Why sponsors won't pull out

China: West is overreacting

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BEIJING--China competed for the right to host the 2008 Olympic Games in Beijing to prove the country has developed into an economic and political giant.

The strategy is working, just not in the way China, or its people, had hoped. China's overseas image took a serious hit during the past couple of weeks, following a deadly clash with protestors in Chinese-controlled Tibet.

After hijacking the Olympic torch relay's international tour debut on March 24 in Athens, anti-Chinese activists mobilized more protests along the torch relay tour--except in China itself, where protests in the Greece, the U.S., India and other countries have been viewed with surprise, frustration, even anger, but very little support.

Olympic mania is in full force at home, in support of Chinese athletes, Olympic teams--and sponsors.

“The Olympics are a sports event and should not be linked with different political points of view,” said Viveca Chan, chairman-CEO of WE Worldwide Partners, an independent ad agency. “Personally, I think the West is overreacting.”

Political issues don't come up

She voices a common opinion in China, where many people are aware of what's happening outside their borders as well as in Tibet, but show little desire to use the spotlight on China as host of the 2008 Olympic Games as a platform for political and human rights concerns.

Darfur “doesn't come up at all, nor do any other political issues” in the latest round of research by Beijing-based consulting firm R3 and TNS Group's CSM Media Research division in China, said R3 principal Greg Paull. CSM and R3 conduct thousands of in-person interviews in ten key Chinese cities every three months to gauge the brand awareness and performance of major Olympic sponsors.

“We have seen a lot of discussion about [Steven] Spielberg's withdrawal from the games on bulletin board sites in China, but many people here think Spielberg made the wrong decision,” said Mr. Paull. “There is tremendous national pride in this event and unprecedented interest, it's much more important than just as a sporting event, it's a cultural event too.”

And a commercial one.

For sponsors such as Samsung, Coca-Cola and McDonald's, the 2008 Olympics provides a valuable opportunity to expand their operations in one of the world's biggest and fastest-growing economies, and with no political backwash.

On the contrary, Samsung and Coke are sponsoring the torch relay alongside the Beijing-based PC-maker Lenovo as a major brand-building strategy. They have been able to give hundreds of Chinese consumers the coveted opportunity to be torchbearers and escort runners as part of their sponsorship deals, which cost more than $50 million at the global level. The torch relay will continue in China until the Olympics begin Aug. 8.

No sponsor fatigue

Other Olympic sponsors also are tapping into the torch relay on a smaller scale, such as Volkswagen, the exclusive provider of vehicles for the convoys supporting the relay in China.

In Beijing, GE is giving the games a green tint by providing wind and gas turbines, solar-powered lighting and water purification systems. UPS is using the games to demonstrate its logistics capability, and Adidas is giving China's national Olympic teams apparel and footwear.

“There is increasing interest in what sponsors are doing, which I also put down to the Olympic torch relay. We haven't reached sponsor-fatigue yet,” said Mr. Paull.

Chinese “just don't associate the Olympics with political causes,” agreed longtime Beijing resident Scott Kronick, president of Ogilvy PR in China, which advises Olympic sponsors like Adidas, UPS, VW and Johnson & Johnson. “What some parts of the world have found is that the Olympics are such a powerful platform that it's become a platform for expression of political beliefs as well. But not in China, where most people in the Olympic movement don't see it as anything political.”

Chinese apathy can be explained partly by censorship. Western news, whether online, on TV or in print, is severely restricted in China. News channels like CNN are limited to hotels catering to Western tourists or gated compounds housing multinational executives.

Chinese call Tibet internal matter

In local media, meanwhile, the deadly anti-government riots in Tibet were portrayed internally as unprovoked attacks on Chinese police by unruly protestors. And the protest in Athens, which was deeply embarrassing to China, was edited out of local coverage.

The spread of the internet and a growing freedom to travel outside China make it difficult for the government to completely isolate citizens from Western news coverage.

But pervasive propaganda from local news outlets feeds a patriotic population. China's strong sense of national pride is often underestimated in the West.

This is particularly true when it comes to the recent violence in Tibet. For the past half-century, Chinese were taught Tibet has been part of their country for hundreds of years, and view the situation in Tibet as an internal matter.

After earlier periods of great famine and poverty, China's rapid economic development over the past 20 years has transformed the country, moving millions of Chinese into white-collar jobs with middle class status and aspirations in just one generation.

Today, the average twenty-something in Shanghai or Chengdu likely owns a car, or plans to buy one, at the same age their parents dreamed about owning a bicycle or a small refrigerator.

Nationalism also plays a role for Olympic sponsors. If Coke or McDonald’s obeyed calls from activists to pull out of the games, proud Chinese consumers would certainly erupt in anger. Sales for those companies in China would drop, and the government could force them out of the country altogether.

It could take years, even decades, for a multinational marketer to recover in a fast-growing market that many companies are counting on to balance a tougher economy in the West.

Pollution and inflation are chief concerns

Chinese aren't pressuring their government or Olympic sponsors about China's support of Sudan's leaders, but that doesn't mean they don't have some concerns related to the event. The hot button issues are pollution, corruption, and inflation.

“Because of the Olympics, the environment in China is improving. The only problem I find is that this is supposed to be the 'people's Olympics' but it's extremely inaccessible. No one can get tickets and it's inconvenient for businesses, who are limiting travel and costs because of the games,” said Ms. Chan.

Ogilvy's Mr. Kronick has also been an adviser to the Chinese government, which is eager to maintain stability during the games without looking like draconian thugs.

“I think people are worried about protests in general but you won't see [protests in Beijing organized by] Chinese. The government is expecting some by foreigners and it has already asked us questions about how to deal with that situation, if it happens,” he said.

“We told them how they deal with protests during the games is the most important thing in the world, because the world will be watching.”
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