Why So Serious Son? Is Risky China the Joker or the Hero in the Anxious Quest for Olympic Advertising?

13 Aug

Dr. Boyce Watkins

www.BoyceWatkins.net

I taught a Financial Theory course at the Shanghai University of Finance and Economics three summers ago. Some Americans perceive China as a horrible place, devoid of human rights, with a machine gun toting policeman standing over every man, woman and child. I found quite the opposite. In some ways, I was more liberated in China than I am anywhere else. My students were polite and less demanding than the externally cold (yet internally warm) Northeastern students I teach in the states, and every meal seemed to cost $2 dollars.

There was also another dimension of the complicated economic soul of this growing country: the dirty skies, the huge wealth disparity, and the fact that every river seemed to smell like a broken toilet on a really bad day. Finally, there’s the politics: I was told to not even say the word “Tibet” when applying for my visa, and I knew that issues in Africa were touchy as well.

Therein lies the multi-billion dollar contradiction that we call China. The Joker/Batman aspect of this country leads to both economic salivation and stomach churning nightmares for any corporate executive looking to take advantage of this growing and powerful market.

The problem with the Olympics in China is that major corporations (and even presidential candidates) can’t miss it. The action and growth are there, as the world scrambles to profit from what will be the largest middle class demographic in the world within just a few years. The Olympics is a “can’t miss” advertising event for several reasons.

First, the fragmentation of media reduces the opportunities to hit really large audiences. The audience for the Olympics during prime time is right up there with American idol, and it’s all yours for a mere $750,000 per 30 second spot (not quite lunch money, but you get the point).

Second, you don’t find an audience of this quality every day. Olympic viewers in the US tend to be wealthier and more highly educated than a typical television audience. With NBC committing to over 3,000 hours of coverage, you’ve got a lot of opportunities to hit your market.

Third, companies who advertise during the Olympics are considered to be innovative and ground breaking trend-setters, much better than their petty competition. Who doesn’t want to be ground breaking?

Sounds like a dream, right? Not so fast.

While every Batman has a Joker, China has not proven which one it actually is.

Sure the Olympics are already political. We can even turn our heads sideways and wonder “How does Iraq have a rowing team?” But the problem is that these Olympics and this country are a bit more political than most. In Finance, political risk is just as nasty as other types of risk when it comes to possibly losing your investment.

First, there is the situation in Tibet and that little human rights thing. While terrorism is always an issue at every Olympic gathering, you can’t help but wonder if you should stay home during this one. In fact, China has told many athletes to stay away, including star speed skater and activist Joey Cheek. There are a lot of people angry at China, including many in their home country. It is times like these when the Chinese government is glad to stomp on individual liberties.

Did I mention Darfur genocide? People are angry about China’s role in that too. The risk for corporate sponsors ranges from the obvious to the subtle. There is the obvious risk that terrorists can steal the spotlight, and at worst, kill some of your customers and employees. There is the subtle risk of those pesky protesters destroying the value of the Olympic brand and venue with which you’ve paid to be associated. Finally, there is the reality that corporations are the Achilles Heel hHeeeel for any controversial organization: the easiest way for a protestor to undermine a government or organization is to hold its corporate sponsors hostage for their desire to financially support an entity accused of being harmful to others.

At the end of “The Dark Knight”, the Joker explains how he and Batman really need each other. Similar to the popular film, the United States needs China. American corporations need China. Business needs to be in the front row of the billion dollar drama across the sea, and they can’t run away from the risk.

Dr. Boyce Watkins is a Finance Professor at Syracuse University. He does regular commentary in national media, including CNN, NBC, ABC and CBS. For more information, please visit www.BoyceWatkins.net.

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