Sport

Red Devils just got redder

Manchester United signs big sponsorship deals in China

Robin, just say “Wa – ha – haaaah”

When Felix Baumgartner broke the world record for free fall last October, millions watched live as the Austrian made his 24-mile jump from space. It took him four minutes and 17 seconds to reach earth, a fleeting moment in history (like Roger Bannister’s famed breach of the four minute mile) which his sponsor Red Bull hoped to bask in the glory of too. It was a high-risk exercise, more mortally for Baumgartner himself. But it worked out: Felix grabbed the glory but the UK’s Daily Telegraph estimates that his heroism could be worth as much as $160 million to energy drink Red Bull too.

Few firms will equal the stratospheric heights of this marketing stunt. But a Chinese beverage maker now has some major sponsorship plans of its own.

Last week the Hangzhou-based Wahaha Group – owned by one of China’s richest men Zong Qinghou – announced a deal with Manchester United.

The attraction for Zong is the club’s claim to have over 100 million fans in China (United claim to have about 330 million fans worldwide, although wags in the United Kingdom say hardly any of them have been to Manchester itself). Not that this will bother Wahaha, which plans to cash in on the English team’s appeal in China, building on its strong position in bottled water and juices to grow in energy drinks. Coincidentally its main competitor in this new field will be Red Bull’s China franchise.

The tie-up is groundbreaking for Manchester United too, as it tests new possibilities of monetising its fan base in China. In a similar initiative, the 19-times English champions announced a second sponsorship deal that gives China Construction Bank the right to issue credit cards using Manchester United’s brand.

Chinese media views the Wahaha sponsorship as the more high profile of the two. During the three-year deal, star players like Wayne Rooney and Robin Van Persie will help Wahaha market its Qili energy drink, the National Business Daily reports. In fact, a TV commercial for the energy drink – featuring Van Persie – has already gone viral in cyberspace. But perhaps not for the right reasons. It features the Dutchman uttering “Wahaha” in a signally unenthusiastic fashion. That’s led Chinese netizens to make derisory observations, noting the striker looks about as happy as if he’d just scored an own goal. The online mockery hasn’t stopped there. Parodies of Rooney wearing a red United jersey with the Chinese characters ‘Wahaha’ emblazoned on it are being captioned: “Would you buy this shirt?”

The challenge to Red Bull is conceived as a much more serious affair. The half owner of the Red Bull’s China franchise, Yan Bin, was ranked by Hurun’s rich list as the 10th richest man in China three years ago (see WiC55) and the Economic Observer reported in December that Red Bull accounts for about 30% of the energy drink market in China. After launching the Qili brand in April last year, Wahaha is now trying to establish itself as the rival to watch. It has already sold 140 million cans of Qili, generating about Rmb900 million ($144.5 million) in sales. The goal is to grow annual revenues for the product to Rmb10 billion.

While much of China’s beverage market – such as Wahaha’s core bottled water business – are already overcrowded, competition in the power drink segment is less fierce. That also explains why Wahaha sees the opportunity, hoping its association with Manchester United fans will give it an edge.

Zong’s company also has ambitions to become a major player in China’s dairy product market (see WiC142). Manchester United might be more wary of associating with this push – given how scandal-prone Chinese milk has proven in the past five years.


© ChinTell Ltd. All rights reserved.

Exclusively sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.