(Chinese Version)

In recent days, engaging football games are continuously taking place in Guangzhou, catching the eyes of passionate fans all around the world. After the intense game Evergrand Taobao VS Bayern Munich, the renowned Real Madrid and Internazionale Milano will be battling each other on the football field. Besides playing games, Real Madrid also has another business to attend while touring in China: the opening of its official online store on Tmall Global, a top e-commerce platform belongs to Alibaba Goup in China. To celebrate the cooperation, Alibaba and Real Madrid together hosted a ceremony, which all of Real Madrid’s players and the CEO of Alibaba’s retail division Zhang Jianfeng all attended to show their support. This is only a small move from Alibaba to explore the growing sports industry in China. Meanwhile, other giants are gearing up to take a share of this lucrative goldmine as well. The Internet sports industry is sure to boom in China really soon.

The cooperation with Tmall came naturally

Wang Nanjie, the founder of Onion Ring, which has thousands of passionate sport fan users, believed that cooperation of such kind was natural. For one thing, major clubs like Real Madrid have always wanted to find an entry point to penetrate the Chinese market. Years ago, they all learned in China that pirated jerseys dominated the fan merchandise market in the country. And as the fan culture grows in China, they believe it’s best for them to find a competitive channel to pour official and genuine fan merchandise into this new and lucrative market. On the other hand, in the past football fans found it frustrating to buy fan merchandise from overseas platforms since the logistics services were just not well enough. Going overseas and buy the merchandise on the spot was not a preferable option either. But now with mature international logistics services are in place, flagship online stores have become the main platform on which fans purchase items and fans are now the target audiences of all those clubs out there.

In the end of May, Bayern Munich officially opened its flagship store on Tmall Global, whose main merchandise included jerseys, football shoes, casual clothing, suitcases and bags etc. Apart from that, the store also has customized items such as player signatures and player jerseys available to consumers. It’s said that the sales volume of Bayern Munich’s online store on Tmall had reached several millions in the past two months, among which one particular jersey alone sold two thousand. Real Madrid thinks highly of Tmall and expects the platform to bring great benefits to them as well. The presence of 28 players of the all-star team also confirms Real Madrid’s attitude towards Tmall. “Real Madrid is a top profession football club in the world, and we only want to partner with the best,” says Florentino Pérez, the president of Real Madrid. “And therefore we feel privileged to be able to work with Alibaba, who’s also the best in its field. ”

Real Madrid’s attitude towards Tmall signifies renowned European football clubs’ great interest in the emerging Chinese market. The reason for this trend is that sports industry giants all agree that China’s sports market and consuming market are evolving to a whole new level and that it has become a lucrative goldmine waiting for them to exploit. In this year’s summer, major footballs clubs, including Bayern Munich, Real Madrid, Valencia, Inter Milan, AC Milan, Juventus and Atletico Madrid and Lazio, all rush to China in an attempt to explore this new market. Choosing to cooperate with a leading local brand that has the capacity to crack open the market is apparently a natural option for them ‘outsiders’ to go for. Real Madrid chose Alibaba because it’s a first-class enterprise even in the global market. Additionally, Alibaba’s emphasis on sports culture sector also adds up to its competence. What’s more, Alibaba is very company that’s most probable to bring the club tremendous profits. Other major European football clubs are very likely to team up with Alibaba as well in the future.

From the perspective of sales volume, compared to ohter enormous online stores on Tmall, these football clubs’ flagship stores appear to be extremely small. However, Tmall still extremely values their presences. Below are some of the reasons for why Alibaba values them so much:

1. The internationalization strategy.  After getting listed Alibaba has been going for a new direction, that is, internationalization. The company aims to help Chinese goods get to overseas markets and provide more conveniences for Chinese consumers to purchase goods from overseas through this measure. Tmall has already launched its international version as tmall.hk. Alibaba’s head, Jack Ma, also travels around the world to have dialogues with politicians and enterprises, especially those in Europe, to push the company’s international influence to a new level, showing the world that Alibaba’s indeed a company that cares about intellectual properties.

2. The sports economy. Jack Ma had mentioned that Alibaba’s main focus in 2015 would be the sports business in the beginning of the year. He explained that Alibaba would not do sports industry, not sports career, but economy. The US’s GDP is boosted by the sports industry by 7 or 8%, which makes Jack Ma think highly of this particular sector and invest a considerable amount of money in it: buying shares of Evergrand, investing in Letv Sports, preparation for setting up a correlated football division, and Tmall’s new focus shift to sports organizations. All these actions show just how important the sports economy matters to Alibaba.

3. The commercial portal strategy. Tmall and Taobao started as online retail platforms and later begun to provide virtual products such as lottery, local services, and travel packages. The CEO of Alibaba’ retail division Zhang Jianfeng stated that the company was not only the largest e-commerce platform, but also the top one commercial portal in China. Besides selling ‘real’ goods, intellectual goods and crowdfunding services are part of Alibaba’s strategy to expand its e-commerce platform. As a typical commercial sports organization, Real Madrid’s products will drastically increase Tmall’s competitiveness in this area.

Alibaba’s investment in the sports industry can be shown in multiple aspects. Besides investing in football teams and Internet sports companies, the company also tries to integrate sports into the company’s businesses. Cooperating with renowned football clubs is just one of the ways for the company to attraction attention and build up strength. The company also launched a campaign ‘Finding The Chinese Version Of The Song Of Real Madrid’ to increase publicity. Alibaba’s other businesses also have the capacity to integrate with sports businesses. For instance, Real Madrid is selling fan merchandise on Tmall, the next moves for the club would probably be teaming up with Alibaba’s ticketing division to sell its game tickets and cooperation with Taobao Crowdfunding, Yulebao and YoukuTudou etc. Real Madrid can even launch travel packages that are based on football games. The integration of different businesses of partner companies has always been a goal or Jack Ma, which is huge step towards the Alibaba ecosystem.

Internet sports businesses might be the next goldmine

The Internet+Economy is stimulating lots of industries’ development and Internet+Sports also has great potential.

On one hand, compared to developed country, China’s sports industry still lags behind in terms of marketization. Even though China has been a major Olympic Games medals producer in the world, but the country’s ‘gold medal’ strategy of the sports industry doesn’t really help the development of the industry. However, a turning point has occurred. In October, 2014, the Sate Council released a document named Suggestions On Accelerating The Businesses And Consuming Of Sports while in March, 2015, a reform program on Chinese football sector came to the public attention. The current tendency indicates a rise of the sports industry. It’s estimated that by 2025, the sports industry in China would reach a scale of 5 trillion RMB, which is closely related to Chinese people’s increasing investment in health. On the other hand, the Internet is bringing new values to the sports industry as a driving force. Plenty of major teams are now betting on this sector. And here’s the list of seven main players of the Internet sports industry:

1. Sports medias: media outlets that provide up-to-date information on games and sports news. Sina Sports is the leading media among a few major sports web portals, and was in partnership with NBA before. In 2015, NBA decided to cooperate with Tencent and both sides ha already signed the contract, which will last for five years. NBA’s cooperation with Tencent is not just on sports news, but also operation of NBA’s official website and community in China. People consider this partnership a major move for Tencent in the sports area and a milestone for Tencent’s sports news section. Besides giant comprehensive portals, vertical portals on particular sections like Dongqiudi are also rising up.

2. Sports communities: Hupu is the most well-known vertical sports community of the first generation, whose success was largely attributed to the NBA rush in China. Besides providing a community platform, Hupu also subsequently launched its e-commerce business and received 100 million RMB in Series round of funding. In 2013, Hupu achieved an annual income of 100 million RMB. In Guangzhou, there’s an app called Yangcongquan (Onion Ring), which provides game statistics, live videos, sports communities, and offline sports activities service, has also received millions of RMB in funding. Other major sports apps such as Keep,Gudong, and Yeshouqixing etc. are appearing fast.

3. Sports O2O: we can always find ways to combine the hottest fields on the market, for instance, O2O and Internet sports. This kind of players can also be divided into several groups, one of which is the booking apps. Quyundong, Dongqilai, Damanguan and Quanchengrelian are the very examples of this group that helps users to book football fields online. The second group is local social apps. Yuepao has already received an investment from 360’s founder Zhou Hongyi and Leqizuqiu, which helps users to find buddies to play football, and Yuepaoquan, an app that help find partners for jogging, are also part of the O2O application.

4. Sports coaches: Huang Jianxiang rolled out Dongbazuqiu this April, aiming to be the Uber in the field of football coaches. His project has already received an angel investment of 9.5 million RMB. China’s free combat champion Yang Huali also made a platform called Jiankangmao(healthy cat), similar to Yuejiaolian and Jiaoli, to help sports lovers find professional coaches, many of which are retired national athletes.

5. Videos: Letv Sports is a representative player of this group. Compared to traditional TV stations, Internet sports video outlets are more personal and have more options available to audiences. Above all, they are more engaging. Letv Sports has successfully invited famous producers such as Huang Jianxiang and Liu Jianghong etc. to support its business. There are also rumors that its current valuation has reached three billion RMB and the Series B round of funding has started after getting investments from Jack Ma, Wang Jianlin and his son. Besides Letv, PPTV also has its own advantages in sports video channel. YoukuTudou, as the biggest video website in China, receive investment from Alibaba as well. These players will no doubt directly compete with traditional TV channels for audiences.

6. Internet lottery: sports lottery and welfare lottery are the two biggest division of the lottery sector, and the former one is obviously more entertaining. The Internet has been playing an essential sales channel of lotteries. Due to the special properties of the Internet, virtual lotteries were able to boom in a short time. Recently, regulators are imposing stricter regulations on Internet lotteries, making quite a few channels lose their qualification to sell lotteries. However, this doesn’t necessarily mean the end of Internet lotteries but only a matter of regulations.

7. Wearables for sports: there are two listed companies that run the business of wearable hardware for sports use, which are GoPro and Fitbit. Wearables for personal health are the mainstream in this field, whose main functions generally include step calculation, motion track, and heart rate monitoring etc. Apart from that, there’s also great demand for professional use. Chips installed players’ shoes, rackets, or even footballs can better help their trainings go. And for golf players, smart golf clubs + training system has already become a very popular new generation training method. Traditional sports equipment makers are all seeking ways to combine what they have with advanced technologies. It’s known to many people that Nike had dropped its Nike+ series but Chinese companies such as Lining is now developing smart football with a tech company while Guirenniao is pouring investment into newly-emerged sports tech companies and developing its own smart sneakers.

Even though now we have so many players on the field right now, the Internet sports industry still needs time to grow. This industry grows at a relatively slower pace and needs great events such as Olympics and World Cup to drive it forward. During the 2008 Beijing Olympic Games the mobile Internet hadn’t been making much of a fuss in China and there wasn’t enough presence of Internet + Sports business models, and therefore the industry did miss out a great chance to make a leap. And now the industry needs time to grow. Perhaps the 2022 Beijing Olympic Winter Games will be a strong catalyst to accelerate the industry in the coming next few years. One thing is for sure though, that is , even though this industry won’t grow at the same high speed like Dididache or Takeout O2O industry and it won’t consume the amount of money they need to take off. But slow also means stable. What the industry really need right now is users. Passionate sports fans are the most valuable resource on this matter. And Internet giants such as Alibaba’s financial and resource support also contribute greatly to the development of this rising industry.

Internet + Sports is becoming the next goldmine, in which field big firms, entrepreneurs and enterprisers invest heavily. Sports as a kind of activities concerning people’s health will become a huge moneymaker as people’s consuming ability grows. Sports can also push the development of technologies forward. For instance, major events such as the Olympic Games did improve the technologies back in 2008 and there have been news saying that in the 2020 Tokyo Olympic Games there will be robots guiding people in stadiums and that the Japanese government is considering to hold an Olympic game for robots, all of which will definitely add up to Japan’s image as a leading nation on robot research and development. The sports industry in China is no doubt going to have a major transformation in the near future. When the sports industry meets the Internet, their interaction might nurture the future renowned companies. The best part is, Internet giants in China are now paying more attention to this new goldmine than ever, which will definitely greatly boost this industry in many aspects.

[The article is published and edited with authorization from the author @Luo Chao, please note source and hyperlink when reproduce.]

Translated by Garrett Lee (Senior Translator at ECHO), working for TMTpost.