How Olympics Branding Is Shaping China
The Olympics have long been seen as China's global coming out party. But the event is more than that: The Olympic Games will change China forever.
In preparing for the Games, the Chinese have had to embrace Western standards to meet the promises made to the International Olympic Committee. Many factories have now been shuttered to reduce pollution and improve air quality in the run-up to the Opening Ceremony. Legions of Chinese soldiers have been enlisted to clear algae infestations from coastal waters where yachting races are to be held. Beijing taxi drivers have been ordered not to spit in deference to visiting tourists.
The deadline of the Games gave government officials an event to forcibly accelerate the modernization of Chinese society. World class architectural design and construction standards have guided the building of Olympic venues. Airports, highways and other infrastructure have been upgraded not only in Beijing but in all the cities where Olympic events will be held. Chinese pride and ambition demand that they be the best ever, no matter what the cost, and that Chinese athletes win more medals than any other country.
But when the athletes have gone home, and the polluting power plants come back on line, what will remain beyond the memories and good impressions? The answer is brands. 2008 will not merely be the year of the Olympics. It will be the year of brands. Not only brand China being promoted on the world stage, but also the commercial brands of Olympic sponsors driving home their brand advantage in the domestic Chinese market.
The Chinese are already in love with brands. How can you stand out in a nation of 1.3 billion with high population mobility? Young Chinese are known by the brands they can afford and the brands they display. Via fashion accessories, cell phones and now cars, brand choices are stratifying a hitherto unified communist society. The billions of daily purchases of trusted brand names are an increasing part of the social glue that holds Chinese society together.
From Coca-Cola to McDonalds, from Visa to Samsung, a record 63 brands have paid the IOC more money than ever for their category exclusive sponsorship rights. And, given the size and growth of the Chinese economy plus the undercurrent of concern about China in the West, these sponsors have allocated more of their global Olympics budgets than ever before to marketing their brands in the host nation.
The Chinese are being subjected to a deluge of brand advertising by Western multinational brands seeking to expand their geographic reach beyond the major cities to the outlying provinces. Olympics-related advertising by these brands could exceed $6 billion. Most of this advertising is not directly promoting brand features and attributes. Rather, it aims to wrap the Western brand in the cloak of Chinese nationalism. From Volkswagen's "honk for China" campaign to Pepsi's limited edition of red colored cans accompanying the slogan "Go red for China", Western brands are taking the "act local" mantra to a new extreme. Few brands are implementing a unified global campaign for this Olympics. Instead, they are typically running two campaigns, one for China, another for the rest of the world.
The same applies to Chinese brands such as Lenovo and Haier that are seeking to leverage Olympics sponsorships to enhance their global stature. Lenovo, which acquired IBM's PC business three years ago, has invested around $100 million as the first Chinese company to become a global sponsor of the Olympics. Through doing so, Lenovo expects to increase its brand reputation and market share in China as much as in the rest of the world.
But where will this vast consumption of brands lead? Choice is good. Engaging with brands is fun. Media diversity, fueled by brand advertising, is welcome. But one can't help wondering whether too many Chinese are consumers first, and citizens second. Perhaps more economic freedom will lead, as many hope, to increased demand for political freedom. Or will the fruits of a growing economy and the passion for consumption be the distraction, the narcotic that postpones the day of political reckoning for the still dominant Communist party?
Read more on the Olympics:
This post is based on Professor Quelch's August 11, 2008 article in the Financial Times entitled "Brands Act Local To Woo A Billion Chinese Consumers"
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