Reports emerged last week that the Chinese video streaming service PPTV has agreed to pay US$700 million for the right to broadcast English Premier League football in China. If confirmed, the deal will be 10 times more that the EPL’s current deal in China, and will be its biggest ever overseas broadcast deal.
The mooted deal is laden with a whole series of issues, ranging from the receptiveness to and willingness of audiences to pay for television, through to the role that football plays in soft power projection. Yet it is PPTV’s part-owner, the Suning Commerce Group (SCG) that is of particular interest, both for the way in which it has rapidly become an influential player in football and for the way in which it characterises the importance of corporate China in the country’s pursuit of its vision for sport.
SCG operates a franchised store network across China, the company’s core business involving the sale of televisions, refrigerators, washing machines, digital and information technology products, and so forth. Significantly, SCG also runs an online commerce platform which sells books, household goods, health products, and (please note) content products.
Listed on the Shenzhen Stock Exchange in 2004, SCG is now not only one of China’s biggest company’s it is also recognised by Forbes magazine as being amongst the biggest companies in the world: SCG’s market capitalisation is US$12.6 billion, has sales of US$21.5 billion, and employs 25,000 people.
In 2015, SCG acquired Chinese Super League (CSL) club Jiangsu Guoxin-Sainty FC for 523 million yuan. Shortly afterwards, the club (renamed Jiangsu Suning) shocked world football during the 2016 transfer window, signing Brazilian players Ramires (from Chelsea) and Alex Teixeira (from Shakhtar Donetsk) for £25 million and £37 million respectively. SCG’s spending spree didn’t stop there; in the summer, the company also bought a 70 per cent stake in Italian club Inter Milan (for US$307 million).
Rumours have also circulated this year that SCG has considered a bid for Stellar, the football agency business whose clients include Gareth Bale. In addition, the company paid US$407 million for the right to broadcast Spanish La Liga games in China for five seasons. The EPL deal is consistent with this (both are content products), the two of them fitting neatly into SCG’s rapidly expanding portfolio of football investments.
The global mega-corporation that SCG is becoming is probably what President Xi had in mind when he launched China’s vision for sport at the end of 2014. That is, a vision where sports investors, entrepreneurs and businesses are engaged in activity that generates income, creates jobs, boosts export earnings, and enables the country to exert its soft power influence around the world. In these terms, SCG would seem to be Xi’s model corporation.
SCG’s rise from sporting anonymity to global football influencer has taken place at breathtaking speed. Yet such rapid growth should not be a surprise, as the experiences of other industrial sectors have demonstrated over the last two decades. Typically, a state edict in China serves as a rallying call to private industry that it should engage in activities consistent with the national interest. In turn, the response of corporations like SCG has normally been to comply, in the meantime pursuing its own commercial goals. As such, SCG is a quintessentially 21st century Chinese corporation, combining political savvy with business acumen.
Managing one’s relationship with the state is a crucial part of the Chinese business operating environment. This has to be achieved at the same time as get to grips with the rapidly-changing nature of China’s domestic economy. Indeed, the rise of its middle class (and their growing disposable income), allied to the population’s voracious appetite for digital content and social media, are some of the reasons why SCG has moved so decisively to secure the EPL and La Liga broadcasting rights deals.
China’s drive towards becoming a football superpower is reminiscent too of its desire to build integrated industrial supply-chains, which enables the country and its businesses to exert control at all levels of production. In turn, this brings a sense of certainty and security to China’s industrial activities. SCG is one of the most prominent examples of this in sport; indeed, one has to consider the implications of an electrical retailer controlling the sale of a player (say, Jiangsu) and the purchase of a player (say, Inter Milan), while at the same time owning a stake in an agency business that represents a player moving between the two clubs.
This helps generate further insight into SCG’s latest apparent relationship with the EPL. For an electrical retailer to be able to own and control the content which forms the basis for a football fan’s consumption experience on a television, laptop or mobile device (which they may have bought at an SCG outlet), confers upon the company significant strategic advantages.
As football and the world of business in general ponder such matters, it is important to remember that SCG is not alone in its pursuit of broader commercial and political goals through football. Another Chinese business, Wanda Corporation, is a further example of this, its portfolio characterised by a relentless pursuit of investment properties that align the organisation’s involvement in the sports and entertainment industries.
In early 2015, Wanda took a 20 per cent stake in Atletico Madrid and then embarked on a spending spree that has included Infront Sports and Media, Ironman Triathlon and a FIFA sponsorship deal. Alongside, this Wanda has just bought Dick Clark Productions, the company that runs the Golden Globes. This adds to its purchase of the Hollywood film studio Legendary, and the company’s newly opened, Disney-rivalling theme park in Beijing.
In the same way as SCG, Wanda has rapidly created a horizontally- and vertically-integrated business that has ownership interests at various levels of its supply-chain. This is the Chinese way. Therefore, those who simply see SCG’s deal with the EPL as yet another financial windfall for English football, need to think again. China takes influence, power and control very seriously. Hence, SCG’s deal with the world’s leading football league should be seen more as a portent of other investments to come than simply just a headlining broadcast deal.
This piece is published in partnership with Policy Forum.net, an academic blog looking at public policy in Asia and the Pacific. The website is based at the Australian National University.
Article source: http://www.scmp.com/sport/soccer/article/2047952/how-chinese-corporations-are-leading-way-countrys-global-grab-football