Communiqué of the third plenary session of the 20th Central Committee of the CPC at the end of July reaffirmed China’s long-term vision of deepening reform and pursuing modernisation based on the three key pillars of innovation, green energy, and consumption as growth drivers.
By Helmo Preuss: Economist at Forecaster Ecosa
The Paris 2024 Olympics will help to boost China’s sports economy as it uses the global spectacle to expand its market presence through sports-related exports and e-commerce. The Olympic ideal is aimed at uniting nations under the banner of sportsmanship and competition, but it also offers countries a unique platform to showcase their strengths and capabilities to a global audience with China showing its prowess with the amount of gold medals won.
Communiqué of the third plenary session of the 20th Central Committee of the CPC at the end of July reaffirmed China’s long-term vision of deepening reform and pursuing modernisation based on the three key pillars of innovation, green energy, and consumption as growth drivers.
A focus on the sports industry will drive the pivot to domestic consumption. In recent years, China has implemented several policies to promote fitness and the construction of a strong sports nation, as well as providing sports equipment to the world. Sports economy sales are expected to reach over $500 billion by 2025.
The pivot to domestic consumption is reflected in the gain in the July services index. The growth in China's services activity accelerated in July helped by new orders, as the Caixin / S&P Global services purchasing managers’ index (PMI) rose to 52.1 from 51.2 in June, recording an expansion above the neutral level for the 19th consecutive month.
The index covers mostly private and export-oriented companies and the 50-mark separates expansion from contraction on a monthly basis.
Chinese policymakers provided some 300 billion yuan in ultra-long special treasury bonds to boost domestic demand by encouraging equipment renewals and replacing old consumer goods with new ones.
Following the successful hosting of the Beijing Olympics in 2008, China designated August 8 as National Fitness Day each year and elevated national fitness to a strategic priority in 2014. The 19th National Congress of the Communist Party outlined the goal to “widely promote national fitness activities and accelerate the development of a sports powerhouse.”
The 14th Five-Year Plan further specifies the goal of establishing China as a sports powerhouse by 2035, highlighting the nation’s significant focus on the sports economy.
Participation in the Paris Olympics allows China to highlight its advancements in technology, infrastructure, and cultural diplomacy, while also serving as a catalyst for expanding trade relations and fostering business partnerships on a global scale.
These opportunities range from sponsorship deals and product placements to export opportunities and investment ventures, which will allow Chinese enterprises to build on the global attention surrounding the Games to strengthen their market presence abroad. Sectors such as technology, consumer goods, and sports equipment are particularly poised to benefit from increased visibility and consumer interest generated by the Olympics.
Major Chinese companies, including Alibaba and Mengniu, are top-tier sponsors of the Games. Mengniu, notably, is the sole Chinese consumer goods company among the global Olympic partners, enhancing its brand visibility on an international stage. These partnerships not only boost brand recognition but also create avenues for increased consumer engagement and market penetration.
Yiwu, a key player in global small commodity trade, reported an impressive 45.6% -year-on-year (y/y) increase in sports equipment exports in the first four months of 2024 as retailers stocked up ahead of the Olympics. The Paris Organising Committee has confirmed that 80% of the Olympic mascots are made in China, highlighting China’s strategic advantage as “factory to the world” in the global supply chain for the Paris 2024 Olympics event-related products.
The buzz created by the 2024 Paris Olympics has been replicated in the digital marketplace, with Chinese e-commerce platforms such as Temu, SHEIN, and AliExpress boosting their global presence. These platforms have leveraged the Olympic media attention to boost their visibility in Europe, offering something for everyone from cheap medals and country badges to exclusive sports gear.
The intense competition among these e-commerce players mirrors the intensity of the competition between the athletes. This surge in e-commerce visibility will help Chinese e-commerce retailers address challenges in building brand recognition and breaking into mainstream European markets.
Winning medals and showcasing national athletic prowess are important aims for the national sports councils, but the broader significance of the Olympics lies in encouraging physical fitness among the general public, and improving overall health through exercise.
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