Sporting chance: China puts the wind in its sales

PUBLISHED : Wednesday, 02 May, 2007, 12:00am
UPDATED : Wednesday, 02 May, 2007, 12:00am

America's Cup tilt highlights growing marketing appeal of top-level sport for mainland companies

China Huiyuan Juice Group is going from stock market to sports team in a bid to build an international brand, and many other companies are doing the same thing, attracted to China's nascent but growing sports marketing business.

The mainland's top juice maker raised HK$2.4 billion in a Hong Kong initial public offering this year, and now it has paid to have its name emblazoned on the sails of the first Chinese yacht to participate in the America's Cup challenge, the world's oldest sporting trophy.

'This is a new way of marketing in China,' said Antony Zhu Yantong, secretary to the president and chairman of Huiyuan, as he proudly watched ChinaTeam hoist its sails and the company's logo in Valencia, Spain, where the team is racing.

'Normally, we'd use advertisements on CCTV to establish our brand, but now we're trying a new medium because maybe it will give us access to a new market.'

The Beijing juice maker is the first domestic company to back China's sailing team, and it is also part of a growing mainland group of trailblazers that see sports marketing as a fresh and relatively affordable way to build brand image.

'It's not so expensive compared to TV. We normally spend about 100 million yuan a year on advertising and marketing,' Mr Zhu said. 'This is just the beginning. We've just made the decision to join the team and if the results are good we may consider extending our relationship with them.'

ChinaTeam has not created much buzz based on its performance - the team won its first race on Monday when its competitor lost its sail - but everyone agrees that its participation carries marketing clout. Be it luxury handbags, computers or refrigerators, Chinese consumers pose the biggest growth opportunity for any marketer.

'China's representation in the regatta is very good for the commercial aspects of the cup,' said Larry Ellison, founder of Oracle, the software company, and head of the BMW Oracle racing team.

Pierre Justo, China managing director of sports research firm TNS, said sports marketing was a US$40 billion business globally, but China accounts for less than US$1 billion of that. 'It's growing at 30 to 40 per cent a year, especially in the past two years because the market is being driven by the organisation of the Olympics,' Mr Justo said.

While yachting is a sport for the elite and one which is almost non-existent in Chinese culture, other sports such as basketball and football are gaining more traction. The US-based National Basketball Association began marketing in China some 20 years ago, tapping into what it estimates to be 300 million active players and even more fans.

However, it is only more recently that business has really taken off, thanks to homegrown players such as Yao Ming and the success of China's own professional teams, as well as the rising economic clout of mainland consumers.

The NBA has now built that interest in the sport into a growing business. Seven of its 17 sponsors in China are domestic companies including China Mobile, Haier, Lenovo and China Mengniu Dairy.

'The thing about sports is that it is unscripted drama, and that helps build an emotional attachment to the brands,' said Mark Fischer, managing director of NBA China.

International revenues, including those from China, account for less than 10 per cent of the NBA's global revenues, but China is its largest overseas market. Moreover, the NBA does not have to compete for market share with other mega brands such as Nascar or the National Football League.

'We don't have as much competition here as we have in the US,' Mr Fischer said. 'There's more competition coming. Every major and minor sports property is looking to get into China.'

Mr Justo said it was hard to calculate how much of the marketing pie each sport had secured, but basketball was likely leading the way, followed by football and motor sports.

With the cost of television advertising rising by 15 per cent to 30 per cent a year, sports marketing appears to offer a relatively affordable way to promote your brand. 'People that invest in sports marketing think the results and value is quite good since it's still so new and hasn't really taken off yet,' Mr Justo said.

However, he said the value of sports marketing might not be quite as attractive if sponsors were to calculate it based on the portion of the market that can actually afford to buy their products. While China's 1.3 billion population is often touted by those trumpeting their entrance into the market, it is mostly urbanites who can seriously be considered potential customers.

In addition, sponsors are still learning about their target market, and that their perceived role in a sport is different in China than in western markets. American sports fans are well aware that sponsors support a team or event in order to sell their products, which can reduce the effectiveness of sponsorship.

'In China, for the moment, people do not necessarily see it this way, this perceived negative aspect of sports marketing,' Mr Justo said.

In the case of Louis Vuitton and its association with sailing, the brand may be helping the sport more than in the reverse. In China the flashy bags made by the French fashion house, the main sponsor of the America's Cup, are better known and certainly more loved than the yachting competition itself. Still, the company has played an important role in bringing China into the America's Cup because the country represents its future growth.

'The people in this market appreciate luxury even if they may not know about the history of this cup the same as our European customers,' said Yves Carcelle, president and chief executive of Louis Vuitton.



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