China, The Sleeping Giant
12th January, 2017
China, a country already with the world’s second largest economy, made a bold statement in 2015. President Xi Jinping announced a goal to create a domestic sports economy worth $850 billion by 2025, a plan that also involves winning the football World Cup by 2050.
This has commenced rapidly, with Chinese Super League clubs paying stars like Oscar and Carlos Tevez at a premium, £60 million and £71.6 million respectively. The effect is simple – bigger names bring more spectators, more commercial interest and greater global reach. As teams gain more exposure around the world due to the leagues increased profile, they become an even more attractive property to brands. This heightened market activity has a knock-on effect to sponsorship fees throughout the rest of the world, as these large rights holders are able to command higher fees, smaller clubs can ride the coat-tails and leverage more expensive properties to their own benefit.
Outside of their home league, Chinese brands have become progressively active as sporting event sponsors and investors, lured by the potential profits of associating their brands with a sport, team or athlete to access a new market. Chinese brands are shown in each of the major European leagues – AIA at Tottenham, 138.com at Watford and Rastar Group gracing the jersey of RCD Espanyol, to name a few.
The biggest example is Hisense, who became the first ever Chinese sponsor of the Euros when aligning with the 2016 competition. Although the official sponsorship fee has not been disclosed, Hisense is said to have invested a sum of 370 million yuan (roughly £43 million).
It is not just football that China is attracted to, but also rugby and basketball. The levels of investment being seen will lead to an effect that can be likened to sponsorship inflation, as activity from within China develops rights holders into even larger properties. Global sports sponsorship investment levels have continuously grown year on year by 4-5% since the late 2000’s and with the sports industry estimated to be worth $73.5 billion by 2019, not surprisingly the bulk of that money will come from China.
Contrastingly, Western brands now have a way to penetrate the largely untapped Chinese market. With significant increases in awareness and media value, gaining a foothold in China would be a lot of brands’ number one goal, however there hasn’t been a platform big enough to promote themselves effectively, until now. The huge audience means Western brands now have a solid foundation to build exposure and revenue in this massive economy, just like the Chinese brands are doing in European sporting markets.
The next few years are going to be a very interesting period for sports sponsorship in China. An already global sport like football is becoming accessible to far more people, allowing rights holders to generate more money for their assets. While some may say that the money in sports is already at a ridiculous level without China’s new-found interest, it is another way of increasing globalisation by providing a platform for China to integrate with the West and vice versa.