Sports industry racing to open up

Soccer fans are excited about the Super Derby of the Americas, an annual competition between the national teams of Argentina and Brazil, that was held in Beijing in 2014. Photos Provided to China Daily

Official backing

As China aims to shift its sporting focus from elite gold-medal-winning athletes to improving general levels of public fitness and well-being after the 2008 Beijing Olympics, boosting the sporting sector has become a top priority for the central government.

In October, the State Council, China's Cabinet, issued a national development plan for the sports industry, urging the General Administration of Sport of China, the governing body, to loosen its tight grip on the untapped market and allow a larger number of businesses and private investors to enter the industry long dominated by State-owned companies.

The policy has been ratified, but has not yet been fully implemented.

It's no surprise that so many players are reaching for a slice of the cake - China's sporting industry is expected to be worth more than 5 trillion yuan by 2025, when it's likely to account for about 1 percent of GDP compared with 0.6 percent in 2012, according to State Council projections.

Under the plan, the national sports administration and its branch administrative centers would relinquish the approval and oversight rights for commercial and mass sporting events to "unburden enterprises to the utmost and give vitality to all kinds of sporting resources", according to a statement released by the State Council.

Currently, all sporting events must be approved by the GASC, which also charges administration fees based on the scale and commercial prospects of the event concerned.

The proposed changes were welcomed by Chinese sporting luminaries, including former NBA star Yao Ming, a member of the Chinese People's Political Consultative Conference, who last year submitted a similar proposal to the nation's top political advisory body.

"The government decision (to free-up the sports market) provides a strong push to start the wheels of the sports industry rolling," said Yao, who owns the Shanghai Sharks CBA team.

Untapped gold mine

Although China's sports industry has recently grown by leaps and bounds, it remains underdeveloped compared with global powers such as the United States.

Most of the sector's added value is generated by traditional manufacturers of sporting goods and athletic equipment.

"As far as I know, at least 80 percent of the sports industry's current output comes from the manufacturing sector, while less than 20 percent results from the consumption of intangible products and services. The proportion of the latter lags far behind the amount in the US," said Yao, who played in the NBA from 2002 to 2011.

According to research by Lin Xianpeng, a sports industry expert at Beijing Sport University, the annual value of the US sports industry reached $450 billion in 2013, accounting for more than 3 percent of GDP.

"More than 70 percent of the value in the US was generated by competition-related activities, including venue operations, player endorsements and sales of broadcasting rights. Compared with the US, we have a huge gold mine with an immense number of potential business opportunities that have yet to be exploited," he said.

Zhang Qing, founder of the sports marketing agency Key-Sports, said the decision to free up the market means the country's sports entertainment industry is expected to soar.

"China's rapid economic growth has driven up living standards and disposable incomes, particularly in large metropolitan centers such as Beijing, Shanghai and Guangzhou, where the sector is thriving as local professional sports clubs are becoming more popular," Zhang said.

In 2013, average per capita spending on sports was only 645 yuan, just 3.5 percent of average per capita disposable income. The percentage is far less than in the US, suggesting that the market potential is huge.

In the past five decades, Chinese sports have been State-run, and largely built around the planned economy, so the government owns and oversees the operation of all sporting events and leagues.

Given the number of gold medals China has won at global events, the strengths of the system are evident, but the long relationship between the State and sports also presents difficulties, making it harder for the free market to develop and for a fully fledged sports industry to take root, Zhang said.