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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