Focus Media Discusses Competition in China

From Focus Media's (FMCN) Q3 2006 earnings conference call:

Lu Sun - Analyst, Lehman Brothers

I just have a quick follow-up. It seems like you have dominant market share in the Tier-I Cities, and also probably the top Tier-II Cities. Now you are expanding to a lot more Tier-II Cities, what is your expected market share in the new cities? How many new cities do you plan to enter?

Jason N. Jiang - Chairman of the Board, Chief Executive Officer, Focus Media

Now that we are already in the Tier-I Cities and top Tier-II Cities, we continue to expand our business into further Tier-II Cities. If somebody really wanted to compete with us, that would be a story three years ago. Given today Focus Media's dominance of the business, we really do not see much competition in those cities, especially if you keep in mind Focus Media is dominant in Beijing, Shanghai, Guangzhou, and Shenzhen, those major cities, and also many of the advertisers, let’s say Volkswagen, Nokia, we believe at this point in time have not started focusing on those cities. Probably in the near future, they will start focusing on those cities.

Right now, we look at all the markets we are entering. We have more than 90% market share. There are no other local guys competing with Focus Media in this sector anymore.

Of course, there are a lot of cities we partner with our distributors, so with those cities, when they start turning profit, we look to acquire those distributors as we have done historically. That is how we look at our business.

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