Ambush marketing?

"Anything is possible." Like its advertising slogan, domestic sportswear maker Li Ning never gives up.

January 3 this year was surely a disappointing day for Li Ning. That's when it lost its bid to be an official partner of the 2008 Olympic Games.

The official uniform supplier to the Chinese delegation for three Olympics since 1992, Li Ning was replaced by rival Adidas - in its home country, no less.

The squirrel tail logo will not only be absent from many uniforms, but also those for the event's staff, volunteers and technical officers.

Audiences at the 2000 Sydney Olympic Games remarked on Li Ning's design that featured a flying dragon and "butterfly shoes". It received many compliments and won an award of its own - as best award ceremony uniform.

Some analysts say the company's failure to secure rights for the Games has had an impact on the firm, slowing its pace of growing brand awareness.

But Li Ning says Olympics involvement will continue.

"We have a lot to do at the Olympics," says Zhang Xiaoyan, spokesman of Li Ning.

The company will supply uniforms for four Chinese national teams - the gymnastics, diving, table tennis and shooting teams - as well as both Spain's and Argentina's men's and women's basketball teams. It is also the official uniform supplier for the Spanish and Swedish delegations to the event.

"Over half of the gold medals for the Chinese delegation in Beijing Olympic Games are expected to go to the four Chinese teams we sponsor, which means Li Ning's logo will appear frequently at the event," Zhang says.

Li Ning's turnover was 3.18 billion yuan last year, while that of Adidas exceeded $10 billion. It was impossible for the Chinese firm to spend a fortune like Adidas did to be an event partner or sponsor, analysts say, so it has to make use of a limited budget for branding campaigns.

It is reported that Adidas spent 1.3 billion yuan on the sponsorship, a figure far beyond Li Ning's entire annual marketing budget.

Zhang points out that 1.3 billion yuan is only an entrance ticket. Adidas will have to spend another 3 billion yuan or more to promote the sponsorship, she says.

Realizing that it was financially unrealistic to compete with its international rival, Li Ning turned its attention to sponsorship of the sports channel of China Central Television (CCTV).

All anchormen, anchorwomen and reporters on CCTV's sports channel will wear Li Ning clothes until the end of 2008. The Li Ning logo or logo pin must be visible even on formal attire such as suits.

Some analysts call it "ambush marketing". Christopher Renner, president of Helios Partners China, says it is unfortunate that CCTV, a long-term partner of the Olympic Games, allowed it to happen. "It (CCTV) should stop Li Ning," he says.

Zhang declined to comment on charges of ambush marketing, but insists Li Ning's logo will not be absent during the Games.

"CCTV belongs to the Asian-Pacific Broadcasting Union. Legally speaking, Li Ning's logo should continue to be worn," he says. He added that the company will make changes to the logo pin, including the size of it.

Xiao Lihua, chief operating officer of Zhengwei Group, a domestic apparel manufacturer, says the Olympics is a crucial occasion for all Chinese firms that want to enhance their brand image.

But instead of spending several tens of millions of yuan on sponsorship, it is wise for domestic firms to spend much less than that outside the circle of endorsements, Xiao says.

"There are 48 Olympics partners, sponsors and suppliers, and ordinary customers cannot remember all those company's names exactly. Some research indicates only 20 to 30 percent of Olympics partners and sponsors gain their expected returns," he says.

Xiao notes that local companies should study sponsorship rules and regulations carefully to make sure all their marketing activities are legal.

He also warns that domestic companies should not only just focus on the event itself, but also think of a consistent marketing strategy afterward.

"Companies may see skyrocketing sales during the event and their output may grow at the same time. Once the event is over, sales drop and there is a potential risk of overstocking."

As the top sports brand in China, Li Ning now has over 4,000 retail outlets nationwide, and will have 5,100 stores across the country by 2008, including in all first- and second-tier cities and many third-tier cities.

By outsourcing its manufacturing, the company focuses on branding and design. It is the first domestic company to have its own research and development center, into which it invests 3 percent of revenue.

It recently held an international sportswear design contest, which attracted university students and designers from independent studios at home and from the United States, the Netherlands, the United Kingdom, France and Japan.

(China Daily 08/06/2007 page5)