Developing a brand in China? It helps to walk with a giant.

May 2003

Developing a brand in China? It helps to walk with a giant.

As the consumer market place in China matures, companies are pushing to position themselves ahead of the competition and develop deeper ties with Chinese consumers. In this quest for consumers, foreign as well as domestic Chinese companies are looking to connect their brands with big names. Yao Ming, Chinese basketball star and NBA all-star game starter is the name they are swooning over.

One season into his NBA career, the 7’5” Yao, with his dynamite smile and gentle-giant demeanor is endorsing a list of companies as long as he is tall. Nike, Gatorade, Apple Computers, Visa, Sorrent (a California gaming developer), and the Milk lobby have all signed deals with the rising star. But the granddaddy of Yao endorsements is still to come. When his contract with Nike, which dates to his days with the Shanghai Sharks, expires, expect a hard-fought battle to secure his endorsement.

In China, Yao Ming is a great source of national pride and, as many are saying, a symbol of a new, open and engaging China. Both domestic and international companies are seeking to capitalize on these sentiments to expand their business in the Middle Kingdom. As China produces more international-caliber stars, look for more and more companies to bridge the cultural divide with the country’s likable athletes and stars.

Many foreign firms have learned the importance of building a positive public image in China. Genesis Technology, a South Florida-based firm specializing in bilateral business development between the U.S. and China, recently leveraged the presence of Yao Ming at a game in Miami. The firm, taking a page from a diplomat’s playbook, selected Yao Ming as a “Goodwill Ambassador” and honored the player courtside “for contributing to good relations and a better understanding between the peoples of the two countries.”

The NBA is at the leading edge of this trend. Many in the organization see Yao as basketball’s ticket into the China market. The popularity of basketball has sky rocketed in China over the last five years, with some statistics placing it above soccer. The average audience for a NBA game in China is 200 million fans, with 400 million tuning in for a recent Dallas Mavericks-Denver Nuggets game, in which the league’s two other Chinese players, Wang Zhizhi and Mengke Bateer went head to head. Many in China think that NBA promotions in local markets will attract Chinese audiences. The AP quoted fan Fei Fusheng, a member of the Shanghai Sharks fan club, saying, "Compared with the Chinese Basketball Association, the NBA cares more about their fans. They know much better how to draw audiences, their posters, advertisements, and products are all different. If they can put all these colors on Chinese players, I am sure they would win more hearts in China." The NBA has taken notice of the potential in China and is putting its money where its mouth is. It recently opened an office in Beijing, adding to its China presence, including an office in Hong Kong.

Some companies are trying to build their China brands in less direct ways than a contract with Yao or the NBA. Soon after Yao joined the NBA, Coca-Cola signed up as title sponsor of NBA games broadcast on Shanghai Television. Reebok is also getting into the act. The shoe company recently issued a new line of sneakers with NBA logos and some player endorsements, but not Yao’s. Sales have reportedly been brisk, even at prices approaching US$100.

This is not to say that Chinese companies are being left out of the action. Team Yao, a group including Yao’s agents, personal advisors, and a team of students from the University of Chicago’s Graduate School of Business that is managing Yao’s image and maximizing his endorsement potential, recently helped close a deal with China Unicom. Yao has appeared in TV commercials and on billboards as a pitchman for the company’s burgeoning CDMA service. While terms of the deal have not been released, a spokesman from Unicom has confirmed that the payment is concurrent with “international levels.” Newspapers are valuing the multi-year deal at around US$ 3.5 million.

The Houston Rockets president and chief executive, George Postolos, has been quoted as saying that Yao has the potential to be one of the biggest marketing stories in the history of sport. Even taken with the grain of salt, it’s a big claim. Is Yao up to it? Only time will tell. Until then, the world will be watching.

Contributed by The Hoffman Agency China, winner of PRWeek’s “Midsize PR Agency of the Year” award. For more information, please contact Kimberly Conley by phone at 6507-0985 or visit www.hoffman.com or www.hoffmanasia.com