The Beijing 2022 Olympic Winter Games are set to see a political cloud hanging over it to add to the event’s challenges which include China’s economic stress and severe question marks about what its winter athletes can achieve in front of the home supports.
A full plate
In terms of political pressure, Beijing’s plate is pretty full for the next few years to come. The endless Hong Kong protests, an ongoing trade war with the US, international criticism about human rights, and the unpredictable South China Sea situation all add to the challenging geopolitical environment that increasingly scrutinises the rise of China in political and economic powers.
Beijing 2022, just like its summer sibling in 2008, is set up to use sports venues to demonstrate these powers. The immediate concern, however, is the slowing down of China’s economic engine, which may adversely affect the prospects of the commercial and marketing development of Beijing 2022. Squeezed by factors of the trade war with the US, inflation, and languishing consumer confidence, China reported that in the third quarter of 2019 the GDP growth rate was just 6 per cent – the lowest it has been in the past three decades, with warning signs flashing for the government.
As of November 2019, with 26 months until the opening of the Games, Beijing 2022 has signed up 17 sponsors, of which nine are Official Partners, six Official Sponsors, and two Exclusive Suppliers. All are Chinese brands except for the European brand of EF Education First, which signed on to become the event’s Official Language Training Services Exclusive Supplier in August 2018. The company was also an Official Partner for the 2018 Winter Olympic Games in Pyeongchang, Korea.
Beijing 2022’s marketing programme was only officially launched in February 2017, and the organising committee still has time to seal more deals by the end of 2020. But the prospect that Beijing 2022 will generate record low numbers for local commercial sponsorships is likely. In comparison, Pyeongchang signed up a whopping 73 sponsors in 2018. For the Sochi 2014 games, the number was 44, while the Vancouver 2010 games brought in 56 local partners. Beijing 2022 needs to double its current number of sponsors to level with Turin 2006’s 34.
Less is more?
With IOC’s blessing, Beijing 2022’s marketing programme extends to cover 2018 till 2024 summer Olympics in Paris. The Beijing Organising Committee for the 2022 Olympic and Paralympic Winter Games (BOCWOG) consequently set the threshold of the entry price for being the Official Partner to above 200 million yuan (US$29 million) per year, which translate to an official partner deal package’s worth being in the range of over a billion yuan ($143 million) to 4 billion ($571 million) which Yili, China’s leading milk producer, is said to have committed to paying for the official dairy product partnership for Beijing 2022 according to sources who declined to be identified.
In 2017 International Olympic Committee television and marketing services director Timo Lumme estimated Beijing’s marketing programme would reap over $1bn domestically. If this strategy of high entry price for an extended duration works out, Beijing should outdo Lumme’s projection even with a small-than-expected number of signed partners.
“The less-is-more is a good idea for BOCWOG, but getting the optimum combination of fewer partners and more revenues is a matter contingent on many factors,” says Dr Lingling Liu, a sports consultant.
One of the factors, other than economic outlook, is the hesitation of companies in planning budgets for as long as up to seven years. Other than the state-owned and state-backed enterprises such as Bank of China, Air China, and the two oil & petroleum giants, few Chinese companies would want to commit to a seven-year marketing spending.
“This partly explains the slow start,” says Dr Liu. “People do have reasons to be equally cautious and optimistic. Let us wait and see if BOCWOG will eventually offer more flexible and short-term packages to speed up the sales”.
There is no doubt Beijing 2022 has its appeal for global sponsors. In June, by creating an unprecedented joint TOP partnership worldwide category combining non-alcoholic beverages and dairy, the IOC signed up Mengniu, China’s second-biggest dairy company, and Coca-Cola for a 12-year deal in the worth of $1.5 to $3bn, according to different media estimates.
However, it also outraged Yili, who found it hard to stomach the IOC’s rationale that the joint TOP will neither offend the Olympic marketing programme’s principle of exclusivity within a specific product category and territory nor affect Yili’s “current Beijing 2022 domestic partner’s exclusive rights in its designated category in the Chinese market”.
The anguished Yili even resorted to nationalist sentiments to attack its rival, claiming Mengniu was “enhancing its status by holding the arms of a foreign master” and “allying with an American company to defile the Chinese Winter Olympic Games”.
Fortunately for all parties, the BOCWOG managed to dial down the dairy controversy without leading to a national uproar involving yet another iconic American brand, and peace has been maintained ever since.
Chinese companies’ eagerness of being a part of Beijing 2022 aims at tapping into the massive potential of the domestic winter sports market. On October 29, Anta, China’s leading sportswear company, became the official sportswear uniform supplier for the IOC till the end of 2022. The deal spans over two Youth Olympics in 2020 and 2022, the Tokyo 2020 Olympic Games and Beijing 2022. “The domestic winter sports equipment and apparel market of China was worth ¥30bn ($4.3bn) in 2017,” says Zheng Jie, its executive board director and chief brand officer.
“The market will be four-times bigger, reaching ¥150bn ($21.4bn) in 2022. Anta has plans to be the leading player in it.” The company started to roll out winter sportswear in the Chinese market in 2018 through a joint venture with Japanese ski apparel company Descente.
Eddie the Eagle
The market expectation is based upon the prospect that the Beijing 2022 will motivate 300 million – one in every five Chinese – to participate in winter sports, a promise made to the IOC in Beijing’s bid book and written into the latest version of the national sports development plan.
The realisation of this ambition hinges on more factors than just the successful showcase of an Olympic Winter Games. Economics is one of them. Dong Ping, a white-collar ski enthusiast who frequents Chongli at Zhangjiakou, 200 kilometres north of Beijing in the neighbouring Hebei Province, where most of the outdoor events of Beijing 2022 will be located, observed that the weekend queues at ski resorts disappeared last winter. “It looked like that some people already have no more money, or curiosity in skiing. So they have stopped staying for a night there,” he says.
One unofficial target is to have 50 million hardcore winter sports players in China after Beijing 2022. However, the imminent challenge for China is really how its athletes will perform in front of a home crowd.
Unfortunately, China is traditionally poor at winter sports, except for short-track speed skating, and even this discipline yielded only one gold at the 2018 Winter Olympics. The current game plan is for Chinese athletes to compete in all events for the first time, and for the delegation as a whole to achieve its personal best.
China has to bet that a few cases of the Eddie the Eagle miracle will emerge. In February 2018, a daring and creative cross-over project was kicked off by Chinese sports authorities to select 150 trainees out of 420 professional athletes in other disciplines, ranging from rowing, canoeing, running, cycling, football, volleyball, and even martial arts, to try out winter sports, in the hopes that a few success stories will emerge.
Chen Pengbing, famous for completing a full marathon every day for 100 consecutive days four years ago, started cross-country skiing in Finland in early 2019. He did not know how to ski in 2018. “I like new challenges. I hope to win enough points to qualify for Beijing Olympic Winter Games,” he said. By the time the Games roll round in 2022, he will be 44.
Despite the unclear number of winter sports enthusiasts, the number of ski resorts in China reached 742 in 2018, an increase of 30 per cent since 2015 when Beijing 2022 was first awarded. Infrastructure, which has been the leading driver for China’s decades of economic growth, has yet again been the real winner.
Beijing 2022 will have 26 venues and athlete villages, newly-built or repurposed such as the Bird’s Nest and Water Cube from 2008, located in three locations. All venues are planned for completion by the end of 2020 or mid-2021, including brand new motorways and high-speed railways linking Beijing and satellite event locations.
Footing the bills of the massive infrastructure costs seems to be no problem for the Beijing 2022 organisers, although the commercial development so far is not as strong as previous Games. “The 2018 Pyeongchang organisers were different,” says Lingling Liu. “They did not have such abundant political resources.”
All costs will be justifiable for Beijing to be written in the Olympic history as the first city to have hosted both summer and winter Olympics. The BOCWOG has the full mandate and support from the state’s top leaders as well as the Beijing municipality government, said Chen Jining, mayor of Beijing.
China’s confidence in hosting a successful Winter Games has always been echoed by IOC president Thomas Bach, who speaks well of Beijing 2022 at every opportunity. The IOC has just conducted a three-day review at the Beijing 2022 organising committee’s headquarters this month, and Juan Antonio Samaranch, an IOC vice-president, said: “We are very impressed with the progress achieved. I am not going to say it surprises us, but we are very impressed with the amount and quality of work that has been done.”
“It gives us a lot of confidence in the ability of Beijing 2022 and [its] partners to deliver on a very ambitious vision.”
In the IOC’s opinion, even the threat of minimum snowfall, and an expected reliance on artificial snowflakes in the Chongli hills in February 2022, will not complicate China’s chances of success in hosting the event. But it remains to be seen if enough domestic sponsors will arrive in time for Beijing 2022 to be just as successful in the sponsorship stakes.