China Sports Business Weekly | 21st February
China slowly but surely started to return back to business this week with some shops, offices, and restaurants opening their doors for the first time in a month. The global sports community continues to send messages of support and donations to China, all of which have been well received by the country.
On the agenda this week: Wanda Sports Group eyes $1b for Ironman, Barcelona partners with Taiping Life Insurance, China out of Davis Cup, adidas announces 85% China sales drop, and ByteDance uses closed cinemas to its advantage.
This week, we spoke to Benjamin Wahl, Head of China for Borussia Dortmund, about a tough period for China and how sports organisations can unite and help.
We also talked with China Skinny’s Managing Director Mark Tanner, on how digital platforms and tech companies have been changing strategy and taking advantage of hundreds of millions stuck at home glued to their mobiles.
1) Wanda Sports Group Looking for $1 Billion Ironman Triathlon Sale The China-based sports marketing and event promoter is looking to sell the Ironman triathlon business it bought back in 2015. Wanda Sports is seeking in the region of $1b for the triathlon business, having originally paid $650m. Read more on Bloomberg (English) and Lanxiong Sports (Chinese)
Mailman Take: After a disappointing IPO last summer, Wanda Sports Group will be hoping for a strong start to 2020. A $350m increase on the price paid five years ago for Ironman would represent that, if they can find a willing bidder.
2) FC Barcelona Partners with Taiping Life Insurance
The Chinese life insurance company has become the official insurance partner for the club in China until the end of the 2022/23 season. Read more on Xinhua (Chinese)
3) China Pulls Out of Davis Cup China have been forced to pull out of next month’s Davis Cup play-off with Romania. They were due to travel to the Romanian city of Piatra Nemat for qualifying matches on March 6-7. Read more on SportBusiness (English) and Sina (Chinese)
4) Adidas Reports 85% Greater China Sales Drop From Previous Year The company stated a significant number of its stores were currently closed, and that those open had seen a substantial drop in shoppers. “Consequently, our business activity in Greater China has been around 85% below the prior year level since Chinese New Year on January 25,” adidas said. Read more on Quartz (English)
5) ByteDance Capitalises on Empty Cinemas China’s Huanxi Media Group was set to lose millions on its New Year-themed movie Lost in Russia as cinemas were all shut across the country. With the movie planned for release during CNY, ByteDance paid $90 million to distribute the Lost in Russia movie for free on its Douyin and Xigua platforms. Lost in Russia was released and quickly racked up 600 million views and counting. Read more on Channel News Asia (English) and ifeng (Chinese)
Mailman Take: While the majority of Chinese companies have struggled lately, tech giants such as ByteDance identified growth areas with the housebound population. Whether this will have a long-term effect on cinemas as consumers become used to watching more movies at home remains to be seen.
6) Short Video Apps and Gaming Surge Daily active users (DAU) for Chinese short video apps combined reached 574m during this year’s extended 10-day CNY, compared to 426m during last year’s week-long holiday. The gaming sector’s engagement shot up, with average time spent on mobile games increasing to 159 minutes during this year’s holiday from 113 minutes last year. Read more on Technode (English)
From The Top
Benjamin Wahl, Head of China, BVB
1. What did BVB do during CNY?
Looking back a few years ago to our very first Chinese New Year greetings, it all started really small and became now a fixed milestone each year to give something back to our great fan base in China.
This year, we’ve launched a BVB calendar with BVB’s most iconic pictures and club values. We’ve initiated a campaign illustrating our players with Chinese calligraphy. I really like Haaland’s illustration and due to his outstanding sportive performance, he is super popular among our fans.
We also launched the second fan documentary series where BVB sent three Chinese fan ambassadors to the club's Winter Camp in Marbella. The fans had unrivalled access to the players and we filmed exclusive shows with Reus and Brandt.
2. During this recent period, did you notice any change in engagement or sentiment from your fans, with the majority unable to go outdoors?
The current situation is really tough for everyone and something most of us haven’t experienced before. Due to the fact that the majority is unable to go out, there is a focus on digital content.
Of course, we could see that the video messages made by Haaland, Reus and Witsel expressing their support for Wuhan and China touched the people and created a huge engagement. Overall I was happy to see that many German Bundesliga clubs and our league the DFL engaged so much and supported China: From greetings, pictures, videos to donations: It was great to see that.
3. What were the key digital learnings as a club from all this?
It’s probably not a straight digital learning but I can share with you that we had many long meetings on how to support China in those times. Bottom line was that it doesn’t make sense for us just to produce a video clip, publish it and that’s it. The digital part is only an entry point for further actions. Therefore we worked on a midterm plan from player greetings, LED messages, signed player items as gifts to donations and additional planned football camps in certain regions.
4. How can BVB and the international sports community work together to make a positive difference during challenging times?
Sports, in general, is a perfect tool to get distracted from those challenging times. With the European leagues all going into their final games of the season, a tight fight especially in Bundesliga for the championship and having the round of the last 16 in UEFA Champions League, it’s football-wise one of the most interesting and exciting times during the year.
What we emphasize on from BVB side is to produce rich content on various Chinese platforms, to engage with our fans and to show them besides the match which is happening at Signal Iduna Park, that our thoughts are with them and we are aware of the current tough times.
5. BVB was recently awarded for its use of fan clubs in China. What do you put this success down to and how will you ensure similar or better results in 2020?
We from Borussia Dortmund are here in China to be closer to our fans. That was the key point and start of our engagement in China and even though our strategy grew bigger within the last years including youth football development and commercial partnerships, we put our fans as the number one priority. Therefore the digital part is a key element to get in touch with them, to deliver content, to bring us closer together. We decided last year to create our very first membership program abroad - The HeroCircle.
The HeroCircle: Which is our platform to found BVB fanclubs, to join a fanclub as a fan and to deliver from BVB side special content for our members in China. The HeroCircle as a platform, combined with our bi-weekly fanclub viewing parties all around the country and our Asian Fanclub Tournament were key elements with our fanbase in 2019.
6. What does 2020 have in store for the club?
In 2020 we are focusing on the Asia Tour with our first team in July and the next BVB legends game in Asia at the end of 2020. We will develop new features for the HeroCircle and we are in preparations for the next Asia Fanclub Tournament which most likely will happen in Vietnam. Furthermore, we are working with our HQ on the launch of Merchandise stores for the main e-commerce platforms in China.
Mark Tanner, Managing Director at China Skinny
1. What have the big tech companies been doing differently to keep the country's people entertained?
I think ByteDance has been the smartest during this unique time. They were always going to organically grow due to the addictive and engaging nature of their short video entertainment through Douyin, and the need for news and information through Toutiao, but on top of that, they read the disappointment of movie premieres being cancelled over the busy CNY period and exclusively showed the anticipated big blockbuster Lost in Russia on their platforms. Tencent followed suit with Enter the Fat Dragon.
Tencent has also recently launched a new feature called "Channels" in the discover tab on WeChat where users can explore media accounts and videos from KOLs in hope of eroding some of Douyin's momentum. Although Bytedance has been getting a lot of airtime since the outbreak, Tencent is well positioned as the leader in social media, gaming and video (including NBA streams), which have soared since the crisis.
Although eCommerce has been hurting outside of staple food and health products, mini program stores have seen some good new additions as traditional retailers - including the small vendors - seek to claw back lost revenue.
2. What have been the key learnings from apps and platforms such as Douyin, Weibo, and WeChat? Have they been successful?
Apps and platforms that connect, inform and entertain have seen the biggest growth, with mobile games, short and long videos accounting for the largest share of time. Platforms/brands providing relevant games - one of the most popular was an epidemic-related game - and new features within those games have seen a spike in engagement.
Similarly, entertainment and relevant video (short and long) continues to glue consumers to their devices and has created a new wave of KOLs - particularly those connecting at a relevant level with info about the virus, or how to be entertained/stay fit/cook while housebound.
3. Can we expect to see any change in digital strategy or will it be back to as it was once the country is back to the office working?
When the outbreak is over, I expect the nationwide 'house-arrest' will see two types of consumer responses: 1) those that are 'over' their house and will be out and about/travel more than ever; or 2) those that have become quite fond of their house, cooking at home, etc, and will invest in making it a nicer place to be through purchases.
Communications should be quite segmented to appeal to these two general 'tribes' and factor in different behaviour. Short video - although it was already on the rise, it is now more relevant than ever and should be a key pillar in digital strategies. The rise of social networking and connections over this period will see everything 'social' accelerate - social gaming, social commerce, etc. In the short term, there is likely to also be all sorts of initiatives that make things as 'contactless' as possible
4. What are your 3 main takeaways from digital in China over the past month?
1. Consumers are fragile at present and respond best to communications that are sensitive to that - entertain tastefully, inform/educate or connect with communications during these unique times.
2. Pushy promotions/campaigns over digital don't work at present.
3. Look to build engagement and acquire brand engagers - particularly as the cost of acquisition is currently very low - so you can hit the ground running when things start to return to normal again.
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