The Winter Olympics in Italy are just a few months away, but a number of brand marketers are looking further ahead and farther afield: to China, home of the 2008 Summer Games. And the reasons go far beyond the Olympics.
With 1.3 billion consumers and a growing economy, China is a huge potential market, they say. And for U.S. companies, it represents an opportunity to make up for market share lost to foreign competition at home.
"China will be approved to join the [World Trade Organization], and in 2008, for the first time ever, China will host the Olympic Games," says John Rowady, president of [rEvolution Marketing, a Chicago-based sports-marketing agency. "The doors are opening for U.S. corporations to begin communicating with a growing class of Chinese citizens with increasing disposable incomes."
Though Rowady notes that government factors greatly govern the Western message, it is clear that Western lifestyle, goods, and services are accepted in China. Some regions, however, lag far behind others. And while marketers tout the immensity of the market, in actuality only 25% of the population can afford Western goods and services.
"This is the point that needs to be understood by marketers here in the U.S. and Europe," Rowady says.
At this stage of China's economic development, Rowady says, sports marketing programs, because of their cross-cultural appeal are one of the few communication tools that can break through and help corporations establish an ongoing marketing effort. Don Lee, managing director for the China office of another Chicago-based agency, Relay Sponsorship & Event Marketing, says that was evident this past summer, when his agency helped bring the NBA's Jam Van mobile tour to several cities in China.
"Sports like basketball in China are hugely popular. Six of the top 10 most popular athletes in China are NBA players," Lee says. "On a local level more kids are participating in sports as well, so there will be a new generation of sports enthusiasts to come. There are great opportunities for brands to take advantage of growing sports properties."
But programs such as the Jam Van will help pave the way for others as they look at the upcoming Beijing Olympics and beyond.
"Beijing ‘08 will be huge, but you need to start paving the way to get there now," Lee says. "It is also important to realize that China will continue to be an important market for sports and sponsorship well after the Olympic Games have left Beijing."
Paving the way means establishing relationships with potential partners, suppliers, distributors, and colleagues now. "Relationships are the most important thing” when setting out to do business in China, Lee says. “It’s not necessarily your capabilities, resources, or ability to get good results. You have to have a relationship with your potential clients or business partners. You have to prove who you are and build your reputation from the ground up, and be there for the long haul."
There are challenges in the way of effectively marketing an American brand in China, Lee continues: "The brand may be the same, but the consumer is certainly not. It is very important to have a talented professional local staff planning and executing to ensure relevancy with the target consumer."
Rowady says rEvolution has learned these five important lessons, which marketers should consider when expanding east:
- Have the most-experienced partners in China. Many people are talking, but few are actually moving forward with initiatives.
- Start in key markets like Beijing and Shanghai; the expense will be too great if the plan is not coordinated.
- Work with agencies who will take you on a plane, plan a visit, and introduce you to the right people so that you can work together to formulate the right strategic plan.
- Understand that a contract still has its risks.
- Be prepared to risk some budget, as you would with any start-up investment.
Rowady also passes along the following four pieces of advice when considering a venture in China:
- When the CEO asks the CMO about China, answer quickly and with confidence. This is a CMO's chance to make a difference in his or her company.
- Get your team together here before going to China, which includes your agency partners who know how to get you to the answers faster.
- Put BOTH feet in the water and learn. Your competitor will learn eventually, and you will lose your opportunity to get there first.
- The first one there will most likely win over the midterm.
