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Chinese Firms Try Scoring with Spanish Soccer

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When NBA journeyman Damon Jones signed a shoe deal with sporting goods maker Li Ning in 2006, he became the first in a long line of American basketball players to win a sponsorship from a Chinese company.

Today, China’s Peak Sport Products leads other domestic companies in terms of quantity, having signed deals with more than a dozen current NBA players. Other firms have focused on superstars: Anta signed 14-time all-star Kevin Garnett, Li Ning has sponsored the now retired four-time NBA champion Shaquille O'Neal, and Erke became a Los Angeles Lakers corporate partner.

The expansion into basketball was so successful that all sorts of Chinese companies including Internet concerns are now targeting another favorite among the nation’s sports fans—European football.

In early April, the Chinese telecommunications firm Huawei sponsored the Spanish soccer team Atletico Madrid in a one-time deal for their league game against cross-town rivals Real Madrid. Villareal signed separate short-term jersey sponsorship deals this season with Chinese social networking sites Renren and Sina Weibo, while six-time Spanish league champions Valencia have tied up with Chinese sportswear company Xtep.

Ryan Sandilands, managing director of Greater China for Octagon, a sports and entertainment marketing firm, said Spanish teams had been looking for Chinese sponsorships. In one case, he said, a Spanish club president traveled to China specifically to meet as many company executives as possible.

Chinese companies are attracted to football for very different reasons. Sandilands says Sina and Renren care solely about their domestic audiences: As many as 60 million Chinese watch Spanish soccer games on national broadcaster CCTV. They are not interested in expanding into international markets.

But Huawei, Sandilands says, is trying to take its brand overseas, so its focus is on the Spanish audience.

André Loesekrug-Pietri, chairman and managing partner of A Capital, a private equity fund for Chinese overseas investments, said companies want to be recognized in the eyes of the Chinese public as well as build brand awareness overseas.

Another sector whose firms are increasingly venturing outside of China is the solar industry. Yingli Solar, a company based in Hebei Province, raised eyebrows when it reportedly paid up to US$30 million to become an official sponsor of the 2010 World Cup. It doubled the surprise by extending that deal to cover the 2014 event in Brazil.

Chinese and South Korean solar firms have been vying for sponsorships deals in Germany and Spain, countries where governments have pushed for more renewable energy sources. Yingli has a deal with German soccer giant Bayern Munich, while Jinko Solar sponsors Valencia in Spain.

But Sina Weibo and Renren were both attempting to impress a domestic TV audience with their sponsorships of Spanish soccer teams. Each deal costs an estimated US$50,000, which means the risks are relatively small.

Not all overseas sponsorships have gone well for Chinese companies. A decade ago, the Chinese telecommunications firm Kejian sponsored Everton in the English Premier League. The two-year deal also included Chinese national team player, Li Weifeng. Fellow national Li Tie was soon persuaded to sign on loan.

Everything looked promising at the start: Li Weifeng proved a bust, but Li Tie established himself as a regular and Everton finished seventh, the club's best-placed result in years. When Everton faced a Manchester City side featuring another Chinese international, Sun Jihai, there were reports of more than 300 million people watching the match in China.

But Kejian pulled out of contract renewal talks with Everton in March 2004, and in October 2011 filed for bankruptcy. Its shares were suspended from trading the following month.

Sandilands cautions that companies can overreach a sports sponsorship. The same rules as for any business investment apply: Know the market, keep clear objectives and monitor the return on the investment.

“It’s very easy to find companies and sports teams that are ready to take your money,” he said. “Making it a worthwhile investment—that's the challenge.”

Mark Dreyer is a Caixin staff reporter.

Topics: 
Society
Keywords: 
Sports, Soccer, Spain