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China, Sport Business | Jul 25, 2017
In review: The Leaders Sport Business Summit in Beijing.

As the rain thundered down across Beijing, the corridors and halls of Sina Plaza boomed with conversation as the first Leaders Sport Business Summit in China rolled into town on 21st July.

Sina is one of China’s internet darlings; the creators of Weibo, and, in Sina Sports, one of the country’s leading digital sports content and community platforms. The internet giant’s shiny new headquarters were a fitting setting for a summit with the future of the sports industry as its focus.

Over 200 flights into Beijing were cancelled on the night before the event on account of the weather, but almost 250 intrepid souls made it down to the ‘Beijing Silicon Valley’ for the summit – including the sponsors that made it happen in iRENA, SAP, and Nielsen.

What went down

After the customary welcome from Leaders CEO James Worrall – using his own idiosyncratic and bold attempt at Mandarin – it was over to our hosts, as Arthur Wei, General Manager of Sina Sports, took the podium.

Potted history

In a short opening presentation, Wei stressed just how rapidly the Chinese sports media market has progressed. It was as recently as 1984 that China was being welcomed in from the wilderness back into the Olympic movement, jump-starting a medals machine that’s still whirring today, and breathing new life into its economy through the Reform and Open Door Policy. In 2015, the government’s State Council Article No.46 – otherwise known as the RMB 5 trillion ($815 billion) target for the domestic sports industry by 2025 – re-energised the sports market again. Sina, already operators of one of the country’s largest social networks in Weibo, took the opportunity to move its sports offering on in a newly liberalised environment, adding an events arm and forging ahead with short form tournaments in 3×3 basketball and 5-aside soccer.

Major Leagues, Major Market

Wise words from WWE Greater China GM Jay Li in a panel focused on the varying strategies of the major US sports bodies for cracking China. “As a rights holder here, the critical thing is to keep your finger on the pulse and keep gauging where the media market is going.” And, as NBA China COO Collins Qian pointed out, wherever that media market is going, the pace at which it’s going there is difficult to comprehend. “I joined the NBA in 2010, the year before Weibo started; Wechat started a couple of years after that. In the time I’ve been at the league, both those organisations have added half a billion users from scratch.” The power and pervasiveness of those social networks is extraordinary, and delivering bespoke, local content seems to be a must for any international rights holder in China. How are the NBA doing it? Well, they’re finding ways to get the players to celebrate Chinese New Year, eat dumplings and practice kung-fu of course.

Interlude

If this were a blow-by-blow, real-time account of the conference, we’d all be going for a coffee at this point. Instead, why not have a look at this, the latest edition of the SportsBusiness Daily – Global. There’s a good primer on the latest government intervention in Chinese sport in there – which is handy – as state-controlled CCTV spoke out against Suning’s ownership of sports properties earlier in the week.

Ground control to Major Zhu

China is arguably one of the most competitive markets for the sportswear industry. The traditional international giants are in a constant wrestle with nimble local players like Peak, Li Ning, and Anta, whose recent $80 million endorsement deal with Klay Thompson caught the eye. Major Zhu, a major player at Anta as Senior Brand Director, explained that, unlike Nike and Adidas, “who focus on performance, Anta is figuring out how to incorporate Klay Thompson’s personality into our brand strategy.” Thompson, Zhu said, is a down-to-earth guy whose recent visit to China transformed him into an icon. LVMH Greater China CMO Loic Biver, meanwhile, was put on the spot with a question about ROI and eyeballs from Nielsen’s Claude Ringuet. Biver looks after the marketing strategies for Hublot and Tag Heuer in China, and neither are easy to measure. “It’s hard to measure ROI when you invest in sports in China,” he said. “Hublot’s target audience is to talk to owners and players; Tag’s target audience is the mass – then your ROI is the eyeballs, how many people watch this, how many people watch that; and it’s clear the viewers are here.”

Clark of the course

CMC Holdings President Clark Xu led a brisk jog through an investment strategy that has seen China Media Capital, whose shareholders include the likes of Tencent and Alibaba, position itself as one of the earliest and one of the most diligent Chinese investors across the global sports industry. An exciting tie-up with the CAA agency in the Chinese region is the latest addition to a portfolio that includes a key holding in City Football Group, a position alongside Wanda in the ownership of Infront Sports & Media, and a stake in Formula E. China’s swashbuckling conglomerates have been doused in cold water of late, their global acquisition strategies reined in by government-imposed capital outflow restrictions, currency fluctuations, and closer scrutiny of their holdings at home. According to Xu, the situation is a short-term roadblock, not something more long-lasting. “We are being affected by the situation,” he said. “Fortunately for us, we have both an RMB and US dollar investment fund. But we are focusing more on consolidating some of our assets, and less on cross-border investment at the moment. We don’t think this will be a long-term restriction though. We still feel we’re in a good position.”

Bounce

The next major event on China’s sporting horizon – at least before the Beijing 2022 Winter Games – is the 2019 FIBA Basketball World Cup. With the popularity of basketball at both a participatory and spectator level, it’s probably the best suited global sports event to China’s unique landscape. The infrastructure is more or less there too. Nevertheless, there are major challenges associated with organising a tournament across the breadth of a country the size of China. The lesson of the day – one hammered home in session after session – was that it’s imperative to partner with local organisations. And the right local organisations at that. For FIBA, and their counterparts at the CBA, Wanda are arguably the perfect fit. Sponsors of the tournament, the sports division is also a long-term strategic partner of FIBA. David Yang, CEO of Wanda Sports, and, as such, closely associated with Wanda’s sponsorship of FIFA, dealt with a question on another sort of World Cup with aplomb. Asked when the soccer World Cup might come to China, Yang replied: “We’re working closely with the CFA on the China Cup – building credibility in organising first tier international football tournaments. I don’t want to mention a year, but we’re looking forward to bidding for the closest one possible.”

Smooth operator

Silken words from Arsenal CEO Ivan Gazidis, who excels at telling a brand story. Arsenal, he said, are going deep in the Chinese market, playing games, meeting fans, running a bespoke content operation, and now forging ahead with a CSR programme that includes education of migrant children here in Beijing. Former Major League Soccer executive Gazidis has spotted some similarities between the development of soccer in China with what he’s seen in the US. “One of the biggest challenges is simply identifying talented players when you have a population of such scale, and then brining it together into elite hubs is the next challenge,” he said. “MLS will stand or fail on the development of US players. Chinese football will stand or fail on the development of Chinese players. No football club in the world, doesn’t matter how grandly they speak, can bring football to China and solve all those issues.”

Making broadcast pay

Jun Zhao is CEO of China Sports Media (CSM), and one of the most senior women in the Chinese sports industry. Nicknamed ‘Ms 8 billion’ on account of the rights fee ($1.2 billion) she sanctioned to take the Chinese Super League (CSL) contract two years ago. She’s in the process of renegotiating that deal on account of a set of damp market conditions precipitated by the Chinese football transfer tax, a swing in foreign currency rates, and the financial difficulties encountered by last season’s CSL broadcaster LeSports. Nevertheless, she’s proud of the nickname because she thinks it’s symbolic of how far the Chinese sports industry has come. Slowly but surely, with a unilateral effort from the likes of PPTV, Tencent and CSM, the reluctance of the Chinese market to pay for services – “if they offer to pay for tickets, it’s like they’re losing face” – is being eroded.

Europeans head East

France’s Ligue 1 and Germany’s Bundesliga are both making tangible efforts to make commercial ground in China. Alongside the Premier League and La Liga, it’s fair to say that the Bundesliga is out in front in terms of popularity in the country. The LFP’s CCO Mathieu Ficot wouldn’t argue with this. He’s just convinced his board to invest in the opening of an office in Beijing and he knows there’s some catch-up to be done. “We have so much room for improvement on the Chinese market and we’re working on it,” he said. “I need to have stars; I need to have the right partnerships with Chinese partners; and maybe to have some Chinese players playing in France one day. I’m quite jealous of what my German colleagues have been doing for a decade, but I’m optimistic.” According to new Bundesliga International CCO Robert Klein, a recent recruit from Red Bull, the German league’s approach to the region has been, as you might imagine, systematic, structured and with the long-term in mind. Enviable indeed.  Whereas the Premier League relies on its constituent clubs to do much of the marketing work for themselves – and by extension the league – in China, the Bundesliga lay the groundwork for a more centralised approach some time ago. A league-owned production company was formed in the mid-2000s, before DFL Sports Enterprises was launched in 2008 as a separate entity designed to commercialise all things Bundesliga. By 2012, DFL Digital was launched, and finally DFL International. “In 2012 we opened an office in Singapore to connect with South East Asia. It was then that we started preparing China,” explained Klein. “You have to work hard to localise content here, and we do. We made a big commitment financially, but we think we’re on the right path.”

Who coaches the coaches?

Certainly not the top talent leading the teams in the CSL, as far as former England Manager Roy Hodgson is concerned. Asked what the single most important aspect that China should concentrate on in its quest to develop its own national football team, Hodgson offered three pointers: “1, coaching, 2, coaching, 3, coaching. That’s not going to happen with Fabio Capello, Luiz Felipe Scolari, Andre Villas Boas, and Gus Poyet. Are they going to be interested in developing Chinese coaches? No, they’re targeted to win trophies, not to develop coaches.”

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