The business of sport in China

The business of sport in China

China’s success at the Rio Olympics will be welcomed not only by the general population but also – and especially – by China’s political leaders whose attention has recently turned to growing the country’s sport economy. In Beijing in 2008, for the first time ever, China won more medals than the USA, capping a games which had been designed to underline China’s position on the world stage as a global economic and political superpower. Of course China is a sporting superpower too, though strong historically in some of the more overlooked (in the West) sports such as table tennis. The breath-taking extravaganza of the Beijing Olympics certainly had all eyes upon it but there has been patchy success at leveraging the Olympic legacy in China, resulting in renewed state support for sports development in 2014 in the form of a State Council Guiding Opinion. Similar to football’s masterplan, this sets out objectives for China’s sport economy and has kick-started China’s further investment in sport.

The sporting plan for 2025

China aims to have 500 million participants in sport by 2025. This participation goal is part of a package of objectives designed to raise China’s game over the coming decade. The People’s Republic of China’s (PRC) sports industry was valued at 400 billion yuan (US$61 billion) in 2015 and is planned to reach 3 trillion yuan by 2020, rising from 0.7% to 1% of GDP. With strong state and political backing, this is an achievable goal. By comparison, the USA’s sports industry contributes around 3% towards GDP.

Dragon boat racing and China’s early version of football date back at least 2,000 years. China boasts a long association with the martial arts and popular recreational sport includes table tennis, badminton, billiards, snooker and (increasingly) football. Indeed, traditional Chinese culture prizes physical fitness. Prior to the 1990s, Chinese sport was effectively government-funded within the command economy, but in 1994, at a time of growing marketisation, football was the first sport to be professionalised. Other sport, including table tennis and badminton, followed. This was the first platform for sport to be turned into a business in the country.

Table tennis and a clean sweep of medals at the Beijing Olympics

It seems likely that table tennis began in the latter part of the 19th century as a parlour game in the UK, although debate around the origins of table tennis/ping pong/wiff waff remains, in table tennis circles at least. Whatever its roots, the game has long been widely-played in China and the PRC completed a clean sweep of medals at the Beijing Olympics in 2008. In London in 2012, China won all medals open to them after a rule change was made to avoid one country (China) taking all medal positions. Intensive training, individual practice and early nurturing of talent in specialist sports academies are some of the contributing factors to China’s domination of the sport.

Table tennis has played an important part in China’s political history too, with matches between the USA and China the lever which prised open the door to Nixon’s ground-breaking visit to the PRC in 1972. This series of events later became known as Ping Pong Diplomacy.

Martial arts and Kung Fu Panda

China is home to several hundred different martial arts, the origins of which lie in military training in ancient China. Later aligned with Maoism, partly to discourage any connections with potentially subversive ideas of self-defence, martial arts have held a central place in popular Chinese culture for the last century. Wuxia or martial arts fiction came to international attention in film form in the 1970s with Bruce Lee’s global hit Enter the Dragon, and Jackie Chan later picked up this mantle and maintained a multi-billion dollar business from it, largely through success in Asia until the late 1990s. Ang Lee’s Crouching Tiger Hidden Dragon and the use of martial arts with CGI in The Matrix marked the genre’s return to the big time and martial arts have been popular in Hollywood action movies in more recent years, perhaps reaching their peak in Tarantino’s Kill Bill. And Dreamworks’ Kung Fu Panda.

Basketball and the Yao Ming effect

Thanks to a long history, and more recently the star effect of Yao Ming, China’s most successful basketball player of all time, around 300 million Chinese play basketball. Yao Ming’s retirement in 2011 prompted over 1 million comments on Weibo and he was elected into the Naismith Memorial Basketball Hall of Fame earlier this year. More Chinese players have since followed in his footsteps into the National Basketball Assocation (NBA) across the Pacific, and the NBA in turn is spreading its reach in China. The CBA Dongguan Basketball School, an NBA training centre designed to foster elite young basketball talent in China, opened in 2011, and joint training camps between the NBA and Yao Ming have been taking place since 2014.

China is the NBA’s largest market outside the USA by some chalk, and will no doubt be further boosted by China’s men’s national team’s appearance at the Rio Olympics.

The 3 trillion yuan opportunity

As household incomes rise, increasing numbers of Chinese parents are keen to provide their (only) children with a more balanced childhood and education than that produced by an emphasis on intensive schooling and piano or violin lessons. Parents are also recognising that sport can provide an experience of teamwork not easily found in a one child family – and for the 500,00 families whose children went overseas to study in 2015, most of them to the USA, sport can act as a great cultural bridge into an unfamiliar society.

And with rising global influence in China, teenagers and young people also see in sport an opportunity for self-expression and individuality. Trainers are perhaps as highly regarded as status symbols as they are in the UK or USA, and have recently become a common reward for high performance in exams.

Advertising, sponsorship, manufacturing and more

China is the largest sporting goods manufacturer in the world – but the big profits in sport lie elsewhere and especially in sponsorship, advertising and entertainment. Chinese sports sponsorship is slowly taking off. The sponsorship of the UEFA EURO 2016 tournament by Chinese electronics giant Hisense was the first such UEFA sponsorship by a Chinese company. One of China’s largest sports manufacturers, 361 Degrees International, is an official sponsor of the Rio Olympics – but opinion is divided as to whether this kind of deal will help home-grown manufacturers pick up the pace against global brands such as Nike. An interesting side-effect of Yao Ming’s high profile in the NBA has been that such sports megabrands need no longer rely exclusively on local stars to promote their goods, introducing more consistency and cost efficiencies across markets for the global brands, and perhaps disadvantaging local brands even more.

On the domestic front, there is increasing money to be made from the business of sport in China. 5-year sponsorship rights to the Chinese football Super League were sold last year for a record 8 billion yuan (about US$1.25bn); the previous 1 year’s rights had sold for just 60 million yuan. The NBA has an official store on Alibaba’s online shopping site Tmall, and its licensing deals in China include a partnership with beer brand Harbin. It also has a 5-year partnership from 2015 with (major ISP) Tencent which guarantees the NBA US$500 million.

In 2015 Chinese athletes won 127 world championship titles in 25 sports, and Beijing will host the Winter Olympics in 2022.  There is no other market in the world which could declare a target of 500 million people to play sport by 2025 – and stand an excellent chance of achieving the goal. Sport is becoming big business in China, and the rewards are only going to increase with time.

So how does China’s increasing focus on sport affect its outbound travel market? Purchases of sports merchandise are on the rise as global brand sports superstars with big sponsorship deals extend their reach into the PRC. Over 350 million Chinese watch Premier League football matches and their enthusiasm for seeing UK clubs during pre-season tours is joining with their plans for overseas holidays; fans want to visit their team’s stadiums and see them play live on home turf or take stadium tours. Wealthy Chinese football fans are seeking exclusive experiences, such as the VIP tour options offered by the UK’s top football clubs. There are also opportunities to promote event spaces and conference facilities to the MICE market.

We specialise in promoting tourism brands to the Chinese travel trade and media, and, through cooperation with our tour operator partners, we can help ensure your club’s Chinese fans include a visit to your home ground within their European holiday itinerary. Contact us now for a chat about how to raise your profile and encourage more visitors from China.

Image: Xu Xin by Doha Stadium Plus. Licensed.

 

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Helena Beard

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