Sports de­mand climb­ing higher

New five year plan for in­dus­try ex­pected to pro­vide ex­ten­sive stim­u­lus to ex­pan­sion

China Daily (USA) - - BUSINESS - By JING SHUIYU jing­shuiyu@chinadaily.com.cn

China’s sports mar­ket is pro­jected to in­crease by leaps and bounds in the long term, as the coun­try ramps up its re­sources to fa­cil­i­tate the devel­op­ment of phys­i­cal ac­tiv­i­ties, sports sec­tor in­sid­ers be­lieve.

Li Xudong, man­ag­ing di­rec­tor of the in­vest­ment bank­ing depart­ment at Bei­jingChina Se­cu­ri­ties, said at a re­cent sem­i­nar that the prospects for China’s sports mar­ket were bright, although there was still a long way to go.

“Sports ac­tiv­i­ties among or­di­nary peo­ple, com­pared with sports pro­fes­sion­als, are seen cre­at­ing huge de­mand,” said Li Ning, chair­man of the Beijing-based sports­wear maker Li Ning Co Ltd. Li made a name for him­self in sports, by win­ning three Olympic gym­nas­tics gold medals.

Li Ning said the af­flu­ence stem­ming from in­creas­ing ur­ban­iza­tion of China’s pop­u­la­tion, and in­creases in fam­ily in­come would spur the sec­tor.

Ac­cord­ing to in­de­pen­dent re­search con­ducted by 36kr, a Chi­nese me­dia site spe­cial­iz­ing in re­port­ing tech­nol­ogy-re­lat­ed­newssto­ries, the sports­mar­ket is set to in­crease 25 per­cent in the next ten years,

An­a­lysts say com­pa­nies and in­vestors have been seek­ing busi­ness op­por­tu­ni­ties in the in­dus­try inthe past three years.

For ex­am­ple, Wanda Group bought Switzer­land-based world top sports mar­ket­ing com­pany In­front Sports & Me­dia at $1.2 bil­lion, just three weeks af­ter its pur­chase of a stake in Span­ish La Liga cham­pi­ons Atletico Madrid. It also Li Ning, bought Florida-based World Triathlon Cor­po­ra­tion — the world’s big­gest op­er­a­tor of Iron­man­events, ac­count­ing for 91 per­cent of the global mar­ket share of long-dis­tance triathlon events— for $650 mil­lion.

China’s e-com­merce gi­ant Alibaba Group Hold­ing Ltd estab­lished Ali Sports Group, whileTen­cent, the top in­ter­net ser­vice por­tal, bought on­line broad­cast­ing rights for a large num­ber of sports events.

Fu­el­ing the trend is the govern­ment’s ini­tia­tives to ac­cel­er­ate the devel­op­ment of the lo­cal sports in­dus­try and pro­mote sport con­sump­tion among Chi­nese peo­ple.

China’s Gen­eral Ad­min­is­tra­tion of Sport mapped out the 13th Five-Year Plan for the in­dus­try in July 2016, aim­ing to spend the next five years in boost­ing it so that it would be worth 3 tril­lion yuan ($460 bil­lion) by the end of 2020 and would ac­count for 1 per­cent of do­mes­tic GDP.

Prior to the lat­est plan, the State Coun­cil re­leased a guide­line for the sports in­dus­try in 2014, which sug­gests that the to­tal value of China’s sports in­dus­try should ex­ceed 5 tril­lion yuan by 2025.

In 2014, the value of the sec­tor was 1.36 tril­lion yuan.

Un­der the lat­est sports plan, the to­tal soc­cer pitches in the coun­try will ex­pand to over 7,000, av­er­ag­ing at least half a pitch for each 10,000 peo­ple and by 2020 China will have 20,000 soc­cer acad­e­mies.

The plan also is­sued a blue­print for na­tion­wide fit­ness pro­grams, set­ting goals of build­ing 500 pub­lic fit­ness cen­ters in coun­ties and 15,000 fit­ness fa­cil­i­ties in vil­lages and towns, with 10,000 more mul­ti­func­tional play­ing grounds to be con­structed in cities.

An­a­lysts say the in­dus­try is flour­ish­ing with op­por­tu­ni­ties in many ar­eas in­clud­ing sports me­dia, sports fa­cil­i­ties, mer­chan­dis­ing, sports mar­ket­ing and spon­sor­ship.

How­ever, although there is a huge po­ten­tial mar­ket for sports, they say its dif­fi­cult to turn that po­ten­tial into profits be­cause of a lack of a proven busi­ness model.

“There’s a lot of money avail­able to fi­nance the in­dus­try, but we need time to fig­ure out how to ... make profit,” said Li Xudong at China Se­cu­ri­ties.

Li added that none of the Chi­nese sports com­pa­nies were listed on the stock mar­ket’s main board. As for the New Third Board — pop­u­lar among mi­cro, small and medium-sized firms — 41 com­pa­nies are cur­rently listed in the sports or sports-re­lated cat­e­gory. Ac­cord­ing to in­dus­try data, the 41 com­pa­nies recorded an av­er­age an­nual loss of 11 mil­lion yuan.

Sports ac­tiv­i­ties among or­di­nary peo­ple, com­pared with sports pro­fes­sion­als, are seen cre­at­ing huge de­mand.” chair­man of sports­wear maker Li Ning Co Ltd

Xin­hua con­trib­uted to this story.

ZOU HONG / CHINA DAILY

A wo­man tries climb­ing at a sports equip­ment ex­hi­bi­tion in Beijing.

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