The Chinese sport has been identified as one of the most dynamic sectors in China based on the market value of the sports industry. In 2013, the market value of the Chinese sports industry was more than $2.91 Billion and increased to $3.44 Billion in 2014 revealing an increase of 18.01%. Typically, Chinese sports industry also recorded the market values of $3.43 Billion at the end of 2015 fiscal year. Although the Chinese sports industry only contributes to 0.63% of the GDP in 2013, however, since 2000, the sports industry has recorded more than 4% annual growth rate based on the increase in the household spending. After the Olympic game in 2008, the market value of the Chinese sports industry has increased by 20%. A report by the Chamber of Commerce (2015) shows that before the success of Lina’s, the CSSM (“Chinese Sports Sponsorship Market”) value (p 1) was approximate $2 billion yearly. Currently, the CSS market value is more than $15 billion. Typically, Stephon Marbury, the former NBA player, will continue improving the market values of Chinese sports industry which will lead to a growth rate of 16% per year. It is also forecasted that the market value of the industry will reach $320 billion by the year 2020 based on the proposed development initiated by the China’s State Council.
In essence, the sports market value has been accelerated based on the current improvement of the Chinese manufacturing industry. Currently, the China is the “world largest manufacturer of the sporting goods equipment” (Chamber of Commerce, 2015 p 1), and the wholesale sporting industry is estimated reaching $35 billion. Since the China’s disposable income has increased, and the country sporting industry does business with the rest of the world, thus, sales from event promotion, concession, and ticket sales have increased.
Chinese sports Venue Availability and Operation Conditions
China has 9 sports venues in the major Chinese cities. There are also 28 sports venues by the province in China. However, each city in China has sub sports venues. For example, there are 40 sports venues in Beijing, and the Chinese government is largely responsible for the operations of the venues. For example, the government builds the country’s public stadium through the public funds under the sports administrative department. The government is the manager and principal owner of the sporting venues. The government is also responsible for the management, maintenance, and development of the Chinese sporting facilities. (Yang, & Yang, 2016). Since the market economy is being gradually established in China, the operations of the sporting venue are presenting unfavorable phenomenon. For example, there have been the issues of the operational inefficiencies since the government lacks the operational understanding of the sporting business.
The NFL and NHL difficulties in China
The ambition of NFL (National Football League) is to extend its operation globally. Moreover, China has become a most important market to explore based on the increase in the standard of living of the middle class and growing population. In the last few years, the NFL has launched its operation in China, however, the NFL officials have been disappointed because Chinese markets have not been favorable. In term of marketing, NFL relies on the social media such as Facebook, Youtube, and Twitter to reach millions of people in the United States, however, these avenues are blocked in China. Moreover, NFL face challenges in addressing the problem of counterfeit merchandise. Many NFL products have counterfeited in China making the company lose income. The logistic problem is another challenge facing the NFL. Since the NFL teams are not ready to stay in China, traveling to China this week to play games and return to the United States the same week to play another game remains a challenge. (Marvez, 2016). NFL also faces challenges in dealing with the Chinese government. NHL (National Hockey League) is also facing similar difficulties in China since the 2022 Hockey World Cup scheduled to take place in China is still in doubt because the Chinese government has not yet made the public announcement with reference to the NHL tournament. Moreover, infringement of the IP (intellectual property) rights has been the major challenges facing NHL. The issues of copyrights, trademarks, and patents right misappropriation are still rampant in China.
Venue Issues in China
This section discusses the social, economic and political impacts of the sporting venue in China.
Social Impact
The sporting venue in China represents a place where elite athletes and sporting lovers around the globe meet. Typically, the venues allow the world’s leading athletes as well as hundreds of millions sports lovers and spectators getting together. Over the years, the mass media are making the sporting events accessible to people globally.
Participate knowledgeably -Education level
An increase in the popularity of the sporting venues in China has attracted many knowledgeable educational levels to launch the sporting events. Some of the knowledgeable educational levels in China are “Beihang University Gymnasium, Beijing Institute of Technology for Gymnasium, Beijing Science & Technology University for Gymnasium, Beijing University of Technology for Gymnasium, China Agricultural University for Gymnasium, and Peking University Gymnasium.” However, these higher institutions focus on the gymnastic than other major sports events. Since the Chinese government has hosted the Olympic in 2008, the Chinese sporting events have improved tremendously because several organizations and higher institutions are participating in the events. For example, the Beijing University of Technology developed the gymnasium seating in 2008 that occupied 7,500 people with the floor space of 24,000 square meters. Institute of Technology in Beijing also hosted volleyball competitions for the 2008 Olympics. Sun, (2015) argues that colleges and universities have been able to make a considerable progress with reference to the hardware construction and opening up of sports venues. However, the author points out that there are still some deficiencies and shortcomings in the Chinese sports venues in the higher institutions. For example, serious deficiencies in the construction of the sporting venues require an immediate improvement.
Security management
The sporting stakeholders in China maintain an effective security for the sporting venues through a co-management of the sports department and real estate department. Typically, the management uses the division of labor to offer security for the venues. The coordination of the security management includes environment maintenance and infrastructure equipment maintenance. The venue security is also facilitated by ensuring that service personnel and workers comply with the security protocols.
Customer Experience
Deloitte (2016) argues that customers are demand are increasing, however, Chinese sporting venues fail to keep pace the consumer’s expectations. A current survey carried out by the Deloitte in 2014 shows that over 75% of customers are not satisfied with sporting venues. Typically, the sports venues fail to drive loyalty compared with the international standards.
Culturally
Despite the deficiencies of the sporting venue with reference to the customer experience, the sporting venues have been to enhance the cultural improvements integrating people from different cultural background. For example, 2008 Olympic integrated people of different cultures globally. During the sporting events, a large percentage of people forget their cultural backgrounds and mix with people from different nationalities and ethnicities. Thus, the sporting venues in China enhances the cultural improvement.
Economically
China uses different strategies for the advertisements of the sporting events. For example, the scoreboards, floorboards, dashboards, and restrooms of the major sporting venues are painted with brand message and sponsors logo. A report carried out by the EIU (2015) reveals shows that the commercialization of the sport is taking a hold in China. The international sporting companies are pouring millions of dollars to promote the sporting events in China. The Chamber of Commerce (2015) also reveals
“the Chinese Sports Sponsorship Market worth approximately $2 billion U.S. dollars a year, and currently it worth more than $15 billion. China’s sports industry as a whole has maintained a growth average of 16% per year.” (Chamber of Commerce, 2015 p 1).
Moreover, the marketing agents such as Basketball (NBA), American Football (NFL), and Baseball (MLB) play a major role in the commercialization of the Chinese sporting venues. Adidas, Coca-Cola and Mcdonald’s also play a major role in the sponsorship of the sporting events in China.
Ticket Sales
The Damai Group is the distribution and entertainment platform for ticket sales for the sporting events. The tickets are sold at the sporting venues; tickets are also sold through the internet. Moreover, the secondary ticket sales agents also make the tickets available for the sports lovers. For example, the Guangxi Sports Center Stadium, Shanghai International Circuit, and Shenzhen University for Gymnasium sale tickets across China for football championship and volley league.
Beverage sales
The soft drink companies play a major role in the commercialization of the sporting events. Soft drinks sponsors provide large percentages of the beverage’s sales for the sporting events. Between 2009 and 2010, the market values of the sports drink in China increased from $1.01 Billion to $2.3 Billion, and it is projected reaching $31.4 Billion by 2019. Thus, Coca-Cola plays a major role in the sales of soft drinks during the sporting events. Other companies such as Mcdonald and carbonated bottled water also play major roles in the sales of tickets. However, China government prohibits the sales of the alcoholic drinks in the sport venues
Distribution
The distribution of sports drinks starts from the manufacturers to the consumers. The wholesalers distribute the soft drinks to the retailers who sell to them to the consumers. The soft drink companies also use the sales machines to allow people buying the soft drinking after inserting the required coins.
Parking revenue
Chinese sporting stakeholders also generate revenue from the parking lots because people are obliged to pay before being allowed to park their vehicles at the sporting venues. The increase in the number of the middle class has assisted China to generate revenues from parking. Moreover, the government generates revenue from the amusement parks that reached $3.3 billion in 2015 and projected reaching $4.8 billion by 2020. (Ho, 2015).
Marketing models
Fullerton & Merz (2008) believes that Chinese companies have been in the forefront of sports promotion using different effective marketing models. The authors identify the Product-Based strategies as the model for the sporting marketing. The model consists of Target Marketing
Product
Promotion
Pricing, and Distribution.
The model assists the sport’s stakeholders to reach larger percentages of the sports lovers.
7. Lack Customer base
Lack of customer base has been the major challenges facing the sports venues in China. Typically, Chinese sports venues have not yet been able to build a strong brand similar to the sports in the United States. The customer loyalty is still low based on the research carried out by the Bain & Company. (China Business, 2014).
Politically
1. Chinese Government Regulation vs. American
The central government still plays a major role in hosting events in China. Unlike the United States that allows private companies to host the sporting events, the Chinese regulation does not allow the private companies to organize the sporting events.
2. How does an event hosting in China
The central government through the China’s State Council is responsible for the hosting of events in China. Although, the China is increasing attracting the private companies to host the sports.
3. Time consuming
However, approval of the application is still time-consuming. Many private companies have been frustrated because it takes a long time before the application is approved.
Applications Regulation
All the applications have to pass through the China’s State Council and it can take several months before the application is approved. Support from government is high in China because the government is largely responsible for hosting the sporting event. However, millions of dollars are still used in organizing the events.
Conclusion
The study provides the analysis of the Chinese sporting industry. The study reveals that the revenue generated by the industry is increasing yearly. However, the paper suggests that China still needs to allow the private companies hosting the sporting events to attract international companies in the sports industry. The Chinese government should realize that the country has been able to improve the GDP (Gross Domestic Product) by conducting businesses with the United States, and other countries across the globe. Thus, the Chinese government should make a policy that will facilitate the participation of foreign sporting companies in the country to improve the country sporting industry.
Reference
Chamber of Commerce (2015). Sports & Sports Marketing. American Chamber of Commerce China.
China Business (2014). Chinese customers’ lack of loyalty puts pressure on brands. South China Morning Post.
Collignon, H. Sultan, N. & Santandar, C. (2011). The Sports Market: Major Trends and Challenge in an Industry of Passion. A.T Kearney Inc.
Delliote (2016).Delivering Superior Customer Experience in China The Essential Ingredient to Building Customer Loyalty. Report.
EIU (1015).The big league? The business of sport in China. Economist Intelligence Unit.
Fullerton, S. & Merz, C.R. (2008). The Four Domains of Sports Marketing: A Conceptual Framework. Sports Marketing Quarterly,17, 90-108.
Ho, J. (2015). China’s $3.3 Billion Amusement Park Market Attracts New Entrants. Forbes.
Marvez, A. (2016). Playing an NFL game in China remains a Logistical Nightmare. Sporting News.
Sun, Z.(2015). A Brief Analysis of Sports Venues in Colleges and Universities. Asian Social Science; 11(16):114-117.
Yang, C. & Yang, T. (2016). Study on Operation Mode of China’s Stadiums. International Journal of Managerial Studies and Research (IJMSR). 4 (1):66-71.
Zhang, J. (2015). Reality and Dilemma: The Development of China’s Sports Industry since the Implementation of the Reform and Opening-Up Policy. The International Journal of the History of Sport: 32 (8):1085-1097.
