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The Growth of the Chinese Football Industry

Chinese football

The football world is meeting a new superpower – China! The transformation of the Chinese football leagues came after the Chinese President Xi Jinping encouraged clubs to invest significantly higher funding into the sport in 2013. After the initial funding, the major clubs of the Chinese Super League started to make their first eye-catching signings including well-known superstars like Oscar, Hulk, Paulinho and many more.

The season that changed everything

This trend of well-known superstars moving to the Chinese Super League started in the season 2015/2016. Before, most of the foreign players in the Chinese super league were relatively old players and almost at the end of their career. Since the season 2015/2016, this changed and more superstars made a transfer to the Chinese Superleague who were relatively younger in comparison to the foreign player that joined the Chinese Super League seasons before.
In the season 2015/2016 the transfer madness of the Chinese Super League began, more international known superstars joined the league and total transfe rvalue of the spendings of the clubs peaked at an all time high of 418 million euros, which is 2.8 times the amount spend on transfers in comparison to the previous transfer window of the season 2014/2015.

Rules and regulations of the Chinese professional football

Even though the Chinese government wants to see significant growth in the quality and level of the league, they also focus on the youth products and that they have a fair chance to become a regular in the first team. Therefore the Chinese Super League implemented various rules regarding the number of foreign players that are allowed to be on the pitch, a maximum of three foreign players are allowed on the pitch of every team that are players who originate outside of the Asian Football Confederation (AFC). The teams are allowed to have one additional foreigner if this player has a nationality which is part of the AFC. This rule was implemented years ago but will be changed for the new season 2019/2020. Guangzhou Evergrande pulished recently that the number of foreigners will go down from three to only two foreigners in the starting eleven. Also, all the goalkeeper in the Chinese football leagues must have the Chinese nationality.

The benefits and disadvantages of the regulations and rules

These boundaries have his ups and downs for Chinese football, on the positive side, the clubs pretty much have to give their youth players a chance in the first team and therefore there are more opportunities for Chinese players to grow and develop. The negative sides of the rules are the fact that the Chinese Super League has a hard time developing and increasing their overall level due to the fact that the depending on the Chinese players who haven’t had the level of training of players that are from other countries and therefore are at a lower level than their competitors. Therefore it will take a relatively long time for Chinese football to grow to the desired level of expectancy. The facilities and trainings staff and education have to increase significantly in order to make the Chinese Football Leagues one of the best in the world. Also due to the fact that the Chinese clubs can only have three foreign players on the field, the demand for high-quality Chinese players is at an all time high. Due to the high demand, the local transfers of Chinese players are at a ridiculous high transfer fee in order to get the sought-after quality boost of the squad.

Examples:

Name:               Former Club:              New Club:              Transfer Fee ( in € ):
C.Zhang             BJ Guoan                    HB CFFC                 20.400.000
Y.Zhao             HZ Greentown               HB CFFC                 17.800.000
Y.Wang             SD Luneng                   TJ Quanjian             12.400.000

These examples shown above are a few of the national transfers of Chinese players. The prices are most of the times more than ten times higher than the actual transfer value the certain player holds.

Football industry in China

The Chinese Football industry is growing rapidly and creates an enormous market in which millions of euros fluctuates in. Due to the increasing popularity of the sport, the money generated by the football leagues also increases. From a huge increase in stadium attendance to new big sponsor deals and TV Deals. The TV right already grew over the last four years by 400% and is expected to increase by another 500% in the upcoming 6 years. The attendance during football games has grown over the past 10 years with over 150% which shows how quickly the sport becomes more populair. The CSL has the highest attendance of all the compeitions in Asia and is almost at the same level as the top 5 leagues of Europe regarding attendance. While the attendance for Chinese football games is growing, in most of the other competitions, especially in Europe, is the number of attendance declining.

Huge Chinese companies invested in Chinese football clubs and Chinese football in general in order to make it grow at a high pace.

Examples:

⦁ Alibaba Group Holding Ltd. invested 1.2 billion RMB to obtain 50% of the shares of Guangzhou Evergrande, which is one of the best Chinese clubs in the league at the moment.
⦁ Dalian Wanda Group invested 500 million RMB in Chinese football.
Due to the fact that Chinese football is increasing in popularity, many businesses started investing in football clubs and use them as a marketing tool. The clubs can be used as a marketing tool because the clubs hold a certain power over their fans and also create a certain image which can attract many potential customers for the businesses that are investing in the football clubs.

Amateur football

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According to the CFA, the number of amateur football players in China is now thought to be around 26 million of which 17% percent are woman and 83% are men. The very long term goal of Xi Jinping and the Chinese authorities is to reach the level of the top European countries. Therefore certain goals are set for the year 2025 to increase the level and the popularity of the sport. The number of football players should grow from 26 million to 250 million, 1.1 million new amateur clubs have to be started up, fifty thousand new football academies and sixty thousand new football pitches have to be created.

Growing markets due to a growth in the football industry

As discussed earlier on , the football industry in China is growing rapidly and also many more people start playing soccer for recreative use and also as serious sport. Due to the fact that the rise in popularity is extreme and is expected to obtain more than 200 million new amateur players in the upcoming years , many industries will grow, especially the sport clothing and accessoires industry will grow significantly. Besides the enormous potential growth in sells of sports equipment and merchandise, the football academies will generate a significantly higher revenue and will become a booming industry with many new players and many opportunities. Also, the serviceses industry regarding football will experiment a growth due to the growing demand for higly educated coaches to train young talents or to train other less educated coaches in order to improve their overall coaching skills.

Business opportunities

As said earlier on in this article, the football industry is growing impressively over the past years and has a bright future. The value of the football industry is estimated to have a value of €170 billion by the year 2020 and is expected to grow to €430 billion by the year 2025. This growth comes with various business opportunities for local and foreign businesses. The growing demand for professional coaching creates a huge market opportunity especially for foreign businesses or individuals that have already gathered the information needed in their home country where football has been popular for a longer period of time. Especially with the fact that the number of football players in China will grow ten times the current size over the upcoming six years, the need for highly educated trainers and coaches will therefore also grow by at least five times the current market size.

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Besides the service industry, the demand for sports clothing , mainly football clothing and equipment, will pretty much explode in size. The estimated growth of an estimated €260 billion between 2020 and 2025 creates many opportunities for foreign businesses. Due to the fact that it is commonly known that many Chinese customers have a preference for foreign brands within their customer behaviour, there is a huge market to explore in the future for foreign businesses.

If there would be a perfect moment in time in which a business should enter the Chinese football industry, by entering the sports equipment industry or service industry, it would be right now. In order to be succesfull a business should be there from the start of the growth in order to be an early adopter and to be able to stay in front of their competitors.

 

Maxxelli has a wide knowledge about the potential business opportunities within the Chinese football industry. Do you have any questions? Feel free to contact us at info@maxxelli-consultancy.com

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