Marketing Changes and Implications to Chinese Businesses by Olympic Games 2008 in Beijing

Marketing Chinese Businesses

Implications and Impact of Olympics 2008

The purpose of this work is to research and render citations in relation to implications and possible impact to local businesses in China's City of Beijing, host city for the 2008 Olympics.

The host city for the 2008 Olympics is Beijing, China. Beijing is China's capital city and was awarded the right to host the 2008 Olympics on July 13, 2001 in Moscow. The opportunities are unbounded and from all reports the Chinese people are excited and honored to be hosting the Olympics. 94.6 of the Chinese people support the hosting of the Olympics in Beijing according to a poll conducted by the Beijing 2008 Olympic Games Bid Committee (BOCOG).

Literature Review:

According to a Beijing 2008 Marketing Report: "For Chinese firms, the Olympic Games provide an honorable opportunity to ... demonstrate their strengths in key technologies, products and services. . . ." (Beijing 2008 Marketing)

The local economy in Beijing is quite likely already feeling some of the financial gain as 711 hectares of tress and grass in the areas central to the city of Beijing are being planted covering an area of 10,000 meters. The plans for the future prior to the Olympics is to also build 100,000 square meter woods and grass tracts in the suburban districts of China.

Further reported is that the city has began construction on "43 new road, 35 trunk road, three highways and 20 road renovations."

I. Demands Created in Olympic Host Cities:

Direct demand for warehouse space from Olympic organizers, broadcasters and sponsors

Increased demand for space from "Olympic preparation" related businesses

Increased demand for industrial space brought by a growth in the number and size of industrial space users.

The industrial sector might also feel the affects through an "acceleration of redevelopment plans" as well as "relocation because of road closures or other related inconveniences."

In 1996 Atlanta hosted the Olympic Games which cased the city to experience "an unprecedented business boom between 1990 and 2000. Local businesses are likely to gain new contacts in the sales or financing arena as well as national and international companies choosing to establish operations if Beijing's experience is anything like the previous host cities of the Olympics.

The plans for the 2008 Olympic venues by the Beijing State-owned Assets Management Co., Ltd. (BSAM): "The National Stadium located in the Olympic Green, will cover a plot of about 204,000 square meters. The venue will have a floor area of 258.000 square meters with an initial capacity of 100,000 seats. During the 2008 Olympic Games the National Stadium is designated to host the opening and closing ceremony, the track and field competition, mens' soccer final and other events." The National Stadium, The Bird's Nest, The National Swimming Center, and The Water Cube are all presently under construction in Beijing which undoubtedly is already boosting the economy in Beijing.

The principle business sectors opportunity during the Olympic Games are in the following areas:

Environmental Protection

Transportation

Telecommunications

Sports venues and other service areas

According to reports from China's Embassy the approximate amount of 180bn yuan will be spent for "infrastructure construction, 142 key projects, 9m square meters refurbished housing with 90bn yuan to be spent on building subways, light rails and 45bn yuan spent for environmental improvement.

According to a CNN report "The Beijing 2008 Olympics will trigger a flood of investment from major international corporations in China"

say analysts. The report further states that "even before the vote on July 13, a number of major companies began jostling to win the favor of Beijing city officials by aligning themselves with the Beijing 2008 bid." According to the report the bid committee states in its bid material that "an Olympics held in China would costs $1.625 billion to stage and reap $1,606 billion in revenues, yielding a modest $19 million profit." Further the report states that "economics at investment bank Goldman Sachs estimate that the right to host the Olympic Games will lift China's gross domestic product by 0.3% annually between 2002 and 2008" and "Beijing officials say they will spend some $22 billion on improvements to Beijing's infrastructure and environment, as well as on an array of new sports facilities, leading up to the games that amounts to 2.2% of China's approximate $1,000 billion annual gross domestic product."

Stated in "China Market Update: The Impact of Beijing Olympics" (2001) the following opportunities are likely due to the impact of the Olympics

1. "New foreign investors are likely to flood over China's borders drawn by the lure of Olympic Gold as Beijing gets 20 billion dollar facelift. China holds 1.3 billion potential consumers."

2. "The chance to use to world's highest profile sporting even as a marketing platform in the worlds most populous nation promises investment above and beyond the up-front investment required to stage the games. Tim Stratford, vice-chairman of General Motors China Operation will states that the Olympic Games will provide an opportunity to market a brand to hundreds of millions of Chinese people."

It is stated that "Broadcasters will deliver the Olympics to over 3.5 billion people worldwide .Beijing needs to partner with leading global companies as China extends its high-definition data and cable television services." (Bonica 2004)

Summary and Conclusion:

China entered the World Trade Organization in 2001 and since that time the role of China in the global community "has taken on much greater discussion in recent years as this monster-sized economy moves further into the global mainstream. Given its powerful growth pace of recent years, the Japanese ....and eventually the U.S.will increasingly peak over their shoulders to see China's enormous economy gaining ground."

The economy in China has been the fastest growing economy in the past few years with real (inflationary-adjusted) growth stated at 8.0 to 9.5% annually which is more than twice the growth in the United States. Even so, there are still 850,000,000 farmers in China's interior that are in the midst of a struggle and 10,000,000 individuals in China that are unemployed. Those who watch the market suggest that the Chinese currency, present pegged at 8.3 to $1 is undervalued which leads to disruptions in trade on a global basis.