Olympic Games offer unique path to China markets
( Reuters ) - When the world's greatest sporting and marketing event crosses paths with one of the best economic growth stories ever, the result could be the opportunity of a lifetime for corporate sponsors of the Beijing Olympics.
Companies are stepping up, with an eye on China's increasingly prosperous consumers, some of whom are snapping up BMWs and sipping French wines just 30 years after the communist depths of the Cultural Revolution.
U.S. healthcare company Johnson & Johnson, sponsoring an Olympic Games for the first time as a global partner, ran a contest to reward acts of caring and community service with free trips to the Olympics in August.
Owen Rankin, the company's vice president of Olympic sponsorship, said it was drawn by the size of China's market.
"This is the right time to do it," said Rankin.
The Beijing Olympics and the Winter Olympics in Turin, Italy, in 2006 have already brought in about $4.4 billion in broadcasting rights and sponsorship deals alone. This figure is greater than the total revenues generated by the 2002 Winter Olympics in Salt Lake City and the 2004 Summer Games in Athens.
"This will be the most successful marketing program ever in the Games," said Christopher Renner, president of sporting consultant Helios Partners in China. "No question about it."
German sports shoe maker Adidas, one of 11 so-called " China partners" of the Beijing Games, will pay $100 million to use the Olympics logo in China.
There are 12 global sponsors, who have marketing rights to use the Olympics logo globally, and 11 China sponsors, who have rights to use the Olympics logo in China.
While Adidas is paying a hefty sum for its sponsorship, some companies pay in kind.
Atos Origin, a global sponsor building the computer network for the Olympics, is believed to be paying a combination of cash and services for its sponsorship deal. The International Olympics Committee does not release details on how much sponsors pay.
Lenovo Group, China's top PC maker and the only Chinese company to be a global partner of the Beijing Games, aims to show off its technological prowess in computer products and build its brand globally much as Samsung did at its home Olympics in Seoul in 1988.
Lenovo designed the high-tech Olympic torch, which is constructed to burn brightly even on Mount Everest where it is scheduled to pass as part of the 137,000-km (85,000-mile) relay route around the world.
China Mobile, the world's biggest mobile carrier, Bank of China, the country's largest foreign exchange bank, and Sinopec Corp, Asia's top refiner are all country sponsors for the Beijing Games.
Global branding machines such as McDonald's Corp and Coca Cola Co - which is celebrating its 80th year of continuous Olympic sponsorship - will be out in force as expected.
But Adidas' rival Nike Inc has a policy of not being an official sponsor. Instead it supports individual athletes and sports federations, some of which also receive Olympic subsidies.
"Official sponsorship is for the world of advertisers," Nike said in an email. "When the Games begin, you will see athletes competing and winning in Nike products."
Yet despite the opportunities, there are risks especially as human rights activists step up criticism over China's stance on Darfur following Steven Spielberg's withdrawal as an artistic adviser for the Beijing Games.
The Hollywood director said he pulled out because China was doing too little to help halt the bloodshed in the western Sudanese region of Darfur, where Khartoum-linked militia have battled rebel groups. China has extensive investments in Sudan.
Dream for Darfur, a U.S.-based rights group which is supported by Hollywood actress Mia Farrow, is planning a series of campaigns "to pressure the Olympic corporate sponsors to do more for Darfur, including protests at corporate headquarters and boycotting commercials during the Games".
The group has issued corporate sponsors' contact details so that supporters can "ask corporate sponsors if they will remain silent in the face of genocide in Darfur", said a press release issued by the group.
Beijing Olympics organizers are playing down the criticism and have stressed that the Games should be free from politics.
"Companies recognize the Olympic Games epitomize the highest level of human achievement, and are willing to participate, wherever the Games are held, to solidify that association with their brand," said Frances Sun, a director at Hill & Knowlton, a public relations firm representing the Beijing Organising Committee and several sponsors.
Organizers have tried to bring the Olympics closer to more Chinese by scheduling events outside of the capital, an appealing prospect for merchants eyeing the country's third- and-fourth-tier cities.
Hong Kong, the southern financial centre, will host the equestrian events, and Qingdao on the east coast will be the site of the rowing events. In addition, qualifying soccer matches will be played in other locations around the country.
China's size, and the money it is spending on the game, is making the Beijing Olympics particularly attractive to sponsors, after the last two Summer Games were held in small markets - Australia and Greece.
Sponsorship is also having a bigger impact on the Chinese consumer, than it would in other countries that are more jaded to advertising.
"If you say I support your Chinese athletes in their quest for gold and glory, that means a hell of a lot more here," said Christopher Renner, the sports consultant.
In addition to its huge market, China's attraction also lies in the nascent, or nonexistent, brand loyalty of its consumers, a holy grail for advertisers.
"We will see most of the benefits over the next generation," said J& J's Rankin. "After the Games we will not pack up and go home."