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Volume 1, Chapter 3Perspectives on the sports industry in China

2Seminal moments in China’s sports history

1971 Ping-pong diplomacy Demonstrate its friendly intentions to world Sports as international ‘ice breaker’ and demonstration of

strength 1984 Olympics

Promote China’s rise as international power 1994 Establishment of Chinese Football

Association First experiment in commercial sports league

2008 Olympics Showcase its history, culture, power

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Trends in China’s sports industry-1

Constant reform Consumers often lead the reform, markets

develop before policy changes implemented Success of Heineken Open tennis tournament in

Shanghai in 1990s-2000s, lead to Shanghai Masters since 2002, ATP World Tour Masters 1000

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Trends in China’s sports industry-2

“Politics, not commerce”, the role of Sports Administration in China’s government Primary objective: gold medals Secondary objective: revenue generation for the

bureau, to help meet the primary objective, but can not conflict with the primary objective

Primary goals for officials: to preserve their careers International companies should consider when

dealing with China’s officials

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Trends in China’s sports industry-3

Rising inequality between upper/middle classes and lower class Greater interest for sports opportunities to

interior or less-developed regions Sport industry as a method for economic

development in interior regions? International sports properties could gain

tremendous political goodwill and operate in favorable conditions by hosting events in 2nd or 3rd-tier cities

6Challenges to sports industry in China -1

Conflicting objectives Challenge for foreign sports organizations,

especially in non-Olympic sports, to provide solution that benefit gold medals and/or revenue

NBA vs Team China, preseason games Allow authorities to claim support for Olympics Increase local revenue

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NFL in China

NFL: grassroots strategy to build interest Proposed a preseason game in Beijing before Olympics

to attract more American tourists, eventually cancelled but left good impressions to local officials

Flag football league at junior high since 2003, extend to universities

Key strategies of NFL partnership with local marketing agencies Build relationships with local authorities Role-specific partnerships for various functional duties:

digital/internet agency, broadcasting partner, research agency

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Formula One in China

Working with key officials in Shanghai city government

Emphasize on enhancing economic development, raise international profile of Shanghai

High-level officials in municipal government pushed Formula One through local sports bureau as higher priority Traditional hierarchy of system worked for FO

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Media in China

State-controlled China Central Television Broadcast rights for sports properties extremely low

Strict government control of content Lack of commercial focus Monopoly power control price on rights fees Sporting events difficult to grow

Sports market in China mainly funded by sponsorship revenues, not TV or other media rights Paid US 25 M for broadcasting 2002 and 2006 FIFA

World Cup, receive US 125 M in advertising revenue in 2006 alone

12Challenges to sports industry in China -2

Legal system: interpreted by judges to maintain social harmony

Sports properties conflict with government bodies difficult to protect their interests

Success: strong relationship with local and regional government coupled with mutual beneficial goals between entity and government partner If use contract to force the actions compromises rarely

reached Improved recently to offer greater protection and

encourage top brands to enter China Still far behind in legal protection

13Challenges to sports industry in China -3

Sports participation traditions athletes do not ‘rise to the top’ from

grassroots or community sports competitions Trained in specialized sports schools

Teaching teamwork through sports? Under current one-child policy

14Common mistakes for international companies

Work with global agencies that lack local knowledge

Enter market at national level Rugby Federation spend US 1 M in 2000, mostly

went to Sports Administration, no effect

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Opportunities for sport in China Primary concerns

Enhance social, physical, economic welfare of state and people

Benefits to Sports Administration, people, other government agencies

Developing grassroots events Rising income and youth-obesity problems in large cities Teaching fundaments of teamwork: a prime concern of

Education Ministry Large, 2nd-tier cities hope to receive world class

exposure to enhance their stature Can get support from central government