Olympics a chance to build brand loyalty

What is in a brand? Until the past decade, it probably meant little for the average mainland consumer. Now, millions are bombarded with the biggest offensive yet by domestic and foreign companies ahead of the 2008 Beijing Olympic Games.

But qualifying for Olympic official sponsorship requires deep pockets that not many can afford. The Beijing Olympic Committee sets sponsorship at various levels - worldwide partner, Beijing 2008 partner, Beijing sponsor and Beijing supplier.

Adidas reportedly paid a lofty US$100 million to secure its Beijing partner crown, elbowing out Nike and Mizuno, as well as the Li Ning company, a home-grown sports goods producer established by former Olympic gymnast Li Ning.

Li Ning chief financial officer Tan Wee Seng says the company realised it would have been unfeasible to make a bid after taking into account the entrance fee and the returns.

'Know yourself, know your rivals,' he said. 'We are a very small company. When we invest $1, we want a $10 return ... we need speedy returns on investments.'

The Li Ning company opted for a different route, one that has been the subject of contention in the mainland, with critics questioning whether it breached Olympic sponsorship regulations.

Early this year, the company signed a two-year agreement with China Central Television (CCTV) for its sports journalists and anchors to don Li Ning sportswear until the end of 2008 in all programmes aired on CCTV National Sports TV channel, as well as programmes aired on the 'Olympic Channel' during the Games. Mr Tan stressed it was a deal between two commercial entities and the company had adhered to regulations. 'This is a good opportunity and we seized the opportunity.'

Li Ning's brand management effort reflects its knack for moving tactically instead of competing head on with international giants. It has also signed on various teams, including the Spanish and Argentinian basketball teams, and tied up with others in archery, athletics, ping pong and diving - events that Mr Tan says have accounted for 42 per cent of the country's gold medal count.

According to a recent CLSA survey on middle-class spending, Li Ning ranked as one of the top consumer choices because of its 'innovative and imaginative marketing'.

Branding efforts lately by mainland companies have hinged on the Olympics, though they will not be limited to the Games, as firms attempt to shake off their long-standing image as cheap manufacturers.

Branding strategists say mainlanders' increasing pride in their country is a boon to domestic companies in gaining market share.

The Olympics will only rekindle more of the nationalist spark and confer status and credibility to home-grown brands.

With less than a year before the Games open next summer, Olympic marketing is all the rage.

This very development is also turning mainlanders into more sophisticated consumers and consciously or not, introducing them to brand loyalty.

Chan Wai-chan, who heads McKinsey's Greater China Consumer Practice, says the Olympics are only another channel for mainland companies to market themselves to the rest of the world, but does not change their overall branding strategy.

Olympic marketing does not come cheap. After securing the rights, insiders estimate an additional minimal US$320 million is needed for the campaign.

Li Ning's Mr Tan says the company's Olympic-related programmes this year will account for half of its total marketing expenditure, rising from 10 per cent.