Sports business in China

XIAMEN, China – The global economic crunch has started to creep into the large manufacturing districts in the Middle Kingdom, which initially didn’t feel the impact because of the massive back-orders being filled. But now that the trickle of investments has slowed down, factories are also laying off workers and trying to dispose of their finished generic products. Even the healthy market for sports equipment is starting to dry up.

Sports was dead in China when Mao Xedong took over. He considered it a Western expression of decadence, and forbade it all throughout the country. Even national athletes like Yao Ming’s mother, national women’s basketball team center Fang Feng Di, had to join the feared Red Guard to have work. It took years (and ping pong diplomacy in Nixon’s time) before China decided to get back into international sports. By then, a whole generation of athletes had grown old and useless.

It is quite an experience driving through the vast expanse of Xiamen for the first time. All they have is space. You pass row upon row of new, gray, empty buildings. The government invested heavily in construction while labor, supply and real estate prices are low, and in anticipation of a boom in the next five years. So for now, the mammoth shells sit, empty and waiting.

Xiamen is also a factory city, and it takes about 40 minutes to get to the heart of it. It’s a surprising blend of traditional little tea shops and restaurants, and huge drab factories, many quiet from lack of activity. Much of the action in sports supplies involves golf, boxing and basketball equipment. But an investor faces many obstacles in trying to tap into the vast market that the world was rushing to make money from.

First, there’s the language barrier. Many coordinators and sales people are not fluent in English. Just trying to make an appointment is a chore. Their understanding of the language is not the same, since they also tend to translate it into Mandarin in their minds. Secondly, the culture is more casual, since business was great for a very long time. Traveling with a small group of Filipino sportsmen seeking investment opportunities, we were surprised when a supplier changed a morning appointment the night before only by e-mail. The group had booked flights to Nanping, and was leaving for the airport to visit the supplier’s factory, when we discovered the change. The supplier was unapologetic, apparently used to being in demand. But times have changed.

Secondly, if you’re buying sports equipment of any kind, you have to be aware of the culture of copying and piracy. The global PR representative of an international sports brand told this writer that pirates and copycats infiltrated their own factory, and used cheaper material with the same equipment that is used to make high-end brands.

So if you’re unaware, you could end up trying to sell designs that have been copyrighted worldwide. Your business is dead before it gets off the ground.

Third, safety is not a priority. In welding, sewing, grinding, polishing and heavy adhesive work, gloves and goggles are not a necessity. So assembling basketballs, making golf clubs and sewing baseballs is not safe by any stretch of the imagination. It’s a common sight to see workers breathing in fumes, handling hot metal or chemicals or paints, paint removers, varnishes and polish with their bare hands. So if you want to compromise or have deniability, you end up turning a blind eye.

Fourth, you’ll have to take the initiative in design. Most designs are picked up from other brands, or outright copied. Also, color combinations may not be to your taste, since Chinese design is not the same as our American-based or Asian sensibilities. Besides, why take the chance of becoming a mass-produced cheaper version of an existing global brand? And some manufacturers have this strange concept of “original copy” wherein they take an existing design, copy it or slightly change the color, and claim it as their own.

Fifth, haggling has its own inherent dangers. The good news is that many Chinese factory owners will never say no when you talk them down. The bad news is that almost all of them will tell you about what they will do with the quality. So you may feel like you’re getting a great deal, until you get the shock of your life when everything you buy falls apart when you get it. So be careful what you wish for.

If you dare to venture into China because it has a reputation for being cheap, make sure you know what you want. Or else, you may start up thinking you’ll be king of the hill in a particular sport, only to lose money and fall flat on your face.