1. The Year of Women’s Sport
Following a historic year of success for Chinese athletes at the Beijing Olympics, the country now turns its attention to the FIFA Women’s World Cup in July next year. Not for the first time, female footballers are leading the charge for China, having done so famously in the final of the ‘99 World Cup and following in the footsteps of other great female athletes. Most notably, Chinese women have outperformed their male counterparts on the world stage in volleyball, ping pong, badminton, and across a wide range of Winter sports.
What does this mean? Seeing the Chinese national team competing on the biggest stage in the world will supercharge the ‘ShePower’ movement sweeping the nation and should drive a significant uptick in brand investment towards both the national team and grassroots women’s sports initiatives across the country, just like Alipay have done, promising RMB 1 billion over a ten-year period.
In the wake of a three-year period of little-to-no sports events taking place in China, the FWWC will provide a welcome respite for both brands and fans looking to pour their attention and national pride into a worthy cause. The ‘Steel Roses’ take on the challenge of changing the narrative around Chinese football, and hope to finally be a ray of sunshine amidst the doom and gloom of the past 20 years.
2. Travel is Back!
As 2022 comes to a close, we’ve seen major developments that have seen China officially move away from its stringent Zero COVID strategy. The majority of the country is beginning to feel ease of restrictions, beginning with quarantine length being reduced to 5+3 in Q4, and now eventually moving to 0+3 in January 2023, which is a massive haul from its original 21-day quarantine. Following strict lockdowns in 2022, China’s aviation industry has taken the biggest hit with canceled international flights, months of limitations on domestic travel, and the implementation of severe Covid-19 rules. This has slowed overall travel as a whole.
That said, 2022 had some positive news as we witnessed students begin to travel back for international education at the start of the year, starting a first wave to travel abroad again. 2023 will expand on the loosening of restrictions and allow the application of passports for more purposes outside of study and business. 2023 will enter, in aviation circles, the growth stage where CAAC (Civil Aviation Administration of China) has already said “The focus is to expand the domestic market, restore the international market, release the impact from reforms and improve the level of opening up.”
Phased progression is how we will see China open eventually. With Hong Kong removing quarantine, and China reducing quarantine times with lighter restrictions for entry into the country - we are seeing positive signs for a brighter outlook for 2023 and beyond.
With the period of growth expected to begin in 2023, look for restrictions to continue to ease as vaccination rates amongst the elderly in China begin to rise. The pent-up want for international travel is at an all-time high as domestic travel fatigue takes its toll. Look for borders to likely be open by Q2 of 2023.
3. Esports Weathers the Storm
Following years of exponential growth, the first half of 2022 was the first time China’s esports industry contracted, due to Covid-19 and government regulations around gaming. Yet China still represents the largest single esports market in the world with over one-third of total revenue.
The industry has weathered the storm with over 200 new game approvals in July and August for the first time since 2018, creating new titles for esports expansion. This was then followed by the Tencent Global Esports Summit in August which was attended by the Publicity Department of China’s Communist Party of China. This reflects their confidence and commitment to the industry, especially with the potential number of new jobs that can be generated through esports.
In 2023, we will see the top Chinese esports teams take part in the first Olympic-affiliated medal event at the Asian Games, taking place in Hangzhou, with the country hoping for gold. This will be a major catalyst for esports growth with national pride at stake and opportunities for heroes to be made. We also hope to see a major international event coming back to China, with BLAST Premier or The International, one of a select few tournaments able to follow in the footsteps of the League of Legends Worlds hosted in Shanghai in 2020.
We hope to see China esports get back on track with the government by showing the benefits they can bring to reverse their ‘spiritual opium’ perception. If China wins multiple medals at the Asian Games, this will be the time to double down on and commit to building a sustainable industry fuelled by the Gen Z workforce.
4. Web3 Gains Traction
Web3, which is being led by the application of NFTs and the Metaverse, witnessed impressive growth in 2021 and then slowed down in 2022. Regulators, platforms, and brands took it as a ‘test and learn’ during this stage. NFTs were usually used in brand campaigns as a marketing tool for customers. Typically, a brand would publish its NFTs on a major platform (e.g. JINGTAN, R-RED, Bilibili) or during a key moment (e.g. Double 11, Super Brand Day, Chinese New Year).
While both platforms and brands are actively seeking innovative approaches to maximise the already shaped and growing understanding from consumers on Web3, it’s safe to predict that we can see another breakthrough in growth for the market in 2023. The forecasted market size of NFTs in China is to have a 50% YOY growth and reach 590 million in 2023.
With the growing wave of going direct-to-consumer (DTC) by brands in China over the past few years, most brands have an established DTC business model. Motivated by more customised engagement journeys and data acquisition opportunities, brands are looking to publish their NFTs or Metaverse on an owned or integrated platform. In this model, blockchain tech providers remain with major players such as Antchain, Xuper, Zhi Xin Chain, with publication on either a brand’s owned handle (Website, App or Mini Program) or a branded section collaborating with one of the major publication platforms (e.g. Nikeland on Roblox).
NFTs and metaverse are yet to be proven to have real business value rather than a marketing cost centre. In 2023, we will see new approaches emerge where e-commerce, membership, and gamification could be integrated by NFTs. On top of the virtual value, there would be tangible and transactional value to sustain the business model. In the sports industry, metaverses that integrate with an AR or VR experience could be able to serve as a key sports strategy for emerging virtual tournaments.
Multiple policies were launched to support the development of Web3 in China. However, the market is still under strict government regulation. In 2023, we will see test projects in dedicated areas backed by local governments as the pilots for wider market openness.
5. Chinese Brands Continue to Look Overseas
The Chinese economy is expected to improve in 2023. We foresee a slow start to the new year with existing Covid restrictions (although these are projected to be relaxed going forward) and the property market slump. Domestic private consumption and retail spending will continue to be weak. This means that Chinese brands, especially those in industries such as home appliances, electric cars, household products, and fashion will look overseas as a source of growth and revenue.
The recent successes of Miniso and Shein will encourage more brands to go abroad. The advantage for Chinese brands is a mature manufacturing base with excess capacity, which combined with good product design, represents a winning value proposition, i.e. good quality at a competitive price. However, Chinese brands seeking to win overseas will face significant challenges. As a start, these brands will need to overcome the China image problem.
Any solution will have to be multifaceted, starting with creating a marketing strategy that ties in local, and cultural nuances as well as reacting quickly to consumer preferences. The latter will necessitate a decentralised approach which may be uncomfortable for brands and their corporate headquarters in China.
Pioneers such as Shein have proven that the DTC approach affords the brand the most control (and opportunity) in communicating the brand ethos. The DTC approach will require the brand to invest in local marketing teams and resources. As much as overseas markets represent a clear and present opportunity for growth, Chinese brands will need to be prepared to put a lot of work and resources into creating tailored go-to-market strategies. This will take equal parts of patience, investing in the brand, and most of all, relevant products. Ultimately, with the Chinese economy in the doldrums for the near future, going overseas may not be optional, but rather a “must” for brands.
And as we’ve witnessed at the FIFA World Cup in Qatar, Chinese brands have been investing heaving into the showpiece tournament, and this is a trend to expect to see moving forward. Despite China not qualifying for the World Cup, China’s biggest brands see the quadrennial global tournament as the perfect way to grow their brand internationally, as well as to boost domestic exposure back home, since millions of fans in China were watching.
6. Growth of Co-ed & Low Barrier Mass Participation Sports
In 2022, Ultimate Frisbee, NFL’s flag football, and NHL’s ball hockey program gained traction in China, appealing to younger generations in search of a low barrier to entry sport that can be played in many locations across the country. 2023 is set for these inclusive, mass-participation sports to reach new heights as China continues to invest in sports, recreation, health & fitness.
The advantages of these sports are many, ranging from co-educational, low barrier to entry, affordable to participate, and locations to play are numerous. If Covid-19 has provided any benefits to society, it’s given the general public more motivation to get fit, and these sports are playing a big part in that.
Popular social media platforms in China have jumped on the ultimate frisbee bandwagon, helping to promote the sport. Xiaohongshu in particular, a social media lifestyle platform similar to Pinterest and Etsy, has been big on promoting ultimate frisbee to its users. According to Disc Circle, a frisbee-centric platform, as of May 2022, there were about 206 Frisbee clubs in China. To add to that, in April this year, the Ministry of Education announced that Ultimate Frisbee was officially included in the curriculum of compulsory education as an emerging sport. Several sports-related brands also sponsored frisbee events and clubs, including Nike, Adidas, and Puma, as well as Red Bull, Gatorade, and McDonald's.
As for flag football, there’s been a surge in participation, particularly among females. Xiaohongshu has established itself as the main social media platform for flag football fans in China, with the number of ‘notes’ related to flag football on Xiaohongshu in March 2022 increasing by 5990% compared to that in October 2021, while the search data for flag football increased by 4279%. NFL launched its official flag football account on Xiaohongshu and quickly gained over 6.8K followers. Now over 60 flag football amateur clubs/communities have joined Xiaohongshu’s flag football league.
And finally ball hockey, in which the NHL cooperated with 32 clubs from 16 provinces and 25 cities all over China to introduce the ball hockey program. These hockey clubs are working with 121 schools covering over 6,000 students, which also provides NHL with the opportunity to introduce ball hockey to the students through the clubs. NHL has sponsored all the equipment and finished the training for club coaches. With the relaxation of the zero-covid policy, we expect next year for there to be more offline ball hockey events, bringing more players to the physical format of the game.
In 2023, these three sports are set for their biggest year yet. Particularly as China has quickly removed its strict Covid policies and hopes to have the country and its economy back on its feet as soon as possible. Fitness and fun will be top of mind for the younger generations, and ultimate frisbee, flag football, and ball hockey will be the perfect release.
Mailman is China’s leading sports digital agency. We exist at the intersection of digital & sports. We help top sports organisations & brands to build sustainable businesses in China, one of the world's most challenging markets. Mailman is part of 160over90, an Endeavor company. Learn more about our story here.