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

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

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

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

  2. Seminal 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

  3. 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

  4. 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

  5. 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

  6. 中國以國家力量推動運動產業 • 2014年國務院印發了《關于加快發展體育產業促進體育消費的若干意見》 • 積極擴大體育產品和服務供給 • 推動體育產業成為經濟轉型升級的重要力量 • 促進群眾體育與競技體育全面發展 • 加快體育強國建設 • 不斷滿足人民群眾日益增長的體育需求 http://big5.3mt.com.cn/g2b.aspx/ido.3mt.com.cn/Article/201410/show3883645c12p1.html

  7. 中國以國家力量推動運動產業 • 全民健身上升為國家戰略 • 根本目標: 增強人民體質、提高健康水平 • 體育產業作為綠色產業、朝陽產業扶持 • 到2025年，體育產業總規模超過5兆人民幣 (US$ 813B)，成為推動經濟社會持續發展的重要力量 • 各地要將發展體育產業、促進體育消費納入國民經濟和社會發展規劃，納入政府重要議事日程，建立多部門工作協調機制。

  8. Challenges 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

  9. 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

  10. NBA in China • NBA China was formed in January 2008 • NBA China and the Ministry of Education of China signed a comprehensive multiyear partnership • incorporate a fitness and basketball development curriculum in elementary, middle and high schools across China • First deal of the kind for both sides http://www.nba.com/2014/news/10/17/nba-ministry-of-education-in-china-join-to-push-basketball-fitness-in-chinese-schools/

  11. NBA in China • The agreement focus on: • basketball participation in elementary, middle and high schools across China • provide enhanced basketball training to at least 3 million students by 2017 • conduct basketball clinics • provide specialized instruction to Chinese coaches and physical education teachers

  12. NBA in China • February 2014, NBA China and Yao Ming launched the first ever after-school basketball program in Beijing • basketball training and fitness programs for boys and girls at all skill levels • Teaching teamwork, leadership and communication in a fun basketball environment. • September 2011, the CBA Dongguan Basketball School, an NBA Training Center, was launched for elite players ages 12-17.

  13. 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

  14. 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

  15. Challenges 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

  16. Challenges 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

  17. Common 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

  18. 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

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