image

Alibaba

How Alibaba aims to transform China’s sports market – and help bring the World Cup to the country

The giant Chinese company sees the world of sports as the next massive untapped gold mine and has set up an offshoot, Alisports, to cash in

PUBLISHED : Wednesday, 03 February, 2016, 1:14pm
UPDATED : Wednesday, 26 October, 2016, 6:48pm

Alibaba transformed China’s e-commerce market in becoming the country’s most well-known company. Now it aims to do the same with sport – and perhaps help deliver the World Cup to president Xi Jinping along the way.

The firm launched an offshoot in September last year, Alisports. In an exclusive interview its CEO, Zhang Dazhong, told the South China Morning Post of plans to cash in on China’s nascent sports market, which has been forecast by the government’s state council to grow to 5 trillion yuan by 2025.

The government has declared sport as the next driver of economic growth and companies are rushing to stake their claim; meanwhile, football fan Xi has declared that China must qualify for a World Cup, host one and win one.

“This is just merely beginning and the market is really vast and huge,” said Zhang through a translator by phone from Alisports’ HQ in Shanghai.

“Therefore I believe the [2025 financial] target set by the Chinese government is very easy to be reached.

“Now of course the government has unleashed entrepreneurs to have this power in the market, I believe more entrepreneurs like Alibaba will make their presence felt.

“As you know the consumption power in China is huge and gigantic – the consumption of sport is about to burst in China.”

Alisports was set up in September with Alibaba as majority owner alongside Sina and Yunfeng Capital, an investment firm owned by Alibaba chairman Jack Ma Yun.

Their plan involves leveraging the reams of data they have on the hundreds of millions of users of Alibaba web products to encourage them to become sports fans and participants – and then splash out on sports events, merchandise and equipment.

They aim to be the go-to provider of web-shops, profile sites, etc. for global sports stars and teams aiming to connect with those millions of consumers.

And they say they will bring major events to China and set up modern ticketing systems.

Alibaba (which agreed a deal in December to buy the South China Morning Post) also owns or has stakes in content providers such as Sina and Yukou.

 

In the four months since founding, Alisports has agreed deals to screen the NFL in China, sponsor Fifa’s Club World Cup, and signed partnerships with Brazil star Ronaldo and the governing bodies of boxing and basketball

CEO Zhang also met with football ‘super-agent’ Jorge Mendes and his client Jose Mourinho in Shanghai last month to discuss partnerships.

Perhaps the first fruit was seen on Wednesday when Mendes client Jackson Martinez signed for Guangzhou Evergrande – half-owned by Alibaba – in a record 42 million euro deal. Mendes’s most high-profile client is superstar Cristiano Ronaldo.

Zhang, a former vice-president of Shanghai Media Group who brought the NBA to Chinese television, says the company’s move into the world of sports can help modernise China’s sports industry and help fulfil Xi’s World Cup dream.

“[President Xi] is really giving it a strong push to reform the Chinese sports market,” he said.

“I believe the World Cup will definitely come to China sooner or later. With the emergence of Alisport [that] dream ... will come even earlier.

“Not because of the money that we have ... but also because we can help the Chinese sports industry become more mature.

READ MORE: As China looks to upset football’s world order, January transfer splurge could be just the start

“Fifa would like to see a mature soccer market [in China]. Alibaba will certainly make a special contribution to make this happen.

“Certainly Alibaba together with other enterprises would like to push and make it a go in this direction.

“We cannot do everything by ourselves but can provide a foundation.”

Chinese firms have recently been buying stakes in European clubs, with Wanda (Atletico Madrid) and China Media Capital (Manchester City) the highest-profile examples.

Zhang said Alisports would probably prefer to sponsor or brand a big league as a whole.

“It’s not our direction to buy a club or team, but to create a platform for clubs and teams,” he said. “Just to buy a club would be an exception or special case, an individual case.

“We’re more interested in the assets, for example of leagues. We like [to engage with] all people ... not just one team or person – when you talk about leagues with many teams and many people [you] don’t have this type of conflict.”

READ MORE: Manchester City hope ‘China’s Rupert Murdoch’ Li Ruigang helps them cash in on country’s sporting revolution

Zhang said that foreign athletes and teams were only just waking up to China’s massive sports market.

“I cannot give you the exact picture [of their knowledge of] how big the market is, but everyone is interested in coming to China in the near future. It’s the most attractive sporting market.

“Very much like what happened 30 years ago when [foreign firms] brought capital to China, 30 years later they need to bring celebrities of sport and games to China.”

Zhang said two key factors would allow them to capitalise: the unlinking of the sports economy from government control and Alibaba’s dominance of the internet.

“In the past the government utilised its administration power in the traditional way to push sports economy, but for us it’s a different story now; we want to utilise different methods and different tools, for example the internet, to give the sports economy a boost,” he said.

“In the past people in China would probably pay more attention to Olympic golds and the number of them, now the attention has been shifted to well-being

READ MORE: ‘Betrayed promises’ cost China a chance to host World Cup, says Fifa candidate Jerome Champagne

“Alibaba would like to convert their nearly 500 million people or users into sportsmen and to utilise its strengths to help them. Our users normally would spent time on Tmall or Taobao purchasing things, but we’d also like to ask them to get out to the field, to play to have fun and to exercise.

“Down the line the consumption or money spent on sport will be much more than other commodities.

“The next part definitely we hope will be to set up our strategic relations with different associations governing different sports around the world.

“We also especially want to try to convert Alibaba consumers into lovers or fans of sports celebrities.

“You can expect we will have a lot of close relations and cooperation with associations, clubs, star players and athletes around the world,” Zhang said.