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The power of China’s hi-tech giants in the sports industry

By Chen Yaping 25 Feb 2016

As we know, China’s capital is flowing away from the traditional real estate, energy and manufacturing industries, and into the sports industry, one of the booming sectors worldwide. In the wake of developments in the industry, hi-tech giants like ZTE, LeEco and Alibaba are rushing into this new arena.

Recently, China’s telecommunications company ZTE announced it had signed a sponsorship deal with top Spanish football team, Sevilla Football Club, to serve as the club's Official Technological Partner and smartphone provider. Several days ago, ZTE’s subsidiary Nubia became the main sponsor of Jiangsu Suning Football Club for the 2016 season, with a valuation of RMB150 million.

LeEco is an active participant in the sports market. Last year, its subsidiary Le Sports became the title sponsor of the former Wukesong Arena. Later, LeEco reached a strategic partnership deal with Beijing Guoan FC. What is more, the parent company announced today that it has acquired the exclusive internet media rights to the Chinese Super League for the 2016 and 2017 seasons. This deal is worth up to RMB 2.7 billion (US $414.18 million).

In terms of crossover investments, Alibaba is undoubtedly a trailblazer. Early in June 2014, Ali’s CEO Jack Ma acquired a 50% stake in Guangzhou Evergrande FC for RMB 1.2 billion. Although the financial report showed a loss of RMB 500 million after the club’s debut on the New Three Board, Ali attracted a lot of attention due to Evergrande’s success in the AFC Champions League last November.

As I mentioned above, China’s hi-tech companies have been bullish with their heavy investments in media rights, sponsorship deals and as stakeholders in clubs. It is a good thing seeing them switch to the sports business. Yet more importantly, besides big money, they are also able to bring advanced technologies into the sports industry. When their creative ideas bring about revolutionary changes in sports technologies, hi-tech companies can become irreplaceable participants in the sports market.

Jack Ma is right as he talked about his investment in Evergrande, “When I invested in Guangzhou Evergrande FC, it wasn’t just to see them win games, but to get a view of the industry, to figure out why China fails in the football world. Mr. Wang (Jianlin) doesn’t need more money, but he needs someone to share ideas with, and to find solutions.”

Proofread by John Devlin.

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