RIO GAMES, MADE-IN-CHINA

RIO GAMES, MADE-IN-CHINA

Chinese enterprises vie to penetrate the global market through the 2016 Olympics By Zhou Xiaoyan

Souvenirs based on Vinicius and Tom, the respective mascots of the Rio Olympic Games and Paralympic Games, produced by China’s Honav Culture Development Co.

On the morning of August 6, hundreds of millions of Chinese sprung out of their beds excitedly to watch the Olympics Opening Ceremony held in Rio de Janeiro. Apart from the ebullient samba and super model Gisele Bündchen’s stunning catwalk, they were also impressed by the appearance of Chinese sports apparel maker 361 Degrees’ logo on the uniforms of technical staff and volunteers at the Games.

At the Olympics, audiences not only spectate the world’s finest athletes competing against each other, but will also see companies from around the world jostling for brand recognition.

From ordinary souvenirs to hi-tech equipment and installations, China-made elements have had a large presence at the Rio Olympic Games. Chinese companies are flooding the event with products such as plush mascot toys, uniforms and air conditioners in an attempt to cash in on the big game.

Ubiquitous presence

While Chinese athletes are striving for medals in Rio, Chinese brands are competing in the business arena to showcase their names.

Domestic sports brands such as 361 Degrees, Anta, Li Ning and Peak seem set to become the largest beneficiaries of the Games—riding the Rio wave with big-ticket sponsorships and marketing deals.

361 Degrees, for example, is an official clothing supplier for Rio 2016 volunteers, technicians and people who participated in the Olympics torch relay. The company has provided more than 106,500 uniforms for the Games. It is the first Chinese sports brand to sponsor the summer Olympics as well as the Paralympic Games.

“The uniform has a really smart design. Because Rio has a huge temperature differ-ence between the day and the night, the uniform includes a T-shirt and coat and the long trousers can be disassembled into short trousers,” Ding Xing, a Chinese volunteer at the Olympics, told People’s Daily.

As a partner of the Chinese Olympic Committee, Anta designed the Champion Dragon Outfit to be worn by the Chinese Sports Delegation. Chinese medal winners will also wear Anta’s sportswear during their award ceremonies, and the company’s competition gear will be worn by Chinese athletes participating in 10 sports.

Li Ning signed a sponsorship deal with the Indian Olympic Association (IOA) for the games. As part of the deal, the company will provide tracksuits along with training kits for a contingent of about 150 athletes and officials.

Neerav Tomar, a senior official with the IOA, told The Indian Express that they reviewed offers from three brands, including an Indian firm. “We were evaluating the kitting side and believed good design and quality as the baseline,” Tomar said. “We zeroed down on Li Ning. They are an international brand, among the biggest in Asia, and have presence all over the world. Their quality is on a par with other major apparel giants.”

Peak is another domestic sportswear firm that has shown interest in Rio 2016. It has sponsored apparel and shoes for athletes from more than 10 countries.

Jinling Sports, a sports equipment manufacturer located in east China’s Jiangsu Province, has provided a range of volleyball equipment including nets and chairs for referees. The Zhang Kong Barbell Manufactory, located in north China’s Hebei Province, has broken up a long-standing Japanese monopoly on weightlifting equipment, becoming the sole barbell supplier of the Rio Olympics.

Souvenir production has always been a strong point for China, and this year is no exception.

The Beijing-based Honav Culture Development Co., an exclusively licensed manufacturer for the Rio Olympic Games, has delivered 1 million products based on Vinicius and Tom, the respective mascots of the Rio Olympics and the Paralympic Games, as well as 700,000 Olympic pins.

Ding Wuhao, President of Chinese sports apparel maker 361 Degrees, takes part in the Olympic torch relay in Rio de Janeiro on August 4. The company is an official supporter of the Rio Olympic Games

Against all odds

The ongoing Olympic event is taxing on Brazil, which has been confronted with challenges on many fronts—ongoing political turmoil, economic recession, high crime rates and the rampant spread of the Zika virus. Consequently, supplying the event has also become a huge challenge for Chinese companies.

Wu Hui, Honav’s Vice General Manager, complained about Brazil’s slow customs clearance procedures and high tariffs. Wu told the Beijing-based Global Times that Brazilian customs authorities had been holding back some official Olympic merchandise provided by the company even when the opening was less than a week away.

He said that it’s not the first time that the company has been confronted with this sort of problem since it started shipping itsproducts to Rio four years ago. Given that customs rules have changed frequently amidst political unrest in Brazil, there was no way to forecast how long customs clearance would take, according to him.

High customs duties were another concern for Wu, which he claimed are more than double those the UK charged during the 2012 London Olympic Games, for which Honav was a licensed pin producer. Wu said that the duties imposed by Brazil have squeezed Honav’s profit margins.

Instability in the political and business environments in Brazil is another major difficulty confronting Chinese companies.

Brazil has been mired in political turmoil following a vote in May to impeach the now-suspended President Dilma Rousseff, triggering fierce protests around the country. On August 11, Brazil’s Senate voted 59 to 21 to proceed with an impeachment trial against Rousseff over alleged illegal accounting practices. The trial will likely take place after the Olympics comes to an end.

Worse still, Brazil is mired in the worst recession since the 1930s. Before the Games opened, there were frequent media reports about the postponement of venue construction for the Olympics, arousing concerns over whether the event could be held on schedule.

Rio’s Metro Line 4, for example, was opened less than a week before the Games’opening ceremony, despite the fact that it was supposed to have been inaugurated at the beginning of the year.

Wang Weizhen, Vice General Manager of the Brazilian affiliate of Chinese air-conditioning equipment maker Gree, told the Global Times that installations of its air-conditioning units in the Olympic Village and stadiums were completed less than a week before the Games opened due to construction being behind schedule.

Volunteers ride on a China-made train on the Rio Metro Line 4, which links downtown Rio de Janeiro with the Olympic village and park

Up in the supply chain

Back in 2012, made-in-China products were seen everywhere during the London Olympic Games, too. A large number of miniature flags and plastic horns that the audience used to cheer athletes were produced in Yiwu, a manufacturing hub for consumer commodities in east China’s Zhejiang Province.

While at the Rio Olympics, Chinese brands are shifting from a low-end and labor-intensive sector to a high-end and innovation-centered arena, following the ongoing reforms to the country’s supply chain.

Despite a rise in labor costs domestically, China’s developed production capability has given its companies a sharp edge in pricing over their peers.

Of all the made-in-China products, the biggest investment was in subway trains.

On August 1, Rio’s Metro Line 4 officially opened its special Olympic service, linking the downtown area to the Olympic village and park. The route carries roughly 300,000 passengers daily and shortens the travel time between the two termini by half an hour. All the line’s trains were produced by the Changchun Railway Vehicles Co., an affiliate of the China Railway Rolling Stock Corp.

Liu Guoquan, project manager of the new subway line at the Changchun Railway Vehicles Co., told People’s Daily that the subway trains were specially designed to cater to Rio’s local conditions.

According to Liu, the main body of the trains is made of stainless steel since the route is close to the sea and the high humidity requires the train to be rust-resistant. In addition, the trains are installed with blastproof glass and designs based on Brazilian culture are used throughout the train cars.

More than 200 security scanners pro-vided by China’s Nuctech Co. Ltd. help keep the Olympic venues safe. Nuctech is a security service supplier linked to the prestigious Tsinghua University.

Chen Yongjian, General Manager of Nuctech’s Brazilian subsidiary, told People’s Daily that the special locations of some Olympic venues had raised the standard for security inspection products.

“Take the beach volleyball games for example. The security check devices need to be installed and used on the beach, which is quite problematic. The power supply could be unreliable, as electronic products could be corroded by the sea water. We have to make sure our products are able to adapt to different environments,” Chen said.

Zhang Jianping, Director of the Department of International Economic Cooperation at the Institute for International Economic Research under the National Development and Reform Commission, said that compared with the 2014 World Cup football tournaments in Brazil, made-in-China products have covered a wider range of sectors in Rio.

“The main reason is that China is one of the largest manufacturing hubs in the world, the largest nation in goods trading and one of the largest exporters in the world. Therefore, Chinese products have a sharp edge in significant sports events like the Olympic Games,” Zhang said during an interview with China National Radio.

He said that he is quite confident of the quality of made-in-China products at the Rio Olympic Games.

“First of all, Chinese exports have a high production standard. Second, organizers of the Rio Olympics have very strict requirements on the quality, price, and technology of their purchased products. It’s the high quality and relatively low price that enabled those Chinese companies to win the bid,” he said.

Despite this, Zhang claimed that more importance should be attached to self-developed brands, intellectual property rights and innovation in order to raise the international recognition of Chinese brands and to expand their global market share.

According to Zhi Shuping, Director of the General Administration of Quality Supervision, Inspection and Quarantine of China, of the world’s 500 major industrial products, China ranks No.1 in terms of the number it produces—over 220.

However, Zhi told People’s Daily that China still has a long way to go from being a manufacturing powerhouse to becoming a super power.

“Without good quality, made-in-China products cannot win over the global market,” he said. “Technological innovation and reliable quality are fundamental in the transformation and upgrading of the manufacturing industry.”

Copyedited by Bryan Michael Galvan

Comments to zhouxiaoyan@bjreview.com

Machinery equipment from China’s Sany Group is employed in the construction of the Olympic Park in Rio de Janeiro on July 1, 2014

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