Chance to create global brand

SHANGHAI: Sports marketing is relatively new in China and Formula 1 racing may be the first truly international sporting event to create a permanent footprint in the country.

The Shanghai Grand Prix, now in its second year, and the potential growth of motor sports in China, have offered new opportunities for businesses to associate themselves with global sporting events.

Yesterday, Formula 1 management and the Shanghai International Circuit organized a global business conference to examine sports marketing and the opportunities it creates.

China Daily sat down with Michael Payne, the man behind the conference. Payne is a special advisor to Formula 1 CEO Bernie Eccleston and the former head of marketing and broadcasting at the International Olympic Committee.

China Daily (CD): What do you think are the key benefits from Friday's conference?

Michael Payne (MP): It takes time for the business community to understand how you create a brand, but I suppose merely to begin that discussion, to expose Chinese business leaders to some of the principles so they can begin identifying their own roadmap so they can go forward.

There's no magical solution. First we have to understand how to take it forward and over time to help the business leaders understand.

If you fast track it three or four years down the road then clearly as Chinese companies begin to develop that international position, to develop that brand identity, then I would fully expect you would begin to see many Chinese companies as sponsors in Formula 1. Whether they would sponsor a driver, sponsor a team or as a major sponsor.

CD: Major Chinese companies are going overseas. Is there anything these companies are not doing or any marketing elements they are not utilizing fully?

MP: Take Lenovo. I did the original deal with Lenovo and the Olympics. I know the team very well. They had a very clear understanding of what they wanted out of the Olympics: To create a global brand. I think they have been developing that very successfully and I think in the end that will become a good showcase to other Chinese companies as they begin to develop their international positions.

The point is, it is beginning.

CD: At the recent Fortune 500 in Beijing there were 15 Chinese companies on the list, most State owned, what do you see happening with them in the future?

MP: Even State companies have to begin to compete. There's competition within companies in China and from outside and over time State companies get restructured.

Look at what's happening in the rest of the world.

The fact that you are a government controlled industry or a private industry doesn't mean that you don't have to go and develop your business, advertise and market to protect your market share, grow your market share.

The fact that you don't have competition today doesn't mean that you won't have competition tomorrow. So you have to prepare for it.

CD: How do different sports compare in terms of marketing?

MP: Each sport offers different positioning and different statements.

Formula 1 has a very strong technological image and leadership no other sport really has. If you wanted to make a technological statement about leadership and engineering you're probably not going to do that through football.

Football on the other hand is very popular. Everybody is playing it on the street. It worked very well for Coca-Cola because it's got the right brand fit.

The basketball situation here with Yao Ming has a particular energy.

Golf is beginning. Again, would Coca-Cola be the very right for golf with it's very upmarket (image)? Or if you are Omega watches or Mercedes Benz, golf is the space that you want to fill.

Whether it is Formula 1 or the Olympics or tennis, the principles of how you develop and how you activate them are very much the same.

If you want global exposure and awareness, Formula 1 is probably unique in that it is in 150 countries and it is every other week for nine months. There's relatively few properties that are offering that.

CD: Is Formula 1 more of a European culture?

MP: I think Formula 1 was grounded in Europe but as it moves more into a global stage with races in the Middle East, races in Asia, races in the Canada and the United States, it becomes more of a global event. Look at the Japanese teams that are becoming very strong.

CD: Does Formula 1 provide Chinese companies with access to other markets?

MP: Clearly there is that platform that Formula 1 offers Chinese companies to develop their position internationally.

But at the same time (it provides a platform) for international companies coming here.

What is, Renault for example, going to do to create it's image here when they start. They are the Formula 1 champions.

Even if there isn't mass understanding or participation there is a growing understanding that it is at the pinnacle. That it is this super technological, glamorous, dynamic event that maybe we don't understand very much about yet but it is right up there.

And that, right there, is a powerful platform for certain key companies.

CD: Chinese consumers have seen many leaps, like mobile phones, which are everywhere. Can something similar happen with motor sports?

MP: You're at the beginning.

It was the first race last year and it was a lot of novelty. It was the first undisputed global event that has come here.

Now, having had the race, you have had the TV audience through the year. People begin to follow a race here and a race there. They start to build awareness.

People are talking about it, they are starting to make a noise. You are not in 12 months or 24 months suddenly going to create a mammoth following.

How long did it take for soccer, with its various false starts through the 70s and 80s?

You have some of the biggest sponsors in the world, very active in marketing and using it. So you will probably develop this quicker than you would with other properties.

CD: Who is watching the races?

MP: If you take the 18 races throughout the course of the season, you had maybe 100 million people across China watching.

As the Chinese market really begins to get some serious traction both for Chinese and international companies I believe that within a decade China will be the most important sports market and the most developed sponsorship market in the world.

That will come as part of the legacy of the Olympics as more companies begin to get involved, part of the legacy of Formula 1.

More and more global events are coming here. And the market itself is opening up. Within a decade, it will be without question the most important sponsorship market in the world.

There is nothing that prepares you for the numbers. You're dealing in a dimension and a dynamic that you can't relate to.

Fifteen years ago, everybody was talking about the promise but it wasn't yet happening. It is now developing, moving.

CD: What role does Formula 1 play to create an audience?

Start with Formula 1 and go on with the Olympics and what that means to put China on the world stage. How many people were watching the Formula 1 race last year around the world? Outside of a news bulletin, which may or may not have been that flattering... that they would have seen something about China.

You communicate not through a narrow audience of business leaders on CNN or whatever, you are communicating through the fan base across Europe. And they are saying 'you know, one of these days we should go to China.'

And the Olympics will magnify that 10 times further.

CD: What will 2008 be like?

MP: 2008 will be the year of China on the world stage... the most incredible coming out party onto the world stage.

I think everybody you speak to now will acknowledge that China will get far more out of (the Olympics) in 2008 than if they had gotten the games in 2000. It will come at the perfect time to get the full impact of hosting the Olympic games. And the world is also hungry to learn a lot more about China.

CD: What are the immediate challenges for F1?

MP: The next stage is clearly beginning to develop motor sports in China. A Chinese industry that understands the technological showcasing that Formula 1 offers.

Nobody is suggesting that China doesn't have the technological leadership and there isn't a more dramatic, dynamic field on the world stage than to prove technological leadership, engineering skills in the sporting community than Formula 1.

(China Daily 10/15/2005 page6)