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Sports Industry in China Part I: Tapping the Goldmine

China’s sports industry is an untapped gold mine with immense potential business opportunities.
China’s sports industry is an untapped gold mine with immense potential business opportunities.
Photo by Feng Li/Getty Images

Author’s Note:

China’s sports industry, an untapped gold mine with immense potential business opportunities has, over the years, caught the eyes of many, mostly inside Chinese sports officials and outside gold rushers. Now, the locked door to the treasury is beginning to open.

A Golden Industry

In March 2010, China’s highest executive organ of State administration historically issued an official document designed to transform the nation’s sports industry, with the primary goal of attracting non-governmental investment.

“We welcome both private domestic and foreign investors’ participation in China’s sports industry, especially in such core domains as the sports performance and recreational sports sector,” Liu Fumin, Director General of the Department of Finance of the General Administration of Sport of China told this author.

“The budding sunrise industry is bound to bring them sweet rewards.”Over the past decades, sport in China has largely been built around the planned economy system, a regime known as juguo, or “whole nation”, in which the government owns and runs all sports.

While the strengths of this system are evident in yielding gold medals, it makes it harder for a free market to grow around sport, and thus, its sports industry to take root.

Although in many industries, China has embraced marketization and globalization over the past three decades of its extraordinary economic growth, the sports industry in China has far from fully developed and many of the nation’s elite athletes and sporting events remain largely sheltered from commercialization. According to statistics of the General Administration of Sport, given the weak situation of China’s sports industry, it accounts for only 0.52 percent of China’s GDP in 2008, while in some developed countries, the number often exceeds one percent.

On the other side of the coin, the current state of China’s sports industry might denote huge growth potential and immeasurable business opportunities.

China’s rapid economic growth has driven up living standards and disposable incomes, particularly in such metropolitans as Beijing, Shanghai and Guangzhou, where a more affluent and younger generation of Chinese sports fans are born.

“China’s sports market has HUGE potentials,” Chen Shaofeng, director of the Sport Industry Research Centre of China told this author. “In terms of the sports performance and recreational sports sector, which constitute the core of sports industry, there’s 90 percent of the market that is yet to be explored.”China’s sport may not only produce gold medals, as witnessed in the unparalleled 2008 Olympics, but also tons of “pure gold”. Sports industry in China is a gold mine that is yet to be tapped.

“For the industry to reach its full potential, China’s sport must free itself from the centrally planned regime and be built around independent, professionally-managed sports league and its own industrial chain,” Chen suggested.

Although China adopted the notion of professional sports from the West and brought in the league system as early as more than 20 years ago, the professional sport, in essence, has yet to come to existence, since China’s sports federations, which run their respective sports league, such as Chinese Super League (CSL) and Chinese Basketball Association (CBA), have been all State-run.

“China’s sports industry calls for a reform of the sporting regime,” Chen asserted.

(This story is originally appeared in the People's Daily Online.)