A key reason has been the fact that sports was fully funded by the Government until 1995, which limited private sector participation. This in turn explains why spend on sports amounts to only 0.2 per cent of total GRP in China against 1.5 per cent in the UK, Germany and Australia and a high of two per cent in the US, translating into a staggering US$200 billion a year.
Among its growing legion of sports fans, a football game holds far greater appeal than a concert by a Canto-pop star as Zenith Media found in its first study to determine how brands can best connect with consumers through sports at this very special time in the country's history.
In polling 860 respondents across five cities in China, Zenith uncovered a sports generation a century after the Chinese were derided as a "sickly race". As much of 75 per cent of respondents said they exercised regularly, while 47 per cent have attended sporting events, with football, diving, swimming, gymnastics and table tennis being the top five sporting choices.
But it's events of an international rather than national, much less local, stature that commands attention. Three quarters of respondents preferred to attend an international event versus 19 per cent for a national or eight per cent for a local competition. "This desire to be connected with international sports is rather phenomenal as the country only began to commercialise sports in recent years,
notes Zenith's strategic research director Zoe Tan.
Which should bode well for the Olympics, now shaping up to one of the most explosive events ever for sports sponsorship in China. Five Olympic sponsorship deals have since been signed by Coca-Cola, Kodak, SchlumbergerSema which takes over IBM's technology sponsorship, Swatch and US insurance giant John Hancock.
Along with other usual suspects like Visa and McDonald's, Chinese brands are also vying for a share of the Olympic limelight. The battle for a slot on the Olympic bandwagon is to be expected because of the sheer size of the market. Equally crucial is that sports programming attracts significantly more "attentive viewing
compared with other broadcasts, says Tan. But greater viewing concentration doesn't necessarily translate into undivided attention for commercials in sports broadcast. The undeniable truth is that using sports as a medium requires more than simply inserting advertising spots in sports broadcasts, she says.
Indeed, as J. Walter Thompson's Northeast Asia area director and China chief executive Tom Doctoroff points out, the challenge is in finding the right balance between the more interactive nature of a through-the-line approach and the broader, image associations that advertising can deliver.
What can sometimes upset this balance is that brands use sports sponsorship for different reasons, which then influences the marketing behind the event. Sports apparel brands like Adidas and Nike have a key behavioural objective of encouraging participation in sports - that is to increase usage of their products - while also building brand equity. But marketers in other non-behavioural categories tend to use sports sponsorship for the badge value it can bring to their brands as they plug into the passions of Chinese youth. Sadly, this is where the majority trip up. Too often, brands with behavioural goals tend to focus on tactical promotions, chiefly with event-related activities, leaving little for advertising. This in turn makes it difficult to raise awareness.
On the flip side, brands in the non-behavioural segment have tended to focus on advertising but often neglect tactical promotions to build a stronger connection with the audience. "Each direction implies a trade-off. The trick is to achieve the right balance,
says Doctoroff.
Another pitfall marketers face is in thinking that sponsorship automatically translates into stronger brand awareness. Before this happens, marketers would need to create a three-dimensional feel of the event for consumers.
The common rule is that another three to four dollars should be spent promoting the event for every dollar spent on acquiring sponsorship rights, says Robert Philpott, a director at another research agency AMI.
This is where brands can again run into difficulties in China, where a shortage of viable events has naturally inflated the cost of sponsorship rights. "There's a very limited supply of good properties - there's football and basketball, but basketball is still dominated by the party, it doesn't have a private enterprise mentality. So it's really soccer," says an industry source.
Three years ago, Pepsi snapped up the sponsorship rights for the China Football League. That Pepsi took over from Marlboro has lead industry observers to speculate that the drinks company may have coughed up too much cash upfront for the five-year package, leaving it with little left over for accompanying activities to promote its sponsorship of the league.
A Pepsi executive says the brand chose the league because football is a key plank of its worldwide platform and it wants to support soccer development in China. "Football is one of the best ways for young people to express themselves and actualise Pepsi's 'Ask for more' spirit,
says the Pepsi executive.
She claims that sponsorship of the league has delivered for the brand.
"We monitor our brand performance as a whole and our key performance index has been improving in the last four years. According to ACNielsen research, Pepsi has the highest association with football in China."
In contrast, Coca-Cola has taken a grassroots approach. It tends to hook up with smaller organisations and uses its funds for guerrilla-type marketing.
"Coke sponsors the youth league so they can get people interacting with the property and the equity the property projects,
says a source.
As Philpott sees it, Coca-Cola is probably the best example of a brand that has fully capitalised on its sports sponsorship - in China and around the world. Crucial to a sponsorship strategy, Coca-Cola has stamina - it has been associated with the Olympics since 1928 - and covers all the bases, both above and through-the-line.
On top of its on-air spots for the recent Winter Games, Coca-Cola opened a 20,000 square foot attraction to give fans a first-hand experience of various winter sports, it hosted pin trading locations for what is undeniably the top spectator sports at the Olympics, organised 'Fan Vans', which travelled the streets of Salt Lake City to reward local fans with Olympic tickets.
Coca-Cola is obviously doing something right in China. The brand, along with Pepsi Cola, Nike, local sports apparel manufacturer Li Ning and Adidas, survive zapping of TVCs by sports viewers, says Zenith's Tan. The five brands are also readily associated with sports in a market where a clear majority still view sponsorships as part and parcel of the sporting landscape.
That only 19 per cent thought otherwise should cheer up advertisers, though not for long. Ambush marketing by Chinese companies at a local level is still prevalent. Says Doctoroff: "The events marketing team has got to have very strong relationships with the local media, ensure they're tied up so that they don't allow rivals to ambush your client."
