helps explain Sinotrust's client profile: its published descriptions said that more than 80 percent of the Fortune 500 companies operating in China used different products and services of the company. That was the company's own claim rather than an independently audited figure, but it indicates the market Sinotrust aimed at — large multinational and domestic organisations that needed China-specific information presented to an international standard.

Offices, scale and leadership

Sinotrust was headquartered in Beijing and maintained offices in Shanghai and Guangzhou, the three cities that together covered northern, eastern and southern China's principal commercial centres. That geography matched its client work: Beijing gave it proximity to national government bodies, regulators and the headquarters of many state-owned and financial clients; Shanghai placed it in China's commercial and automotive-industry hub; and Guangzhou put it in the manufacturing and trading economy of the Pearl River Delta. Staff numbers reported at different points reflect the growth and later restructuring of the group. Company descriptions issued with its automotive index releases in 2009 said it employed about 1,000 people; a similar description in 2010 said over 700. The market research business that was sold in 2013 employed 350 people on its own. In 2012 Sinotrust held an annual meeting combined with its nineteenth anniversary celebration in Beijing. Reporting of that event named Brook Zhang and Lei Lin as co-presidents and joint chief executives, and recorded Lin reporting that revenue for the fiscal year 2011 had topped 350 million yuan, an increase of 15 percent on the previous year. The same report said the automotive business had reached 230 million yuan, up 16 percent, and continued to rank first in its field in China by business scale, staff numbers and range of services.

Services: research, information, consulting and database marketing

Sinotrust's work fell into several connected lines. The first was custom market research: studies commissioned by a client to answer a specific commercial question about consumers, products, brands, channels or customers. The second was business information — structured information about markets, companies and industries that clients could use in planning. The third was consulting, in which research findings were turned into advice. The fourth was database marketing, using customer and market databases to target commercial activity more precisely. Alongside those marketing services, the company also presented itself as a provider of credit solutions, drawing on its business-information capabilities. The combination mattered because the same underlying asset — verified, organised information about Chinese companies and consumers — could support several products at once. A manufacturer might commission consumer research before a launch, use channel research to understand its dealers, draw on business information to assess partners, and use database marketing to reach customers afterwards. Sinotrust's pitch, in its own wording, was that it integrated information, services and technology rather than selling research reports alone.

Automotive market research

Automotive research was Sinotrust's best-known specialism. WPP, announcing the acquisition of its market research business in 2013, described Sinotrust Market Research as the industry market leader in automotive market research in China, and listed its offering as consumer research, product research, brand research, channel research and customer research analysis. Those categories describe the life of a car in the Chinese market: consumer research examined who might buy; product research tested what a vehicle should offer; brand research measured how a marque was perceived against rivals; channel research looked at dealers and distribution; and customer research followed owners after purchase. The specialism was well chosen. China became the world's largest car market during Sinotrust's lifetime, and foreign carmakers operating through joint ventures, together with a growing set of domestic brands, needed continuous local research in a market where incomes, tastes and city conditions differed sharply by region. Sinotrust's own 2012 reporting said its automotive business continued to rank number one in China in terms of business scale, staff number and service types, and that automotive revenue had grown steadily even as the wider market's growth rate cooled from its earlier peaks.

The China Automotive Industry Climate Index

Sinotrust's most public product was the China Automotive Industry Climate Index, which it produced jointly with the China Economic Monitoring Center of the National Bureau of Statistics of China. The index was developed jointly at the beginning of 2009 and was issued quarterly. Its purpose, as the partners described it, was to give a quantitative description of the development trends of the Chinese car market. It consisted of a Comprehensive Climate Index together with a Pre-warning Index, an Entrepreneur Expectation Index, a Dealer Manager Index and a Buying-power Index. From those components the partners compiled reports analysing the reasons for and trends in changes in the industry's climate, estimating the industry's development period, identifying peaks and troughs in development, and giving early-warning signals. Published values illustrate how the index was used. For the third quarter of 2009 it recorded 99.6 points, with 2001 as 100, up 2.7 points on the previous quarter — a reading the partners took to indicate that the automotive market was already recovering from the downturn. For the fourth quarter of 2009 it rose to 102.0 points, and for the second quarter of 2010 it recorded 105.7 points, down 0.1 point on the previous quarter, a result described as bringing a three-quarter rebound to an end. A jointly produced index of this kind gave Sinotrust a public, statistical identity beyond client-commissioned work, and associated its name with an official data producer.

Clients and sectors served

Although automotive work was its flagship, Sinotrust served a broad set of industries. Its company descriptions listed clients from automotive, financial services, insurance, retail, telecommunications, information technology, manufacturing, consumer products and trade; other summaries added banking, healthcare and technology. That spread is consistent with its service mix. Financial services and insurance clients were natural users of business information and credit-related solutions; retail and consumer-products companies needed consumer and brand research; telecommunications and technology firms needed market and customer research in fast-growing consumer markets; and manufacturers needed product, channel and business-to-business research. The company's claim that over 80 percent of Fortune 500 companies operating in China used its products or services, repeated in its releases over several years, should be read as a statement about the breadth of its relationships with large multinationals rather than as a market-share figure. It nevertheless explains why a global information group and later a global research group both regarded Sinotrust as a strategic asset: acquiring or investing in it was a way to acquire established relationships with large companies operating in China, as well as a Chinese research workforce.

Experian's strategic investment in 2007

Sinotrust's first step into international ownership came at the beginning of 2007, when Experian, the global information services company, made a strategic investment in the company. Sinotrust consistently described the investment as comprising both capital and know-how, and said that it kept improving its service capabilities. Experian staff in China appeared alongside Sinotrust's founders and leaders at company events, including the 2012 annual meeting and nineteenth anniversary celebration, where representatives of Experian China were listed among the guests. For Experian, whose businesses internationally centred on credit information, data and analytical and marketing services, Sinotrust offered a Chinese platform in business information and marketing solutions. For Sinotrust, the investment was presented as the first step in its internationalisation: the company's own retrospective said that around the time of China's WTO accession it had introduced international strategic capital in the form of Experian. It also said that in the years that followed the company increased investment in human resources, financial management, outsourcing management and information systems, allowing internal control over its businesses, human resources, financial services, outsourcing and information security, and reducing operating risks. Those details matter to the later sale, because the business TNS bought in 2013 was bought from Experian, not from Sinotrust's original founders.

The 2013 acquisition by TNS

On 13 May 2013 WPP announced that TNS, its wholly owned operating company and a leading global custom research business, had agreed to acquire Sinotrust Market Research from Experian, subject to regulatory approval. WPP's announcement supplies the clearest final snapshot of that business: founded in 1992, it employed 350 people, had offices in Beijing, Shanghai and Guangzhou, and was the industry market leader in automotive market research in China, offering consumer, product, brand, channel and customer research analysis. Its unaudited revenues for the year ended 31 March 2013 were 255 million yuan, with gross assets at the same date of 95 million yuan. Two distinctions are important for an accurate record. First, the acquisition concerned Sinotrust Market Research — the research arm — and reports about Sinotrust as a whole, including its wider business-information and credit activities and its larger overall headcount in earlier years, should not be conflated with the 350-person research unit named in the WPP announcement. Second, the announcement was of an agreement to acquire, subject to regulatory approval; it is therefore most accurate to describe the research business as having been sold by Experian to TNS under that 2013 agreement, rather than to describe the whole historic Sinotrust group as simply becoming TNS. The transaction nevertheless marked the end of Sinotrust Market Research as an independent Chinese research brand, as its capabilities were absorbed into a global research network.

Legacy and significance

Sinotrust's significance lies in what it represented in the development of China's information industries. It was founded when reliable commercial information about Chinese consumers and companies was scarce, and it grew by turning that information into research, data, consulting and marketing services for the largest companies operating in the country. Its automotive practice made it the recognised leader in research for the industry that became emblematic of China's consumer expansion, and its joint climate index with a centre of the National Bureau of Statistics gave it a semi-official public role unusual for a private research firm. Its ownership history — founded in Beijing in 1992, backed strategically by Experian from 2007, and with its market research arm agreed to be sold to WPP's TNS in 2013 — traces the wider path of China's professional-services market: local firms built the knowledge and client relationships, and international information groups then sought those assets as China became too important to serve from outside. Because the research business was absorbed into a global group, Sinotrust is now best understood as a historical company, and its record is preserved mainly in its own releases, the statistical index it co-published, and the transaction announcements of Experian's and WPP's involvement.