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SLAM DUNK: Yao Ming brings NBA to China (XINHUA) |
With Yao Ming being the Chinese ambassador for sport worldwide, the fast-paced economic growth of China has spawned one of the most profitable industries in the nation. NBA China, with its dominance in the sporting industry's merchandise and broadcasting, is steadily having an impact on the buying trends of China's residents.
Thriving market
NBA China has become the largest foreign merchandise market for the NBA outside of the United States, and is the most popular sports league in China. It was established with five strategic investors, purchasing a combined stake of 11 percent of the company for $253 million. According to Goldman Sachs, NBA China is now valued at $2.4 billion. Among the investors are a number of influential and powerful Chinese organizations, including the Bank of China, Legend Holdings (known as Lenovo today), Li Ka Shing Corp., and China Merchant Investments.
NBA China currently has four offices in China, with its main centers located in Shanghai and Hong Kong. With over 150 employees, it has access to $250 million in funds. In recent years, its roster of marketing partners have grown to include Coca Cola, McDonald's, Lenovo, DHL, Gatorade and Tsingtao.
"Marketing the NBA brand in China has seen phenomenal success in recent years. The demand for NBA products in China has grown 30 percent annually. The success of Yao Ming in the United States has made the NBA brand one of the hottest topics of investors," stated Li Xuan, a Chinese market analyst based in Shanghai.
According to The New York Times, an estimated 300 million people in China play basketball. Of these, 83 percent of people aged 15-24 said they are NBA fans and 20 percent of traffic to NBA.com now comes from China's netizens. Broadcasting is also a major factor with 51 channels across the nation now airing NBA games, strategically allowing Chinese consumers to tap into the latest trends in the United States.
The success of NBA China is mostly down to its CEO, Timothy Chen, the former chief executive of Microsoft's operations in China. An avid basketball fan since his youth, he has expanded the business in the last four years at an unprecedented rate, reflecting the overall rise in China's global economic power.
Chen said the Chinese economy as a whole continues to grow despite the current global economic slowdown. The government has issued fiscal policies that aim to boost spending and increase employment including a package of stimulus money into various sectors of the economy. This has an overall positive impact on the sports industry, as the interest for sports and entertainment is still very strong. "A lot of infrastructure is being built and a lot of governments are looking at building arenas, not just for sports, but also for culture and entertainment. This is a positive signal for our business." Chen said.
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