Rui Chenggang's speech in Harvard

  Thank you for Professor Christopher’s wonderful opening remarks and an introduction that I do not really deserve. In China we have an idiom called “抛砖引玉”, I am sure a lot of countrymen under this roof know what it means. You throw out a few dirty and old bricks and hopefully some fine pieces of jewelry or jade will follow. So here are my bricks. On the surface I am not really involved in sports, I am an anchor and a co-founder of CCTV 9 international TV channel of China and I’m used to read news and produce news on CCTV2, the business channel. But I happened to be born to a father who is a novelist in 1970s who wrote this really famous book about a gymnast who was a crucial old story about a small boy from a remote countryside became a worldwide championship in gym in 1976, which was the best-selling book of the year which was made into a national version portion, but nobody talk about it now because it was a book during the culture revolution. And also one of my co-founders of CCTV 9 is now the head of CCTV 5-CCTV’s official sports channel which is of course the most powerful sports TV in china.

  And a long ago I myself was invited to speak in a series of events including the Davos annual meeting, on one economic forum on sports. But I will start with a personal story happened about four months ago I was invited by one of my friend by a finance year based in New York by the name of Teddy Forstmann. If you are NBA candidates, I’m sure you’ve heard this name before who is one of the leading characters of this book called Barbarians at the Gate, the founder, the grandfather of the business practice called leveraged buyouts. He gave me a call and said, “Chenggang, I bought another company and it is called IMG -International Management Group.

  “It is the world’s largest and most powerful sports marketing and management company. And he said, “I have my reputation in business world whenever I buy a company I will sell it in three or four years at ten times the purchase price.” And he said, “I want you come to Florida and give a talk to all IMG staff on what’s going on of China.” I said why and he said because IMG has been to China for more than twenty-eight years yet IMG has failed to establish a business in China. IMG is also a case study. You will find out IMG case study in either Harvard or Yale business school on textbooks. So I went to Florida and spent three days with all the senior staff of IMG and a very interesting discussion with all of them. And somehow I found the reasons why for more than a quarter of a century IMG failed to establish a business in China. The reasons are not unique.  First of all, what sports really means to China.

  What I believe is that sports is not an industry in China, not yet. If you really want to talk about sports in China, you have to talk about Chinese history. And we haveto talk about the particular centrum mentality of Chinese people and I would interpret it as the sick men of Asia syndrome “东亚病夫”情结. If I think looking at myself, before I was seven years old I know nothing about this syndrome. And then I watched a TV series called HuoYuanJia now major motion pictures made about this guy. And then I heard this expression for the very first time sick men of Asia. It is about China in the eighteenth and nineteenth century when the aggressive foreign powers basically split out china. Then China was turning into a colony and Chinese people fell in shame and humiliation. And then this guy, the KongFu master, was fighting all the Japanese and European boxers to win gloria pride for Chinese people once again. The scan was actually delegated to Chinese people by our Japanese friends, sick men of Asia.

  So I think, for ever since then, for more than a hundred years, the Chinese people are working really hard on all forms to prove that the Japanese and the world were wrong about this judgment that Chinese people can stand tall among the world community. That Chinese are not sick men and women of Asia. Probably we should, I would say, given China today’s status, we are wiping on that, but unfortunately it is still maybe because of our education on the way of our books and novels and movies were made. We are still more or less influenced by this mentality. So everything is now putting on the sports, it’s always been used as a vehicle either for diplomacy, as we know, I’m sure you know “Ping-Pang Diplomacy” and vehicle for Chinese people to win back the pride that we once owned. So that is the reason why it is one hundred percent regulated by the state and not really an industry. So for IMG, you know a world renowned sports management company to come to China as early as 1970s, it is difficult for them to make money.

  And secondly the most important component for any sports industry is the athletes. And in China the athletes are widely seen as the property and asset of the state. And why did so? Because as, just as the character of my father’s book, usually, what are athletes are?

  They are usually very poor boys and girls born and raised in small, remote countryside who had no other options, so their parents had to send them to state-owned sports schools to get proper education and get fed and quest. That’s usually how the story started. And of course for their growing-up all the entire tuition and education fees were subsidized, paid for by the government from the municipal level to the provincial level, and if you are really good, by the state level. And of course if that is the case, then you are basically owned by the government. They pay for everything, you need pay back. And of course these athletes will show that they were educated in the way that they should go out and win the national pride for the country. That is why Chinese people love them. So in this case, these athletes arenot really active participants of this industry. I am sure you’re all heard of this story of this Chinese, really famous Chinese Olympic gold medalist, three times or two times Olympic Champion, correct me if I’m wrong, Mr. TianLiang. I was just Karaoking him in Beijing a lot of times. He’s actually a very nice boy and Karaoke is really the national sport of China. And he was kicked out of the national team of china for doing too many commercial endorsements. As you remember that two years ago, wherever I go, whenever there’s a major commercial events, like the Cartier Store opening in Beijing, whenever there is a Vasania Suit, a Flech store opening in Beijing, always run into him, Mr. Tianliang, who just won the gold medals at the Athens’s Olympic Games. And then he started to scruple with the state administration of sports for doing too many commercials and maybe didn’t give enough commission to the  administration. So he was kicked out of the national team.

  There were also other athletes who were on the brink of being kicked off the national team, but somehow, through certain connections they didn’t do that.    There are also rumors going on that if Yaoming had not been that famous in the US, maybe he would have been had himself into trouble as well. So this is a big debate, whether these athletes have the right and reason, the choosing reason to make money for themselves, on one hand, to be seen as the individuals of course they should; on the other hand, to be seen them, you know they are basically raised by the state, then it’s probably a little more complicated.  So if the most valuable assets of the sports industry are actually the assets of the state, then how do you propertized them, how do you make them to, how do you make money on them? It is another story.

  But now these things are changing, I have to, there are reasons hope, because people like Yaoming and the hurdler, who is the hurdler’s name? LiuXiang, yes, thank you for that. They are no longer poor pattern boys from countryside. They are both natives of Shanghai, from eastern families and actually their stories are telling the Chinese parents that sports are actually a very appealing alternative, you don’t have to go to school, go to Harvard to get an MBA degree to become a lawyer or a doctor or become an anchor man. You can actually centralize on sports world. And maybe one day you will become a huge star and make a lot of money. They are proving to the people there are alternatives but it’s just the beginning, we still have a long way to go. So this is something very unique about Chinese sports industry.

  And also another thing which is quite struggling different and strange, I will say, about Chinese sports landscape is that Chinese sometimes are more interested in sports of other counties. For instance, I am sure there are ten times more fans of European soccer games in China than in Europe. For countless occasions, I’ve run into German, French or English, they told me whenever they are in Beijing, they feel ashamed because Chinese people know more about their stars, their sports and their soccer than themselves. And also I’m sure that ten times, if not a hundred times, of fans of NBA in China than here in United States. This is very strange because usually in Europe or in the US, people are only interested in their domestic sports, whereas in China they are not, they are more interested in overseas sports. Sports were nothing to do with Chinese people. For never reasons, most importantly I would say because we don’t yet have an industry in China, and to precisely because we don’t have, we have not really industrialized the sector, there are no really good competition going on. We don’t have the right system, regulator fine work, incentives, structures to train really world class soccer teams and basketball teams. It’s so. That’s the reason why the Chinese soccer team never met or barely met top of Asia, maybe once. And Chinese basketball team was disappointing, too. That’s the reason why they have to watch NBA and European soccer.    Believing it or not? It was IMG, Teddy Forstmann new-acquired company, International Management Group who established the very first the Chinese football and very first Chinese basketball League, the CBA, but eventually they were kicked out of the game completely by the administration.

  So, to sum up, my point here to lay a good foundation for our leader, our discussion Q&A without sufficient knowledge, what sports really means in China; without sufficient expertise to really navigate the system which is still in highly regulated by the government, it is difficult to for any company or individual to take the whole potential of marketing or business opportunities of sports in China. Thank you all very much!。