On June 24, the International Olympic Committee announced a new joint TOP partnership with Coca-Cola and Mengniu, a 12-year worldwide partnership that covers multiple Olympic Games, Paralympic Games and Youth Olympic Games.
However, the emergence of this partnership has received a big opposition from the existing exclusive dairy partner of the Beijing 2022 Winter Olympic Games and Paralympic Games. A few days before the official IOC announcement of the partnership, the Beijing 2022 Dairy Partner, Yili, published a long article strongly criticizing Mengniu, saying they harm Beijing 2022 Olympic Games. The article attracted wide-spread attention.
To understand the deal and controversies better, Yutang Sports interviewed Professor Simon Chadwick about his views on this topic. Simon Chadwick is Professor of Sports Enterprise and Director of the Centre for Sports Business at Salford University in Manchester (UK). He is also the Research Centre Director with emlyon Business School's Centre for the Eurasian Sport Industry (based in Shanghai).
He has rich experience in studying and providing services in the sports sponsorship field. He obviously holds a positive view of the deal and thinks it has good significances for Mengniu, the IOC, the sponsorship world, China’s economic and industrial transformation and the US-China trade frictions.
Below is the conversation.
Yutang Sports: Do you think there is any potential risks of rights conflict between the new joint TOP partners and the Beijing 2022 local dairy partners? How to avoid any potential risks?
Simon Chadwick: The deal is of huge significance, not least for the its financial magnitude. Yet it is also important because of the way it has been created. At one level, some critics might see the Mengniu/Coca Cola deal as being one that effectively cannibalizes the IOC's own sponsorship portfolio (which already includes another dairy partner). However, in exploring and establishing a proliferating rights portfolio, it somehow seems inevitable that such conflicts and contradictions will arise. As such, the onus of responsibility is very clearly upon the IOC to ensure that the investments of all its partners are protected. Otherwise, the Mengniu/Coca Cola deal rather suggests that global corporate interests trump local ones. This symbolises the power and importance of the Olympics as a global entity, and the need to partner with corporations that accentuate this proposition.
Yutang Sports: Why do you think this first-ever joint TOP partnership came into being successfully?
Simon Chadwick: The tie-up between Mengniu and Coca Cola is an intriguing one, particularly the way in which collaborative strategy has been employed to secure the rights that have been acquired. Such lateral integration of sponsorship deals is a new phenomenon, and provides an unprecedented level of scale, resources and power that rivals will find difficult to compete with. It strengthens an existing commercial relationship, provides a platform for the realisation of further co-marketing benefits, and effectively serves as a barrier to entry for commercial rivals.
Yutang Sports: What does this partnership mean for the Olympic Games sponsorship? Is it likely to become a trend and a new way to form IOC and even other large-scale partnership in the future?
Simon Chadwick: The deal marks a new era for the IOC and is likely to serve as a benchmark for some subsequent deals. In future, we are therefore likely to see sponsorships re-inventing themselves as a form of strategic alliance. This is a long overdue development, as there has been an obvious opportunity for sponsors of the same property to coordinate or integrate their programmes. For the IOC itself, the most obvious benefit is the additional revenue that such deals are likely to generate. However, it will also enable the IOC to create better opportunities for businesses to pursue their corporate objectives via sponsorship. Furthermore, one surmises that the integration of sponsors and their product offerings will help in adding value to the consumer experience.
Yutang Sports: Does it signal the increasing visible role of Chinese brands in the world's sports sponsorship field? Chinese brands are attaching more and more importance and giving more attention to sports sponsorship, compared with before?
Simon Chadwick: The deal reinforces rather than announces the growing profile, presence and strength of Chinese sponsors across the global sport industry. Crucially however, it signifies the willingness of China's corporations to strategically ally across international boundaries, to spend money on overseas assets when there is a proven business case for doing so, and to target global strategic growth. This is a breakout deal for Mengniu (a brand that very few people outside China are aware of), which will take the brand into new territories. It also demonstrates how Chinese corporations can piggyback existing partners in order to fast-track their international growth plans.
Yutang Sports: How do you comment and regard this joint partnership under the background of the China-US trade war and the danger of unilateralism in world trade?
Simon Chadwick: It seems somewhat ironic that, at a time of heightened trade tensions between the US and China, this deal has happened. This deal is likely to have been some time in the making, certainly predating the current spat between Washington and Beijing. However, it does provide a template for how the US and China can, if they choose, work together for mutual benefit as well as the benefit of consumers globally. One hopes that the governments in Washington and Beijing draw inspiration from Mengniu and Coca Cola, seeing it as a way reconcile differences and create mutual win-win opportunities.
Yutang Sports: How do you comment the meaning of this partnership to the sports world?
Simon Chadwick: The deal could mark the start of a new era in sponsorship, especially as we know the IOC has been a trailblazer over the last four decades in developing and exploiting new sponsorship models. It represents the emergence of sponsorship as a form of strategic alliance, it signifies a new chapter in China's ongoing economic and industrial reformation, it marks the receptiveness of corporate America to remain engaged with China, and it constitutes an upscaling of sponsorships both in terms of physical and financial size.