China sports brand takes short cut to Olympic fame

As sportswear makers jostle for attention at Beijing's Olympic Games this summer, one home-grown Chinese brand has a plan to get a leg up on big global names like Adidas that paid big money for official sponsorships.

Li Ning <2331.hk>, founded by and named for the gymnast who won three gold medals at the 1984 Los Angeles Games, will have its logo emblazoned on shirts, shoes and assorted sportswear worn by reporters and sportscasters at the state-run Chinese channel with exclusive rights to mainland broadcasts of the games.

While Adidas AG paid about $200 million to sponsor the event, the company's Asia chief said earlier this year, Li Ning paid a fraction of that to sponsor Olympic coverage by the National Sports TV Channel of China's CCTV.

This deal is hardly a first in the Olympics' long history of so-called ambush marketing that sidesteps pricey official sponsorships.

But it puts ambitious Li Ning in a sweet spot of Olympics-related marketing this summer as it battles global rivals in China's sportswear market, which is growing by more than 20 percent a year and, according to Shanghai-based brand strategists ZOU Marketing, will be worth $7.2 billion by 2009.

"These days, it doesn't make much sense to sponsor the Olympics, as you cannot set yourself apart from others any more as brand awareness is diluted," said Shaun Rein, managing director of China Market Research Group.

But Li Ning's rivals have cried foul.

The International Olympic Committee, spurred by complaints from competitors, investigated Li Ning's arrangements, although it found no violation of its rules.

"We didn't breach any rules," Li Ning spokesman David Wang said. "Sponsoring CCTV is much cheaper, and we think it's a very clever idea."

CRYING FOUL

With a 10.5 percent share of China's sportswear market, according to ZOU Marketing, Li Ning is keen to catch up to Adidas's 15.6 percent and Nike's 16.7 percent.

"This is a smart technique, but I'm really concerned from the ethical standpoint," said China Market Research's Rein, who argued that unofficial sponsors should not get air time on live Olympic broadcasts because that dilutes the value of official sponsorships.

Adidas's bigger rival, Nike, is also planning to attract eyeballs without an official sponsorship by signing up Athens gold medal hurdler Liu Xiang, a popular athlete in China who is expected to draw heavy attention during the Beijing Games.

Such arrangements are likely to leave consumers confused about who the actual Olympic sponsors are.

About 40 percent of Chinese surveyed by Shanghai-based China Market Research believed Nike was an official Beijing Olympics sponsor and 10 percent thought Li Ning was a sponsor. Eighty percent said they did not care who the sponsors were.

Li Ning also cooperates with the Swedish Olympics Committee and sponsors China's national teams in table tennis, diving, gymnastics and shooting.

Only official Olympics partners, however, are allowed to use Olympic logos or titles in advertisements.

A dozen multinational companies, including Coca-Cola , General Electric , Johnson & Johnson and McDonald's Corp , won global sponsorships, while 11 others, such as Volkswagen and Adidas, are sponsors within China.

Dozens of other companies have less extensive tie-ups, ranging from the official leather goods supplier, Aokang Group Co, to accounting services provider PricewaterhouseCoopers.

But the International Olympic Committee's marketing commission chief, Gerhard Heiberg, told Reuters in January that it was preparing to crack down on ambush marketing before and during this year's Beijing Games, to protect the interests of its partners.

"We have taken this issue very seriously," he said. "This is brand new to Chinese companies. Some do it with good intentions, and some not with good intentions."

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