- Hong Kong protests and trade war with the US have created challenging environment
- Organising committee has so far signed 17 domestic sponsors
- Beijing 2022’s sponsorship packages have been extended to run from 2018 until the 2024 Paris Games
Houston Rockets manager Daryl Morey’s tweet supporting pro democracy protestors in Hong Kong triggered a three-way sparring match between the National Basketball Association, the US government and the Chinese government. But when the dust settled, without anyone appearing to throw in the towel, a quiet truce followed, with the NBA’s China broadcast partner Tencent showing live games and content from the NBA on their platforms, albeit with an embargo on the Rockets remaining in place.
From China’s end, the quickly-managed armistice stopped the sparring from escalating into a bout of nationalism that could have created a political cloud over Beijing 2020, adding to the event’s current challenges which include China’s economic downturn and question marks over what its winter athletes can achieve in front of home support.
A full plate
In terms of political pressure, Beijing’s plate is pretty full for the next few years. The endless Hong Kong protests, an on-going trade war with the US, international criticism around human rights and the unpredictable South China Sea situation all add to the challenging geopolitical environment and increase scrutiny of china’s economic and political rise. Beijing 2022, like its summer sibling in 2008, will aim to use sport to project a more positive image of the country.
The immediate concern, however, is the slowing of China’s economic engine, which may adversely affect prospects for the commercial and marketing development of Beijing 2022. Squeezed by the trade war with the US, inflation, and languishing consumer confidence, China reported that in the third quarter of 2019 the GDP growth rate was just 6 per cent – the lowest in the past three decades, with warning signs flashing for the government.
As of November this year, 26 months ahead of the Games, Beijing 2022 had signed up 17 sponsors, of which nine are Official Partners, six Official Sponsors, and two Exclusive Suppliers. All are Chinese brands except for European brand EF Education First, which became the event’s Official Language Training Services Exclusive Supplier last August. The company was also an Official Partner of the 2018 Winter Olympic Games in Pyeongchang, Korea.
Beijing 2022’s marketing programme was officially launched only in February 2017 and the organising committee still has time to seal more deals by the end of 2020. While it has been perceived as having a slow start in some quarters, the feeling is Beijing’s more exclusive sponsorship strategy won’t have to work too hard to surpass the revenues generated by Pyeonchang’s cut-price and overloaded domestic programme, even if Beijing’s approach has created some tensions among brands.
Is less more?
With the IOC’s blessing, Beijing 2022’s sponsorship packages have been extended to run from 2018 till the 2024 Paris Summer Olympics. The Beijing Organising Committee for the 2022 Olympic and Paralympic Winter Games (BOCWOG) consequently set the threshold of the entry price for being the Official Partner to above ¥200m ($29m/€26.3m) per year. This translates to an official partner deal sponsorship package being in the range of over ¥1bn, to the ¥4bn which Yili, China’s leading milk producer, is said to have committed for the official Beijing 2022 dairy product partnership.
In 2017 International Olympic Committee television and marketing services director Timo Lumme estimated Beijing’s marketing program will reap over $1bn domestically. If this strategy of high sponsorship prices for multiple Olympics works out, Beijing should outdo Lumme’s projection even with a small number of signed partners.
“The ‘less-is-more’ approach is a good idea for BOCWOG, but getting the optimum combination of fewer partners and more revenues depends on many factors going right”, says Dr Lingling Liu, a sports consultant.
One of the challenges to be overcome, beyond the economic outlook, is the reluctance of companies to commit budgets for up to seven years. Other than the deep-pocketed state-owned and state-backed enterprises such as Bank of China, Air China, and the country’s two oil and petroleum giants, few Chinese companies want to commit to such a marketing commitment.
“This partly explains the slow start,” says Dr Liu. “People do have reasons to be equally cautious and optimistic. It remains to be seen if BOCWOG will eventually offer more flexible and short-term packages to speed up sponsorship sales.”
There is no doubt Beijing 2022 has its appeal for global sponsors, something which has benefitted the IOC’s own coffers. In June, by creating an unprecedented joint TOP partnership worldwide category combining non-alcoholic beverages and dairy, the IOC signed Mengniu – China’s second-biggest dairy company – and Coca-Cola to a 12-year deal worth more than $3bn, according to data from SportBusiness Sponsorship.
This outraged domestic dairy partner Yili, who found it hard to stomach the IOC’s rationale that the joint TOP will neither offend the Olympic marketing programme’s principle of exclusivity within a specific product category and territory, nor affect Yili’s “current Beijing 2022 domestic partner’s exclusive rights in its designated category in the Chinese market”.
In an ugly turn of events Yili even resorted to nationalist sentiments to smear its rival. It claimed Mengniu was “enhancing its status by holding the arms of a foreign master” and “allying with an American company to defile the Chinese Winter Olympic Games”.
Fortunately for all parties, BOCWOG managed to dial down the dairy controversy and avoid a national uproar involving yet another iconic American brand.
The eagerness of Chinese companies to be part of Beijing 2022 is in many cases due to their desire to tap into the massive potential of the domestic winter sports market. On October 29, Anta, China’s leading sportswear company, became the official sportswear uniform supplier for the IOC until the end of 2022. The deal spans over two Youth Olympics in 2020 and 2022, the Tokyo 2020 Olympic Games and Beijing 2022. “The domestic winter sports equipment and apparel market of China was worth ¥30bn ($4.3bn) in 2017,” says Zheng Jie, its executive board director and chief brand officer.
“The market will be four-times bigger, reaching ¥150bn in 2022. Anta has plans to be the leading player in it.”
The company started to roll out winter sportswear in the Chinese market last year through a joint venture with Japanese ski apparel company Descente.
Where are the Chinese winter athletes?
The market expectation is based upon the prospect that Beijing 2022 will motivate 300 million – one in every five Chinese – to participate in winter sports, a promise made to the IOC in Beijing’s bid book and written into the latest version of the national sports development plan.
Realisation of this ambition hinges on more than just the successful showcase of a Winter Olympic Games. Economics is one key factor. Dong Ping, a white-collar ski enthusiast who frequents Chongli at Zhangjiakou, 200km north of Beijing in Hebei Province where most of the outdoor events of Beijing 2022 will be held, observed that the weekend queues at ski resorts disappeared last winter. “It looked like some people already have no more money, or not enough interest in skiing to spend a night there,” he says.
Another unofficial, but often reported, target is to have 50 million hardcore winter sports enthusiasts in China after Beijing 2022. However, the immediate challenge for China is really how its own athletes will perform in front of a home crowd.
China is traditionally poor at winter sports except for short-track speed skating, and even this discipline yielded only one gold at the 2018 Winter Olympics. The current game plan is for Chinese athletes to compete in all events for the first time, and the goal is for the delegation as a whole to achieve its personal best at a Winter Olympics.
In February 2018, an imaginative cross-over project was kicked off by Chinese sport authorities to select 150 trainees out of 420 professional athletes in other disciplines, ranging from rowing, canoeing, running, cycling, football, volleyball, and even martial arts, to try out winter sports, in the hope that a few success stories will emerge.
Chen Pengbin, famous for completing a full marathon every day for 100 consecutive days four years ago, started cross-country skiing in Finland early 2019. He did not even know how to ski a year earlier. “I like new challenges. I hope to win enough points to qualify for Beijing Olympic Winter Games,” he said. By the time the Games roll round in 2022, he will be 44.
Although the number of winter sports enthusiasts in China is unclear, the number of ski resorts reached 742 in 2018, an increase of 30 per cent since 2015 when Beijing 2022 was first awarded. Infrastructure, which has been the leading driver for China’s decades of economic growth, has yet again been the real winner.
Beijing 2022 will have 26 venues and athlete villages, newly-built or repurposed. All venues are planned for completion by the end of 2020 or mid-2021, and include brand new motorways and high-speed railways linking Beijing and satellite event locations.
Footing the bill for the massive infrastructure costs doesn’t seem to be a problem for the Beijing 2022 organisers even though the commercial development so far is not as strong as previous Games. “The 2018 Pyeongchang organisers were different,” says Dr Lingling Liu. “They did not have such abundant political resources.”
The suggestion is that, for the government, the cost is justified because Beijing will be written in Olympic history as the first city to have hosted both summer and winter Olympics. The BOCWOG has the full mandate and support from the state’s top leaders as well as the Beijing municipality government, according to Chen Jining, mayor of Beijing.
China’s confidence in hosting a successful Winter Games has always been echoed by IOC president Thomas Bach, who speaks well of Beijing 2022 at every opportunity. The IOC has just conducted a three-day review at the Beijing 2022 organising committee’s headquarters this month, and Juan Antonio Samarach, an IOC vice-president, said: “We are very impressed with the progress achieved. I am not going say it surprises us, but we are very impressed with the amount and quality of work that has been done.”
“It gives us a lot of confidence in the ability of Beijing 2022 and [its] partners to deliver on a very ambitious vision.”