Why Beijing Is Running Rings Around Athens
(Business 2.0) – The 2004 Olympics are only a hop, skip, and long jump away. But just when corporate sponsors should begin cashing in on the Games' historic return to their birthplace, they're instead looking beyond Greece to the more coveted land of opportunity: Beijing, home of the 2008 Games.
What went wrong in Athens? Consider these grim realities: The Games begin on Aug. 13, but as of late June not even half the seats were sold for the 17-day event. Four years ago the hugely successful Sydney Games boasted more than 100 sponsors; Athens has secured just 32. And because Athens has long discouraged the construction of new hotels in the city, many visitors will have to sleep on cruise ships floating in the harbor. Then there's location, location, location. Athens borders the political maelstrom of the Middle East--a big turn-off for marketers. Security concerns are keeping some corporate VIPs out of Greece completely. NBC even set up an alternative site in Bermuda where executives and guests can relax while watching the Games via satellite.
At best, Greece gives sponsors a platform for expansion into the Balkans and the Middle East, both tertiary markets. But the Beijing Games offer sponsors a springboard into a huge and growing market: China. "I can't say that Athens is a huge priority for us," says Karen Kozak, Olympic marketing manager for Kodak, one of 11 corporations in The Olympic Programme (TOP) that contributed about $55 million apiece to the International Olympic Committee for the right to market themselves as Olympic brands. "Beijing is the huge opportunity. It's the main reason we continued the TOP sponsorship through the 2008 Games." Credit card giant Visa is also looking ahead. "We're already working on our Beijing strategy, and we haven't even gone to Athens yet," says spokesman Michael Rolnick.
With cheaper labor and fewer security concerns, Beijing is spending just $2.6 billion--half of what Athens spent--to build athletic facilities for the 2008 Games. But it's also spending another $200 billion to give itself a pre-Games facelift--including permanent upgrades for the city's transportation and communications infrastructures--to prepare for its future role as a world-class commercial megalopolis. Much of that financing is coming from the pockets of private investors eager to do their part to boost China's global prestige. (Athens turned away most private investments.)
To house the anticipated crowds, both during and after the Games, international hoteliers have launched a full-fledged building boom. Shangri-La Hotels plans 16 new properties in China by 2008, and Ritz-Carlton has two new Beijing hotels on the drawing board. Encouraged by Ritz-Carlton's already-successful operations in China, COO and president Simon Cooper hailed his company's latest project with barely a mention of the Olympic Games: "As China continues to welcome new business opportunities, following the signing of the World Trade Organization agreement, Beijing holds much promise for even greater future success."
It's not just Western companies that hope to cash in on the Games. In March, China's largest computer vendor, Lenovo Group, became the first Chinese business ever to join TOP. As part of its $65 million deal, Lenovo will supply information technology equipment for both the 2006 Winter Games in Turin, Italy, and the Beijing Games in 2008. In return, Lenovo can use the five-ring Olympic logo to promote its brand globally for the next four years.
But for many Chinese, the 2008 Olympics represent more than commercial promise--they're about gaining international acceptance. "Beijing 2008 is about creating a 'superbrand' called China," says Scott Kronick, managing director of Ogilvy Public Relations Worldwide in China, "and the brand essence is progress." Let the Games begin. -- SHAILAJA NEELAKANTAN