Talking Point

What’s the goal?

How China is bankrolling the World Cup in Russia

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Red army: Chinese fans have bought more World Cup tickets than English fans

Moscow 1980 turned out to be one of the most expensive Olympic Games in history and the event also proved to be disastrous for the Russians, both politically and financially, following the Soviet Union’s invasion of Afghanistan on Christmas Eve 1979.

Commercial sponsors pulled out. Western TV firms cancelled their broadcasting plans. Foreign tourists did not arrive. Perhaps most notably, socialist China joined the 60 or so countries that boycotted the Olympiad.

Indeed, at almost the same time that the Russians kicked off an extravagant opening ceremony in front of a half-empty stadium, a high-level delegation of Chinese financial officials were meeting senior American executives in New York to iron out deals that would foster China’s economic reforms (see WiC232).

The closer Sino-US relations meant that when the Russians retaliated four years later and rallied its ‘red’ allies to boycott the Los Angeles Olympics, China refused to join its socialist counterpart. Peter Ueberroth, chairman of the US Olympic Committee, even reckoned that “China saved the Olympics” by disrupting the momentum of the boycott camp.

This month the football World Cup kicked off in Russia. The official price tag – at $15 billion – makes it the most expensive ever. Yet this time round the pendulum of geopolitics has realigned. It is China-Russia relations that are much healthier now (while relations with the US are floundering).

Although the Chinese football team did not make it to the tournament (again), Team Corporate China has come to the rescue.

Chinese firms and tourists have contributed more than those from any other country to make sure Russia’s World Cup is at least a financial success.

How is China participating?

“Chinese elements have been everywhere in Russia, covering almost all walks of Russian lives during the World Cup period,” a reporter from the People’s Daily noted in Moscow this week. “All these have underscored in a unique way the intimate relationship between China and the world’s most popular sport.”

These “Chinese elements” include the sea of Chinese fans and tourists, the souvenirs and sportswear that are made in China, as well as the Chinese brands that are either sponsoring the World Cup itself, the different national teams or some of the individual stars.

Obviously, the glaring absence of the Chinese national team has not gone unremarked back at home. “Apart from the Chinese football team, basically everything Chinese has arrived in Moscow,” a popular TV anchor of the national broadcaster CCTV quipped.

While enjoying themselves watching the World Cup this month, many Chinese fans cannot resist the temptation to poke fun at their own national team, whose solitary appearance in the World Cup Finals was in 2002 (at a time when competition for places was made much easier by the fact that the strongest Asian teams, South Korea and Japan, qualified automatically as co-hosts). As WiC has pointed out before, China’s perennially underperforming national soccer team is the frequent butt of jokes.

“Japan became a World Cup Finals regular by learning from Brazil, hiring Brazilian coaches and nationalising Brazilian players. So China has set out to learn from Italy, hiring [Marcello] Lippi, [Fabio] Capello and [Fabio] Cannavaro as coaches. The impact is immediately felt as well: Italy was dumped out of the World Cup Finals together with China,” went a popular joke on social media, suggesting the Chinese team was so bad it dragged the Italians down to its level.

Chances are that few Italian (or Dutch) football fans travelled to Moscow this month. But the overwhelming enthusiasm shown by Chinese fans has bemused many foreign observers.

“No World Cup past or present has had a Chinese presence as strong as Russia 2018, with the nation’s companies at the forefront of a very public push for prominence,” Michael Church, the sports correspondent of the South China Morning Post noted, pointing to Chinese brands popping up on pitch-side signage and video screens, promotional booths outside the main stadiums, as well as the inescapable sight and sound of Chinese calligraphy and Mandarin voiceovers.

Who are the Chinese sponsors?

Corporate China has smashed numerous records in this World Cup. To begin with, seven Chinese companies, led by property conglomerate Wanda Group, are official sponsors of FIFA, football’s global governing body.

Other Chinese firms which made the list are popular consumer brands back at home, including electric appliance retailer Hisense, dairy firm Mengniu and smartphone maker Vivo.

Combined, the Chinese firms have invested $835 million – also a record – to sponsor the tournament in Russia, more than one third of the total sponsorship money that FIFA has received, and double their American counterparts’ investment (dwarfing too the $64 million spent by Russian firms like Gazprom on their home turf).

As such, football fans across the world are being exposed to less-heralded Chinese brands such as Zhidianyijing (a tech firm focused on virtual reality applications) and Diking (male clothing). These logos flash across TV screens alongside global names such as Coca Cola, Adidas and McDonald’s.

Chinese firms have also embraced every niche sponsorship deal that FIFA and the Russian government have invented. For instance, Yadea Tech has become the first ever official EV (electric vehicle) sponsor for the World Cup after paying $20 million to FIFA. Meanwhile, Shenyang-based Bolinte won the bid to produce 67 elevators for two World Cup venues.

The enthusiasm of the Chinese firms in Russia has far exceeded that witnessed at the 2014 World Cup. Four years ago in Brazil solar firm Yingli was the only Chinese sponsor – and actually the first from China – to pay for exposure to the world’s most watched sport event. As football superstition goes, perhaps the likes of Wanda should be alert: Yingli has since found itself in deepening financial woes and Chinese media reported in April that the solar panel maker is staring at bankruptcy.

Yingli spent Rmb500 million ($77 million) for its presence at the 2014 event and Wanda’s boss Wang Jianlin – who once owned a football club – will hope his company’s sponsorship will lead to an enhanced global profile.It is certainly getting Wang’s firm attention, albeit causing some puzzlement. “So what is Wanda? What do they do?” a fan from Northern Ireland asked the SCMP’s Michael Church. “We see them all over the World Cup, but we’ve no idea what they are.”

Will it inspire Wanda’s comeback?

Regular WiC readers should be familiar with Wanda’s business in China, and how an ultra acquisitive strategy overseas had mired it in financial troubles as well as angering Chinese regulators last year (see WiC395).

One acquisition Wanda made in 2015 helps explain its major World Cup presence: the $1.2 billion deal for Swiss-based sports marketing firm Infront, whose chief executive at the time was Philippe Blatter, the nephew of Sepp Blatter, FIFA’s former president

The deal put Wanda’s boss Wang Jianlin inside the personal network of the then-most powerful figure in world football. Although Blatter was ousted following a slew of corruption scandals in 2015, Wanda still pulled out a victory a year later by signing on as a FIFA partner until the 2030 World Cup.

The $150 million deal, negotiated while Blatter was still FIFA boss, made Wanda a first-tier tournament sponsor (the only other companies with such status at the 2018 World Cup are Adidas and Coca Cola). It also gave Wanda the exclusive right to pick the mascots to carry FIFA’s flag at World Cup events.

Accordingly, Wanda recruited six young students from Danzhai, a poverty-stricken county in Guizhou, one of China’s poorest provinces, to be FIFA’s flag bearers when Russia kicked off the tournament last week in the opener against Saudi Arabia. Some of the teenagers are even promising young football players at local schools built by Wanda.

Foreign fans might not have noticed but back at home, Wanda has delivered a subtle message that it has been working towards two major policy goals proposed by Chinese leader Xi Jinping: developing China into a world football power and fighting poverty.

Official media has acknowledged Wanda’s effort as well.

“It is the first time in World Cup history for Chinese flag bearers to have such a presence,” Xinhua noted. “All six children are from Danzhai, where Chinese real estate conglomerate Dalian Wanda Group has helped build schools and lift families out of poverty.”

Who needs to go global?

Wanda’s case points to another World Cup irony – while Chinese firms are splashing their cash at the tournament, many of them are doing so to reach the Chinese audience watching in huge numbers back in their home market.

“There are countless Chinese brands [featuring Chinese calligraphy] popping up on TV screens during live World Cup matches but obviously they are being shown to target Chinese audience,” a football pundit wrote on Easter Sports. “The Chinese firms have turned the World Cup into the Chinese Football League.”

“Some of the Chinese sponsors are hardly ‘international brands’,” Time Weekly magazine also noted. “But the World Cup Finals always attracts a lot of attention in China and this is a marketing opportunity that most Chinese consumer brands cannot afford to miss.”

No wonder then, many consumer brands have scrambled to launch their World Cup marketing campaigns at home.

Dairy giant Mengniu, for example, has signed up Argentina’s Lionel Messi as its brand ambassador during the World Cup Finals. Messi’s archrival Cristiano Ronaldo has signed up with various Chinese brands including luxury SUV brand WEY.

Vatti, a kitchenware supplier, has got more creative. It is offering a special promotional package that should France, its sponsored team, lift the World Cup next month, it will fully refund the ‘World Cup Champion’ appliances it has sold between June 1 and June 30.

In fairness, other Chinese firms are looking to the World Cup as a means to raise their international profiles

Take Hisense. The electric appliance firm has already sponsored major sporting events and teams, including Euro 2016, the Australian Open and Germany’s FC Schalke 04.

The sponsorship of Euro 2016 in France, the company said, helped it increase television sales in Europe by 60% in the second quarter of 2016.

“The FIFA World Cup brings together the highest levels of competition and prestige in global football, making it the perfect sports event for us to be a part of,” Liu Hongxin, president of Hisense, told Xinhua.

To Russia with love…

According to Time Weekly, the top-tier sponsorships for the World Cup have long been dominated by global brands such as Coca-Cola and Sony. Due to FIFA’s tight control over sponsorship quotas, Chinese firms have found it difficult to make the list in previous tournaments.

Things are a little different this time, the magazine said, as the scandal-hit reputation of the World Cup organisers (in the wake of Blatter’s ouster) has deterred global brands, and thus opened the way for Chinese sponsors.

The Independent has arrived at a similar conclusion, although the British newspaper believes the “tainted brands” in this case go beyond FIFA and also include the host nation. It points out that some Western companies are cautious on spending their advertising money in Russia.

Russia’s reputation hasn’t put off Chinese fans. According to FIFA statistics, they have purchased more than 40,000 tickets for the World Cup (though some 3,500 supporters have also been saddled with fake tickets via a Russian travel agent). In terms of purchases this ranks them ninth among all countries and regions (and means they’ve bought about 8,000 more tickets than English fans).

It has been estimated about 100,000 Chinese will travel to Russia during the Finals to sample the atmosphere or attend games. To meet the demands of this influx, a Moscow-bound train departed last month from Wuhan carrying 100,000 crayfish, a match-day favourite for young Chinese supporters, Xinhua reported.

Those fan numbers are up from four years ago in Brazil, helped by visa-free access to Russia and increased wealth in China.


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