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Professional leagues from West make play for Chinese market

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In a way, the major players in the sports industry - the leagues, marketing concerns like IMG and even star players like Wimbledon champion and China Open headliner Maria Sharapova - are simply following the same path as the cellular-phone manufacturers and major auto makers who have been investing so heavily in cracking the Chinese market in recent years.

But there's one major difference: While companies like Motorola and Volkswagen have to contend with intense local and international competition and the accompanying pressure on prices and profits, sports enjoys a kind of immunity.

"Sport crosses markets and cultures better than any other product," says John Cappo, managing director for IMG in China. "And there are barriers to entry. It takes time to develop properties. You can't just start another league. There are only so many athletes that play at that level."

The best news for those involved? The real potential for the sports industry in China is still ahead.

"The sports boom we had in North America in the 1970s and 1980s hasn't come here yet," says Terry Rhoads, a former Nike executive in China who now runs Shanghai-based Zou Marketing, acting as a bridge between Chinese and Western sports interests.

"Outside the elite system, there's no real competition or leagues for kids right now. But it's coming. I think the real boom is 10 or 20 years away, as more and more kids get a chance to participate and become consumers."

The lure of connecting with those consumers is driving the rush to China by leagues and major brand manufacturers alike. "That's the Holy Grail," says Rhoads. "Kids in America have what, 10 pairs of shoes in their closets? In China it's one or two. For Nike or adidas that's eight more pairs of shoes."

It's expected Nike's sales in China will be in the range of $370-million for 2004, but analysts expect them to be doing $1.2-billion by 2010, with adidas and Reebok following behind.

It's not all clear sailing. One of the NBA's leading sources of revenues is licensed product - everything from basketballs to clothing to video games. And while there's an appetite for it - there's no shortage of kids in Beijing wearing oversized NBA jerseys as part of their hip-hop inspired uniform - it's a good bet most of the gear is counterfeit, given China's record for knocking off manufactured items ranging from designer clothes to golf clubs.

"It's a long-term problem that everyone is facing," says the NBA's Denzel.

"Every year, we hack away at it a little bit more, and now with the WTO and the Olympics coming, there's a lot more external pressure to crack down, but there's some major changes needed, and like everything in this country, it takes time."

Another major hurdle is the lack of a competitive television market, which traditionally gives sports leagues and events their greatest source of revenue. There is one major national, state-run sports channel in China, as well as a dozen provincial channels that carry sports, but they operate mostly as a monopoly and pay only nominal rights fees.

For the Chinese, there is concern that as sports supporters become fans of international leagues and events, the domestic product will suffer. Television ratings are generally three times better for NBA games than for those played by the Chinese league. And while Chinese soccer fans swamped stadiums for a tour by Real Madrid and David Beckham last year, interest in the Chinese Football Association has slumped in recent years, in part because of a series of sordid gambling scandals recently, but also because of an increased interest in European soccer.

Will China's athletes start aspiring to stardom beyond their borders, leaving Chinese leagues to face the future without star players?

"We might have a lot of basketball players in China, but not that may of top calibre, and when a top player leaves a CBA team for the NBA, the CBA team suffers," says Xia Song, a player agent for some of China's top basketball players.

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