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Why so many World Cup sponsors are from China

Many Western companies have withdrawn their support.

CHINA’S footballers have only qualified once for the finals of the men’s World Cup and that appearance—in South Korea and Japan in 2002—was forgettable. The Chinese team failed to score a goal and conceded nine, crashing out of the tournament at the group stage. But even though China is sitting out the current tournament in Russia, it is still having a considerable impact. Seven of the 19 corporate sponsors are Chinese. Why so many?

The World Cup is the marquee tournament for FIFA, the Zurich-based multi-billion-dollar enterprise that governs world football. It is hard to overstate how closely FIFA’s business model is tied to the quadrennial event, which is its primary source of revenue. FIFA booked $5.4bn in revenue for the four-year business cycle ending with the 2014 World Cup in Brazil, thanks largely to the television rights and corporate sponsorships that are the cornerstones of its balance sheet. The former brought in $2.4bn in revenue and the latter $1.6bn during that cycle, helping to offset the $2bn operational costs related to the staging of the tournament. The World Cup is one of the world’s most-watched television events, so big companies have traditionally relished the platform it offers their brands, and competed fiercely for the sponsorship slots on offer.

That has changed. In 2015 American prosecutors indicted some 40 individuals and entities associated with FIFA on a broad range of corruption charges, including racketeering, wire fraud and money-laundering conspiracy. The charges stoked long-bubbling concerns among the organisation’s corporate partners about whether their associations with FIFA exposed them to reputational and financial jeopardy. Companies such as Emirates, Continental, Johnson & Johnson and Sony refused to renew their sponsorship contracts when they expired. Few lined up to take their places. Of the 34 sponsorship slots on offer for the tournament in Russia, only 19 have been filled, a stark change from 2014 when sponsorship packages were sold out long before kick-off. (It should be acknowledged, though, that the corporate world might have reacted differently if the 2018 World Cup had been scheduled for, say, Portugal and Spain, rather than a Russia increasingly mistrusted by the West.) FIFA’s only new deals since the scandal broke have been with companies from Russia, Qatar (which hosts the tournament in 2022) and China, whose businesses seem to be less concerned about being associated with FIFA. Among those Chinese companies are Vivo, a mobile-phone company; Hisense, an electronics manufacturer; Yadea, an electric-scooter company; Mengniu, China’s second-largest dairy company; and Dalian Wanda, a conglomerate with interests in property and cinemas.

Around one in five Chinese people watched the 2014 tournament on television, but football’s popularity in the Middle Kingdom has not previously translated into large numbers of Chinese sponsors of the World Cup. Only one Chinese company sponsored the 2014 tournament, so the change with this year is notable. The Chinese president, Xi Jinping, an avid football fan, has made no secret of his wish for his country to qualify for another World Cup, host the tournament and eventually even win it. According to Nielsen, a research firm, the presence of Chinese sponsors at this tournament “can be seen as the country’s corporations rowing behind the national effort to develop the game and attract the World Cup”. They are speaking to FIFA in a language it understands: money.

Courtesy : The Economoist


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