According to a report released by the Chinese National Sports Authority, China produced a total output of RMB 1.7tr (US$ 250bn) from its sports industry in the year 2015 alone.
As the report revealed, the result is mainly driven by manufacturing, sales, trading and rental of sports goods and related products, which accounts for 86.2% of the total. In other words, the sports-related goods industries are still the main sectors of the Chinese sports industry.
However, the nucleus of a sound sports industry should be its sports performance industry and not its sporting goods sector.
Deloitte found in 2015 that Dubai’s sporting industry was worth more than US$ 1.7bn, with investment in sporting events, sports venues and mass participation events accounting for US$ 709m of the city’s total gross events expenditure of US$ 1.14bn. In this regard, Dubai has a much healthier sports industry than China.
Then how can we change the status quo of the Chinese sports market?
Maybe we can start with the following aspects.
The Chinese Super League
The Chinese Super League (CSL), we can say, is the most popular and commercialised professional sports league in China. In recent years, powerful outfits such as Guangzhou Evergrande and Shanghai SIPG have become annual title favourites for the AFC Champions League.
More importantly, the arrival of international players like Tevez, Oscar, Hulk and Alex have enhanced the competitiveness and increased entertainment of Chinese clubs and fans as well as improving the international influence of the top-flight football league.
As such, the growth in attendance figures of the league have been remarkable. According to statistics released by CSL officials, the total stadium audience reached 5.8 million in 2016, averaging 24,159 for each game. At the same time, more than 284 million people watched the CSL on TV with the number of viewers streaming online increasing sharply. As of now, the football league is being broadcast in 96 countries and regions around the world.
The league has also been monetising its commercial value through sponsorships and partnerships. In May, the CSL Company sealed a five-year title sponsor-extension with the Chinese insurance firm Ping’an Group, which will see the firm pay RMB 1 bn to continue its title sponsorship through to 2022.
Meanwhile, the CSL has also signed up as partners with China Sports Media (CSM) in a five-year broadcast rights deal, worth RMB 8bn. Despite LeSports relinquishing its broadcast rights due to financial burdens, the new media rights for the 2017 CSL season were acquired by the Suning-backed PPTV Sports.
However, two new policies, recently introduced by the Chinese Football Association (CFA), have caused a stir in the Chinese football world. These new rules regulate the number of foreign players and require clubs to have for each match: at least one Chinese under-23 player in the starting XI; at least three U23 players in the 18-player squad; and the number of U23 players and the times they play no fewer than foreign players. The rules have also limited Chinese clubs’ investment in transfer windows by doubling transfer fees overnight.
The CFA said the new rules are aimed at promoting the development of youth players and training in the country, but some critics argue that this move, despite its good intention, is too premature for the Chinese football market. It remains to be seen whether this is the best way to balance commercial value and youth player development.
The Chinese Basketball Association
Although the Chinese Basketball Association is not as widely known as the CSL, the first-tier professional men's basketball league in China has a remarkable fan base.
As reported in the Yutang Sports viewership report 2016, the league showed its popularity by having 7 CBA matches ranked in CCTV’s Top 10 basketball games list.
Even more importantly, China has been making recent progress in basketball reforms. With the establishment of the CBA Company, Yao Ming’s election as CBA President and the launch of the CBA Summer League the country is on track to separate its professionally-run basketball league from its traditional government-run system.
All these changes will help improve decision-making, enhance independence and transparency, as well as turn the CBA into a more professional and commercialised league in the international market.
However, beyond football and basketball, other sports leagues in China are not yet operated in a much professional level, such as badminton, table tennis and volleyball. They still need to be run more professionally and to attract more attention.
Mass participation events, on the other hand, are developing at an unprecedented rate in China.
Take marathon running as an example. In 2016, 328 marathon-related events were approved by the Chinese Athletic Association, which is almost 1.5 times more than 2015 (134 events) and 14 times more than 2011 (22 events). Parallel to the increase in marathon events is a rise in number of participants, reaching 2.8 million last year, up 1.3 million from the previous year.
However, we should not only focus on the numbers but on how we can solve more tougher issues regarding how to carry out the national fitness programs. Some questions include: How can we balance policies and market demand? How can we make full use of sports venues? How can we promote the development of grass roots clubs? How can we make events more professional and motivate mass engagement and participation? And how can we provide more public sports resources to the public?
Policy Support for Mass Participation
Recently, a national plan was jointly released by nine Chinese departments on supporting social strengths for organising mass participation events such as marathons and bicycle races.
The plan describes that marathon runners and the times people run marathons should exceed five million and related consumption should be over RMB 20 bn; consumption related to bicycle races should also exceed RMB 20 bn.
As such, we can see the government is making more detailed guides in different disciplines/areas and grass roots/mass participation events are playing an important role in realising the larger national sport industry goal.
As a conclusion, a well-established sports industry cannot only be strong in the sporting goods sector. Improvements in the sport event market are needed to optimise the industrial structure.
This article was written by Gu Xin of Yutang Sports