BEIJING--United Parcel Service, an Olympic sponsor of the 2008 Summer Games, is competing in an uphill race of its own in China this year to come from behind and build its brand and business in the world’s manufacturing center.
It’s a tough course. Compared to its global rivals, Federal Express and DHL, UPS was a latecomer to China. Despite a leadership position in the U.S. market, the Atlanta, Ga.-based company only set up a wholly-owned operation in the mainland in 2005, years after its competitors had established a solid business there.
Like many American companies, however, UPS views China’s escalating economy and position as a global out-sourcing hub as a critical component of its long-term growth strategy. UPS is banking on its heavily -marketed sponsorship of the 2008 Olympics in Beijing as a massive one-time opportunity to quickly boost its image among Chinese entrepreneurs, factory managers and business owners and build their confidence in UPS.
“We’re a 100-year-old company, but in China, we’re relatively young. As a brand, UPS didn’t exist prior to 2005; people here didn’t know what UPS stands for. The Olympics are proven as a platform, and people associate best-in-class brands with it,” said Peter Tan, director of UPS’s Olympic marketing program. “It adds a bit of excitement to the brand. Being a logistics company is not the sexiest thing on earth. Sponsorship is also a great rallying point to build loyalty among employees and incentivize performance.”
The core message behind UPS’s communication in China is the knowledge that its target market needs to set up and maintain reliable, complex international distribution systems to ship overseas the clothes, toys and other products churned out all over the country, said Merwin Chew, account director at McCann Erickson Guangming in Beijing, the agency overseeing UPS’s advertising in China.
In China, UPS also works with McCann’s below-the-line arm, MRM, as well as Ogilvy PR, sports specialist Zou Marketing and Carlson Marketing, a hospitality agency coordinating UPS’s overseas VIP visitors coming to Beijing in August.
“Chinese entrepreneurs are big on can-do spirit,” Mr. Chew explained, “but their desire to successfully do business with the world comes with the anxiety of a newcomer. They are not yet seasoned players and every trading opportunity brings with it the stress of succeeding in the bewildering global market.”
No longer TOP sponsor
UPS has partnered with the International Olympic Committee (IOC) as a TOP, or global level, sponsor of the games since 1994, despite a contentious period in 2000 when local organizers in Sydney appointed an alternative ticket deliverer. Still, UPS returned as global sponsor of the 2004 games in Athens.
For the 2008 games, however, UPS signed a national deal with the Beijing Olympics organizing committee, known as BOCOG, and not the IOC, which means UPS cannot market its connection with the games outside China, Hong Kong and Macau.
Also, the relationship with BOCOG is far more extensive than anything UPS set up with the IOC in the past. Before, the company mostly provided ticket distribution and international express letter and package delivery services for athletes and journalists. In China, UPS has become BOCOG’s right arm, helping to develop and execute the operating plan for the Beijing Games and providing express delivery services to all venues.
“In 2005, we made the decision to bid for the logistics and express delivery sponsorship category and then began conversations with BOCOG that lasted six months, talking about how they want us to be involved. We found what BOCOG required was the entire gauntlet of what UPS provides, logistic, venue management, freight...everything,” said Mr. Tan, a Singaporean who joined UPS in 1994. Before he moved to Beijing in 2005, he directed UPS’s brand communications across Asia from Singapore.
“Our services range from milk runs, or connecting all the venues, to any form of transportation or movement of goods between venues to things as complicated as managing the Olympics Logistics Center (OLC) and venues such as the competition venues, the athletes’ village and the press and broadcast centers.”
That means transporting almost everything imaginable: refrigerators, computer equipment, furniture, food and beverages, and sports equipment right down to the flooring in the gymnasiums. It also entails coming up with primary and back-up routes between every venue, measuring the height of every bridge and tunnel, timing traffic lights, and other detailed preparations in Beijing and the other cities hosting Olympic events, such as Qingdao and Hong Kong.
The deal covers the 2008 Olympic Games, the 2008 Paralympic Games, the Chinese Olympic Committee and the Chinese Olympic teams competing in the Beijing 2008 Olympic Games. UPS also sponsors China’s Olympic women’s volleyball team, the men’s national basketball team and tennis star Peng Shuai.
UPS strategy mirrors Lenovo's plan
In many ways, UPS’s game plan is a reverse mirror image of Lenovo Group’s strategy. Unlike UPS, the Chinese PC-maker is using global Olympic sponsorship to introduce its brand to the world. Virtually every aspect of the games depends on Lenovo's technology, including accreditation, staffing and scheduling; sports entries and qualifications; timing and scoring; ticketing; and installation of internet cafes for athletes and coaches in Olympic villages.
With most of the world's eyes on China and the Olympics, Lenovo knows even a small failure could be devastating. UPS faces similar challenges as a global brand trying to introduce itself to Chinese consumers by completing a nightmarish logistical job. Amid complex strategic, security and operational challenges, UPS is essentially doing a product demonstration of its service with the entire country watching.
In late December 2007, UPS broke a slew of new ads in China to explain how the expertise UPS used to help BOCOG can also help non-Olympic customers. The two-pronged campaign, running in TV, print, outdoor and radio, supports both worldwide express delivery service and management of the huge one million square foot Olympics warehouse that is the nerve center for the games.
UPS started promoting its Olympics role in April 2006 with a campaign called 'Pride' to showcase UPS's capabilities. The second phase rolled out in March 2007 with a multimedia campaign starring Chinese actor Zhang Fengyi, timed to coincide with the 500-day countdown to the start of the Beijing Olympics.
UPS has a Chinese-language site, www.thegames.ups.com/cn, that showcases how UPS is working with BOCOG, including a fork lift game and an interactive section devoted to an IOC’s Olympic road show traveling around China.
“We thought these things will draw more people to the site and educate them about what UPS is doing to manage the logistics. They make the site a little more sticky and drive traffic and drum up excitement about the games,” Mr. Tan said.
“The rationale behind the latest campaign is to showcase how UPS's global network, expertise, and technology can help companies in China to enhance their business, just like what it is doing now for BOCOG to help stage the world's most successful games,” Mr. Chew said. “In other words, if UPS can do all this, just think about what they can do for you.”