Volume 1, Chapter 3
Perspectives on the sports industry in
China
1
Seminal moments in China’s sports
history
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1971 Ping-pong diplomacy
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1984 Olympics
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Promote China’s rise as international power
1994 Establishment of Chinese Football
Association
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Demonstrate its friendly intentions to world
Sports as international ‘ice breaker’ and demonstration of
strength
First experiment in commercial sports league
2008 Olympics
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Showcase its history, culture, power
2
3
Trends in China’s sports industry-1

Constant reform
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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
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“Politics, not commerce”, the role of Sports
Administration in China’s government
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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
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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
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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
Challenges to sports industry in
China -1

Conflicting objectives

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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
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Allow authorities to claim support for Olympics
Increase local revenue
6
7
NFL in China
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NFL: grassroots strategy to build interest
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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

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partnership with local marketing agencies
Build relationships with local authorities
Role-specific partnerships for various functional duties:
digital/internet agency, broadcasting partner, research
agency
8
9
10
Formula One in China


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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
11
Media in China
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State-controlled China Central Television
Broadcast rights for sports properties extremely low
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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
Challenges to sports industry in
China -2

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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

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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
12
Challenges to sports industry in
China -3
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Sports participation traditions
athletes do not ‘rise to the top’ from
grassroots or community sports competitions
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Trained in specialized sports schools
Teaching teamwork through sports? Under
current one-child policy
13
Common mistakes for international
companies
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Work with global agencies that lack local
knowledge
Enter market at national level
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Rugby Federation spend US 1 M in 2000, mostly
went to Sports Administration, no effect
14
15
Opportunities for sport in China
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Primary concerns
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Developing grassroots events
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Enhance social, physical, economic welfare of state and
people
Benefits to Sports Administration, people, other
government agencies
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