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Wednesday, July 21, 1999 Published at 09:41 GMT 10:41 UK

Business: The Company File

Reds target China

Man Utd Plc wants to cash in on recent victories

The world's wealthiest football club is seeking to develop sales of its replica shirts, key rings, mugs and other merchandise in the world's most populous country.

That is undoubtedly the reason for the current Manchester United tour of China.

The BBC's David Willis: "This tour is about making money"
The club's chief executive Martin Edwards, leading the club trip to China, was asked whether the team had flown half way around the world for the sport or for money.

"It's for the football and also it helps to spread the gospel worldwide", he claimed.

Somehow it is hard to believe that the team's manager, Sir Alex Ferguson, wanted to take his treble winning players to Australia and then on to China for a series of games against teams no better than many found within a few minutes drive of Manchester.

Indeed Sir Alex remained in London, receiving his Kinghthood from the Queen at Buckingham Palace, at the same time as the team arrived in Shanghai.

[ image: Beckham and Giggs help sell merchandise]
Beckham and Giggs help sell merchandise
What the trip is all about is money, but it would not be politic to make that too obvious in the world's largest communist state.

Manchester United is a commercially run leisure company whose shares are listed on the London Stock Exchange.

Its core business is football, but it makes much more of its money from television rights and selling replica shirts with the names Beckham and Giggs on them, than it does from the cash paid by spectators attending matches at Old Trafford.

Its turnover for the year to 31 July 1998 was £87.8m, on which it made a profit of £14.1m. Since then the team has become European champions, estimated to add £10m worth of sales of replica shirts and other goods.

Spice Girls

Anyone wanting to buy the business would have to pay more than £600m, but having conquered first the UK, and now Europe, the leisure company is now naturally seeking new markets for its products.

With it now arguably having as many supporters as it is likely to ever get in its home market, its directors are looking further afield to satisfy the pressure to keep profits increasing.

The consequence is the tour to the Far East.

The principle is the same as when the Spice Girls or Rolling Stones go on worldwide tours to boost sales of CDs, posters and T-shirts.

The 60,000 tickets for Wednesday's match sold out within two days, but more important to the club will be the fact that it is being broadcast live to a potential audience of more than one billion.

Manchester United is already planning more Old Trafford megastores, which stock club merchandise, for cities across Asia.

Middle East is next

The first Theatre of Dreams outlet is to open in Singapore later this year, followed by Hong Kong and Jakarta.

These will all add sales that the club did not have in the past. Further growth will follow if talks with three potential Chinese partners for stores in the People's Republic succeed.

According to UK newspaper The Financial Times, Manchester United plans to tour China every two years to cement its new fan base, and probably to ensure the all important smooth relations with the Chinese authorities.

The commitment may grow further as giant stores in Beijing and Shanghai may be followed by its merchandise being manufactured in China.

Conquering, or developing, a market in China continues a rapid spread in company operations to previously neglected parts of the world.

Just ahead of the tour to Australia and the Far East, the club said the Middle East would be its next market to be targeted.

Abu Dhabi, capital of the United Arab Emirates, is in line for the 'Theatre of Dreams' chain, to be followed over the next two years by stores in Saudi Arabia, Egypt, Lebanon, Kuwait, Oman, Bahrain and Qatar.

The club is seeking to expand its presence anywhere it believes it may be able to persuade more people to become followers of the club.

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