Sports Business in China

FAT IS RICH AND MUSCLE IS LABOR,HURDLES AND OPPORTUNITIES IN THE SPORT AND FITNESS BUSINESS IN CHINA

Antonio Graceffo, PhD, China MBA ( 安东尼博士 )

Antonio Graceffo ( 安东尼 )

Contact: [email protected]

mailto:[email protected]

NEW YEAR’S RESOLUTIONS 1. LOSE WEIGHT 2. LEARN A FOREIGN LANGUAGE 3. LEARN A SKILL /DANCING OR MARTIAL ARTS

The world is full of slim, black belts who speak Chinese and French.


FLAWED BUSINESS MODEL PEOPLE ARE NOT COMMITTED TO IMPROVEMENT.


“My Chinese textbook is lying next to my unused guitar and dumbbells. The guitar is nice, however, because it gives me someplace to hang my karate white belt.” Canadian friend in Taiwan

Alcohol, junk food or cigarette shops outnumber

Gyms and foreign language schools

A judo instructor in New York once said, “I had to close my club because it was like having two mortgages.”


BUSINESS DECISION ONE

Foreign Market or Chinese Market

Here in China, in addition to fighting against the same lazy, human nature you find elsewhere, you are also fighting thousands of years of cultural norms.


Foreign Market Too small Too concentrated Too much competition Too transient It ignores the other 1.3 billion people in the

country


Chinese Market Not as large as you might think Not as rich as you might think Wrestling with cultural norms Tremendous growth potential


Population of 1.3 BillionOnly 51% in citiesLess than 50 million in tier-one citiesUS poverty line $24,000 USD, several times the average wage in China.

Today’s presentation is about the Chinese market because it has the most potential. Even a small fraction of the Chinese market is a multiple of the foreign market.

Home Depot Failed Judo teacher’s English book

Chinese People want different thingsOne or two generations away from toiling in the fields, the last thing people want to do is diet and exercise.

Fat is rich, muscle is labor


Athletes ask for supplements Shifu dietary supplements

Good news Interest is growing Urban obesity rates approaching 20%


Problem Supplements, including cheap copies

and substitutes are sold on Taobao

Takeaway Supplements may represent a good business

opportunity because they are similar to Chinese herbs, medicines, and snake oils which have been part of the culture for eons.


For about the last ten years, Chinese people who never exercised have been wearing name brand running shoes.

Now, they are wearing grappling shirts.

Opportunities exist in Sport shoes Sports apparel Possibly home sports equipment


My 180 RMB eighty-RMB boxing gloves

Made in China, sold in US

The growth of mid-range, mid-priced products


Takeaway: Mid-range products and services seem to be the next area of opportunity in China.


Parkour and Gymnastics Gym Problems with China market information Recency bias Information availability bias


Sports lessons and martial arts

X-sports, hip hop, skate parks, indoor rock climbing

Growing fast, but the market is small

Sports lessons and martial arts


Different kinds of SportsTargets teenagers and college studentsNo moneyLittle mobility No parental support

It’s more expensive to find a new customer than keep an existing one. The gym business is a business of CONSTANTLY having to find new

customers.

Adult Sport and Martial Arts Lessons


Adults are busyCheapTiredThey start with best of intentions and quit



You must offer MMA, Muay Thai and grappling but Muay Thai fitness is the money maker

Adults think they want to fight, but actuallyThey just want to lose weight.

Most MMA gyms and Muay gyms I’ve visited in Shanghai either went out of business, or had low numbers of students.

One Muay Thai gym has survived for about ten years.



Yangpu Jiangwan Sports CenterMMA and Muay Thai for adults, closed downMuay Thai and grappling instructors visa problems/expensiveKarate, taekwondo and san da classes for children.

Target kids and parents Parents have money Belts, create longevity, belt tests, extra income Performance (parents can see where their

money is going) Competitions (Pride for parents, opportunity

for kids, more money)

Possible Business Opportunity Gymnastics and Taekwondo US Model Tiger Schulman Karate or Y.K. Kim Karate Hasn’t been done yet in China


Take away: Look into large scale taekwondo chain, for kids, on the model of YK Kim and Tiger Schulman in US


Supplemental education is big money Juku (Japan) Hagwan (Korea) Bushiban (Taiwan) China, still developing

Supplemental English and Sports Combo


Growing in China Football Basketball Baseball Some companied hiring foreign

teachers, even standardizing English lessons

Combined sports and English business


Take away: Well organized program which combines Taekwondo with structured English lessons.


Organize a structured circuit of English competitions and events during the course of the year, like dance recitals, public events, invite other schools and other kids to compete for prizes. This will serve as a showcase and marketing for your school.

Take away: The same, but with soccer or basketball, whereby theTaekwondo one, because it is in doors and needs less space, would

lend itself more to splitting the time between English and sport lessons.

By far, the best market potent is children’s sports. But there are opportunities in the adult market as well.

Chinese parents spend 30% of their income on children’s education. Combing education with sport would fit an existing cultural norm.


Global Urbanites (Global Middle Class) Middle class – defined as having 30% of their income available for

consumption Global urban middle class is becoming a homogenous market

segment


Three models Open a gym Send trainers to people’s homes and offices Operate out of an existing gym

Personal training: Pilates, fitness, boxing, body building, yoga…

Popular status symbol among well-off urban market Foreign trainers are very much sought after.


Takeaway: Operate a personal training business through someone else’s existing or failing gym.

Takeaway: DON’T OPEN A GYM!!!!! Jackie Chan lost his shirt on one and you

will too


Takeaway: Children’s Taekwondo can be your core money maker, but you can combine it with any or all of the above options.

Takeaway: Explore the concept of selling the supplements, sports apparel, shoes, home exercise equipment, and personal training in someone else’s gym, BUT it must be at ground level.


Takeaway: Grandparents take children to Taekwondo. Provide highly-social traditional exercise classes for senior citizens

at the same time as Taekwondo classes (obviously in separate rooms).

Senior sports Seniors are the only people with money in this

new generation.


汇报完毕谢谢各位专家

Antonio Graceffo ( 安东尼博士 )PhD, Shanghai University of SportChina MBA, Shanghai Jiaotong UniversityLinkedin: https://www.linkedin.com/in/antoniograceffoTwitter: Brooklynmonk: http://twitter.com/BrooklynmonkContact: [email protected]

https://www.linkedin.com/in/antoniograceffo

http://twitter.com/Brooklynmonk

mailto:[email protected]