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Friday, 13 July, 2001, 14:17 GMT 15:17 UK
Beijing win is big business
Cyclists pass the sign to the Olympic Village site in north Beijing
The main Olympic venue: fields on the outskirts
By BBC News Online's Mary Hennock

Beijing's victory in the battle to host the 2008 Olympic Games is worth a lot of money to Western businesses.

The Beijing and Chinese governments will spend more than $20bn to get the city ready for the games.

They will build an Olympic Park with venues for 15 sports and an Athletes' Village, improve existing sports facilities, invest huge sums to build five new metro lines and 125 miles of new roads, and clean up Beijing's polluted air and water.

With such big deals on offer, some executives of Canadian companies have backed Beijing's bid over nearest rival Toronto.

The Evaluation Commission has taken Beijing's ability to mount a huge capital expenditure programme on trust

Harry Peart, BBC Sport

For instance, Bombardier and SNC-Lavalin have won a $1.5bn contract to dig tunnels for five new subway lines which is awaiting the go-head.

Beijing's sucess means "we should get approval for our projects," said Bombardier's China vice president of sales Zhang Jianwei.

Taken on trust

With so much construction work to do in the next seven years, Beijing's sucess in winning the games is a vote of confidence in its ability to mount a huge capital expenditure programme, says Harry Peart, BBC World Service Sport Correspondent.

In essence, the Evaluation Commission has accepted Beijing's bid "on trust", he said.

So who will win these lucrative contracts?

"Undoubtedly being well-established in the China market is an advantage," said Madeleine Sturrock, deputy chief executive of the China-Britain Business Council. "If you are already trusted and known to your Chinese counterparts it will help."

Man walks past a billboard
The bid has had massive promotion in Beijing

It's a view echoed by Joachim Prigol, China managing director for multinational construction firm Holzmann, which built stadiums for the Munich and Atlanta Olympics.

Experience helps

"The Chinese position is 'We'll not make business with newcomers or people who have a short reference here,'" he said.

He expects the tender for the main Olympic stadium to be worth in the region of $250m. Holzmann will bid alongside CSCE Construction, its Chinese state-owned partner.

In the past, Holzmann has built the Bank of China head office and one of Beijing's biggest shopping centres.

The deals on offer will reach into every sector of the economy - tourism, information technology, broadband internet, advertising, water purification, a light rail link. And they will include all Beijing's facilities, even the oldest. A magnetic levitation rail line to the Great Wall is being planned.

The Chinese position is 'We'll not make business with newcomers'

Joachim Prigol, MD Philipp Holzmann, Beijing

China-based multinationals have been lining up to sponsor Beijing's Olympic bid commitee.

Procter & Gamble - which sells Lux soap and shampoos in China - is just one of several foreign companies which has donated money to the Beijing bid committee. P&G gave $362,000, according to China Daily, a government-sponsored newspaper.

Telstra, the Australian telecoms giant, has sponsored the committee with equipment and and facilities, China Daily said.

In China, like anywhere else, sponsorship can bring brand recognition. The brewer of Budweiser, Anheuser-Busch, is the official sponsor for the Chinese Olympic team for 2004 games in Athens, the third time it has sponsored the team.

Eager for a headstart

A string of multinationals have become well-established in China - such as mobile phone maker Motorola, engineer Siemens, telecoms network builder Ericsson and auto giants General Motors and Volkswagen.

Earlier this year, News Corp boss Rupert Murdoch won a foothold in China's telecoms market as part of a four-company deal to buy a 12% stake in China Netcom Corp - due to build broadband internet. Beijing plans an information superhighway by 2008.

Newcomers should not be discouraged, however, says Mrs Sturrock. "There are likely to be new types of business, new opportunities," such as sports business, she said.

All these deals will bring lucrative fees and commissions to the financial services sector, the China branches of overseas banks, international law firms and mangement consultancies.

The Beijing Olympic bid committee leaves for Moscow
The Beijing Olympic bid committee leaves for Moscow

Some China watchers have raised concerns that these contracts may not be allocated in a transparent and fair way.

"A small clique of Communist Party officials stands poised to reap huge rewards", said Michael Sheridan, writing in the Sunday Times. Bei Chen, a development company with close ties with the city government has bought prime land in the area north of the city where the main Olympic venues will be built, he says.

Reforms get a boost

Others disagree. The spotlight on China over the next seven years "will give the international business community reason to believe that market reform will continue", according to Scott Kronick of Ogilvy Group in Beijing.

International PR agency Ogilvy has acted as an advisor on the Olympic bid.

Among the middle class, some 50 million Chinese households own shares, and stocks in Beijing City Construction - tipped to be a player in the construction of Beijing's subway - and Capital Venture and China Sports Industrial have been popular buys recently, analysts said.

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