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    China Business
     Apr 21, 2007
Beijing 2008: The commercial contest
By Daniel Allen

BEIJING - As the Beijing Summer 2008 Olympic Games draw ever nearer, one event that is already underway is generating fierce competition. Eager to cash in on next year's sporting extravaganza, Chinese and overseas corporations have been rushing to sign sponsorship agreements they hope will bring increased market access, brand awareness and monetary gain.

Companies have long traded on the feel-good spirit and massive viewing figures associated with the world's most famous sporting



occasion, but the Beijing Games are shaping up to break all records. For those who can catch a ride on the Olympic bandwagon, the exposure and potential financial rewards are high - more than 1 billion Chinese are expected to watch, not to mention a half-million international visitors and a worldwide viewing audience of 4 billion.

Describing the marketing frenzy that already surrounds the Games as an "orgy", Tom Doctoroff, China chief executive officer of JWT, an international advertising giant, recently commented, "Every single company under the sun has, or is preparing, some kind of Olympic pitch." Beijing's organizing committee has vowed officially to present the "best-ever" Olympics - an event bigger, glitzier, better-organized and more lucrative than any other. Never before has a global sporting event been so entwined with commercial opportunity and profit.

With cheaper labor and fewer security concerns, Beijing is spending just US$2.6 billion, half of what Athens spent for the 2004 Games, to construct Olympic venues. However, the Chinese government is also splashing out another $200 billion to give the capital a major pre-Games makeover, including permanent upgrades to the city's transportation and communication infrastructures.

Much of the financing for these projects is coming from the pockets of national and international corporations, recruited as Olympic partners, sponsors and suppliers. The sponsorship program developed for Beijing 2008 is the most comprehensive Games package ever created, and ad campaigns from Olympic sponsors such as Visa, Coca-Cola and Lenovo are already in full flow.

If the Athens 2004 Olympics were Greece's opportunity to show the world the wonders of Greek culture, the Beijing Olympics are set to be China's coming out ball. The Chinese government has identified three themes - people, technology and the environment - all designed to show how progressive and innovative China can be, and how hard the country is working to fix some of its biggest problems.

Fifteen years ago, sports sponsorship in China consisted mostly of erecting a board with the company's name at a local table tennis game. It was hit and miss, a confused, embryonic version of corporate social responsibility. Today, corporations are snapping up international and Chinese sports stars to endorse their products. Chinese consumers can now see their home-grown superstar hurdler Liu Xiang with a can of Coke, drinking Yili milk, wearing Nikes and promoting China Mobile cellphone services in separate advertisements around the nation.

On July 13, 2001, the very same evening Beijing was celebrating being awarded the 2008 Olympic Games, Coca-Cola's Beijing plant ran off 30,000 bottles, each wrapped in a golden cover reading "Our Congratulations on the Olympics". Two years later, Coca-Cola became the first authorized user of the Beijing Olympic logo, flooding shops with 1 million special-issue cans on August 3, 2003, the day the logo was officially unveiled.

From the outset, Beijing's selection as Olympic host has aroused the interest of national and global sponsors - companies with aspirations to leverage the Olympic rings in both local and overseas markets. This time the motivation for sponsorship is vastly different to that of the Athens Olympics three years ago. There, sponsors were principally interested in the global platform the Games provided, not the slender opportunities provided by an already saturated and stagnant Greek economy.

In Beijing, Games sponsorship will have a double-sided impact. A company that signs a global deal will be able to link its name with the Olympics, aligning branding with such ideals as "excellence", "friendship" and "victory" in its international marketing efforts. Second, and more profitably, the company can strengthen its presence in the Chinese market.

According to a recent study, 68% of Chinese sports fans are more likely to buy brands that sponsor the Olympic Games than those that don't, and Chinese people are sure to embrace corporations that boast integrated, insightful, China-centric sponsorship strategies.

So how can the Beijing Olympics best be leveraged? Marketers must tap into the emotions that will swell before and during the Games. The Olympics are usually an expensive opportunity for marketing departments to increase their advertising spend, and for corporate hospitality departments to break out the bubbly in cozy, trackside, logo-plastered corporate boxes. Leading companies, however, approach sports sponsorship with more imagination than money - and get a lot more in return.

Getting started isn't cheap, regardless of marketing strategy. Beijing-specific partnerships in some categories have cost advertisers as much as the fees for multiple Games before. In the hotly contested car category, Volkswagen China Group eventually put in an estimated winning bid of $100 million in cash and kind. The group's director of Olympic marketing, Anthony Laver, estimates that in the 12 months before the Games begin, official sponsors will spend as much as $2 billion on advertising, and that's just in China. However, spending several hundred million dollars a year advertising the privilege of being an Olympic sponsor is a waste if it doesn't reach the consumers likely to afford your product.

"Target" is the watchword of smart sports sponsorship. Keen to be seen as a global company coming out of China, Lenovo used the two weeks at the 2006 Turin Winter Olympics to unveil its new image. However, Lenovo didn't swamp Italy with expensive billboards. Instead, it had its name displayed in strategic locations, promoting its right to supply the communications technology driving the Games, and laid on Internet cafes for athletes.

Creating a premium brand through intelligent association with the Olympic Games will undoubtedly translate into sales for corporations like Lenovo. Yet many corporations who don't have the cash or the good fortune to be an official sponsor may end up with the same effect.

Again, the trick is doing more with less. By creating the 2005 Nautica Urban Regatta with a flotilla of miniature boats at Shanghai's Xintiandi, sports goods maker Nautica got the company noticed in a novel and relatively cheap manner. It then followed up the event with a sponsorship deal with China's sailing team, thereby ensuring its name appears at the Beijing Olympics without the cost of being an official sponsor.

Donald Chan, the China national managing director of Publicis Groupe's Leo Burnett advertising agency, is advising some of his clients, which include McDonald's, to start planning their Olympic campaigns, but to wait on delivering ads until the second half of 2007. "Local brands are now trying to build a competitive presence against multinationals," he says. "But in terms of Olympic experiences, there is nothing going on right now. A lot of multinationals used the 2006 World Cup to stay engaged instead."

Multinationals and Chinese brands may be on different schedules because they are looking for very different results from their expensive marketing rights. "The message for the multinationals is that we are here in China, and we are going to be part of this transformation that is taking place," says Scott Kronick, the president of WPP Group's Ogilvy public relations agency in Beijing. "The message for local companies is that we are a famous Chinese company that has the potential to be a global brand."

Over the past decade, Chinese consumers have become far more sophisticated and brand-savvy. They are looking to get useful information from the products they purchase, and are critical of brands that don't meet their expectations. They want brands to do right by the consumer - instead of dropping in and running away with the money, they want overseas companies to become part of, and contribute to, the community.

To truly succeed in the Chinese market, both local and multinational companies must find ways to engage the 100 million young affluent Chinese consumers who have the money for premium brands. In a crowded market, standing out can be a problem. The fact that Liu Xiang already has marketing deals with Visa, Coca-Cola, Yili Group and Nike, plus several others, underscores both the allure and challenge of advertising at next year's Games. A recent survey by Chinese marketing consultancy R3 and research firm TNS found that Chinese consumers associated Liu Xiang with a head-spinning 19 brands.

From here on in, penetrating the Chinese market is going to become increasingly tough for Olympic sponsors. For "China Inc", for brands that are preparing to join the race, and for those that may attempt to crash the party late, August 8, 2008, is a date looming large on the horizon.

In the same way that the Beijing Olympics will show what China is really made of, world-class brands now have the opportunity to demonstrate the quality and originality of their promotional strategies. In both cases, failure would be unthinkable, and costly.
Daniel Allen is a freelance writer and photographer from London who has lived in China for the past three years.

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