[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Languages
Last Updated: Tuesday, 18 May, 2004, 09:16 GMT 10:16 UK
Sport the key for China PLC
In a series of special reports for BBC World Service, Global Business reports on a second industrial revolution and the upheavals which are changing not only China but the whole world.

Logo-covered Jaguar at the launch of the Shanghai circuit plan
The Shanghai Grand Prix has been heavily sponsored from the start
As the impact of China's booming economy becomes ever more visible, one factor making Chinese brands into household names worldwide is sport.

A wealth of sponsorship deals have recently been tied up by China's biggest companies, designed to give them maximum exposure to the biggest possible global TV audiences.

In March, the petroleum company Sinopec signed a deal to become the principle sponsor of the inaugural Chinese Grand Prix, set to be held in Shanghai later this year. Formula One delivers the third-highest sports event viewing figures in the world.

But Chinese computer company Legend has now gone one better. It agreed to become a top-level sponsor of both the 2008 Beijing Olympic Games and the Winter Olympics in Italy in 2006, and even changed its name to do so.

The company has been rebranded as Lenovo, since the name Legend had already been taken in other parts of the world.

"We're all making bets on which of those brands will use it as a springboard to becoming big, global brands," British consultant Fiona Gilmour, author of the book Brand Warriors Of China, told BBC World Service's Global Business programme.

"It's not just [giant electronics company] Haier who is looking at that, not just Lenovo, not just TCL - I think they'll be one or two other players in other markets, whose names we don't know yet, who will also appear," she said.

Brand power

Lenovo will provide as much as $80m of computer equipment for the games, far more than it has spent on any sort of marketing before.

Ms Gilmour said that the Lenovo sponsorship deal was highly significant for the company.

Poster for the 2008 Olympics outside McDonald's in China
The Olympics are the most viewed sports event in the world
"This is of massive impact, and why Legend was in such a hurry to change its name to Lenovo and get its branding ready, before such an announcement," she said.

Another example is mobile phone company Kejian, which has sponsored English football side Everton primarily on the basis that it has Chinese international midfielder Li Tie in their squad - although he is not a permanent fixture in the side.

This deal was aimed less at the global market than China's domestic mobile users - English football is hugely popular in China, and televised matches attract huge audiences.

Meanwhile, two months ago, electrical appliance firm Haier became the first Chinese company to break into the world's top 100 most recognisable brands.

The announcement confirmed a remarkable turnaround for a company that 20 years ago was a failing refrigerator company. But is also indicative of how corporate China is making itself known around the world, and quickly.

The country's businesses have been learning lessons from Japan, and the swift post-war rise of its business economy to turn huge production facilities making cheap, anonymous goods into branded names that users and retailers pay a premium to buy.

US practice

But they have also combined this with business practices from the US that take advantage of China's size and population.

"Like America, they have got the advantage of having huge national volumes that they can then leverage," Ms Gilmour stated.

Li Tie
Li Tie's signing gave Everton a new sponsor
"They've got the R&D [research and development] capability and investment in their new products to actually take these to the rest of the world. As America did some decades ago, we're going to see China, over the next 20 years, leveraging those volumes."

But while the growth may mean China's economy is changing rapidly, so is the Chinese consumer.

Haier offers one of the best examples - its success has been built on offering its customers a more sophisticated product.

When its young chief executive Zhang Ruimin took over, according to company legend the first thing he did was smash the fridges that did not work properly.

"At that time workers had no awareness of quality of product, because we could sell everything we produced," he told Global Business.

"So I used this big event to change their mind, to raise their awareness."

Haier now has factories in 22 different countries, and has managed to persuade US retail giant Wal-Mart to stock products bearing its logo, and not simply rebrand them.

But it offers a variety of products to different areas of the domestic market, including machines for washing sweet potatoes and cheap, top-loading washing machines for the rural market.

Ms Gilmour pointed out it is very difficult to market a product across the whole of China, as the demands of its 1.3 billion people are so wide-ranging.

She said that even something as simply as skin cream had to be different in the north, where people's skin is drier, than in the south.

"These things have a huge impact on how you market," you can't just do blanket coverage," she said.

You can hear Global Business on BBC World Service every Saturday at 18:32 GMT in Europe.


RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS AND SERVICES

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East | South Asia
UK | Business | Entertainment | Science/Nature | Technology | Health
Have Your Say | In Pictures | Week at a Glance | Country Profiles | In Depth | Programmes
Americas Africa Europe Middle East South Asia Asia Pacific