The Chinese sports may have been a pride for Chinese people, but the sports industry has not always been developing very well commercially. Over the past few years, especially during the past few months this year, the government announced important decisions to boost commercialization and development of Chinese sports industry. A big grow seems to be waiting in the near future.
The traditional approach
Over a long period of time in the past, Chinese sport industry has somewhat remained in the public sector, receiving a significant amount of funding from the government each year. Even now, the situation is still quite the same, with three major money resources: financial funding of the government, industry exploitation, and sports lottery, where each one contributing similar percentage of money. However, the industry itself doesn’t make good profits.
In 2013, the government paid around 30 billion RMB (4.8 billion US Dollars) for the development of the industry, which increased 45.69% compared to 2008. The money was used for events organization, training, venues, public sports and other areas.
There are certainly benefits of this approach: Chinese sports performed well in International sports events. Back in 2008, China won 51 gold medals, 21 silver medals, and 28 bronze medals, ranked 1st on the number of gold medals.
However, disadvantages are heavy from a long-term perspective. The fact that various levels of governments fund and manage the industry leads to reliance on the government and lack of participation from the private sectors. The influence of the markets is minimized, in contrast with the general economic trends. It will affect healthy developments and grows of the industry ultimately.
Commercializing the industry
The central government has seen the disadvantages, and started gradual reform of the sports industry to promote the market’s role in the industry’s development, and to drive further grows.
In 2010, the State Council of China produced a document on increasing the speed of developments of sports industry. It demands that sports industry should have a role in China’s economic transition, and that sports-related sectors, products and services should be strengthened, for example, sports events and sports performance shows, fitness business, sports agency. It encourages using diverse resources of capital in the industry. It was regarded that the document included sports industry in China’s economy developing plans.
In 2011, General Administration of Sport set specific goals: during China’s 12th five-year plan, the sports industry should grow at an average speed of 15% each year; by 2015, the grows should be more than 400 billion RMB, taking up over 0.7% of GDP, providing over 4 million jobs, becoming one of the major growing areas of the economy.
Up until 2013, the sports industry in China was 0.6% in GDP.
The fitness market
Take the Chinese fitness market as an example of opportunities and potentials in Chinese sports industry. According to a survey by China Fitness Association in 2012, there were about 3,500 fitness clubs domestically, and around 13 million club members, i.e. less than 1 club for every 1 million people. Whereas in America, one out of eight people went to fitness clubs and there was about one club for every 10,000 people. The statistics shows great space of improvement in the Chinese market.
Now there are over 400 million people from the age of 18 to 50 who have demands for relevant products and services. City residences’ spends on fitness and sports grows by 30% each year, higher than international speed of 20%. It is regarded that as people’s income grows and life improves in recent years, the demands would continue to increase.