German sponsors inch across Olympics highwire
The Olympic Games are never just about sport.
So German firms Adidas and Volkswagen, which have both signed up for the right to use the Olympic logo in China, are now busy with a balancing act that sponsors must carry off as the Games approach.
On the one hand, their involvement in the 2008 Beijing Olympics lets them burnish their brands in a fast-growing market: On the other, it is raising objections at home which they need to manage to preserve their image.
"It is not an easy situation for the sponsors," said Wigan Salazar, managing partner for public relations group Publicis Consulting in Germany. "They have to think about certain sections of the market but also the whole market."
In sponsoring the Beijing event despite protests over Tibet, both companies have their sights set on a global market prize for Germany. China, with about 1.3 billion potential consumers, is a battleground where Adidas fights with Nike, and Volkswagen is grappling with General Motors.
"For the first time we will sell more cars as a group this year in China than in Germany," Volkswagen chief executive offiver Martin Winterkorn told German daily Handelsblatt this week. China already accounts for nearly 15 per cent of its auto sales.
But the companies face pressure at home to defend their involvement, and Tibet has been contentious at a political level. Chancellor Angela Merkel rankled Beijing last year by meeting with Tibet's spiritual leader, the Dalai Lama, who visited Germany again at the weekend.
Adidas, which says its founder supplied kit to Jesse Owens during the 1936 Berlin Olympics - when he disgusted Hitler by winning four gold medals - is ready for controversy.
"No one in our company is surprised when there are demonstrations surrounding the Games," chief executive officer Herbert Hainer told magazine Der Spiegel earlier this month. "They will not be the last."
Critics used Adidas' annual meeting earlier this month to voice their concerns. Groups including Reporters Without Borders say companies sponsoring the Games are linking their brand with human rights violations in China, and some members of the German Olympic team are planning to wear protest armbands with the slogan "Sport for Human Rights" at the Games.
Mr Hainer sought to absolve the company from responsibility: "We will not let ourselves be held morally responsible for a situation which we did not create and for which we are not accountable," he told the meeting, criticising some protestors as "moralists who just spout rhetoric".
Adidas, Volkswagen and Puma, which is not an official partner but does supply kit to participants, say they have so far seen no damage to their brands from the protests.
But Adidas, which depends on Asia for about one-quarter of its €7.2 billion annual sales, says it cannot rule out a negative effect in the future. To limit any damage in mature markets, all are now navigating a delicate course.
Puma has noted that it was the official sponsor of both the Iranian and Israeli national teams for many years despite the conflict in the Middle East.
"They cannot stand by without commenting on the situation, as a sponsor they must clarify why they are doing it and explain why there are good reasons to sponsor the Olympics," said Mr Salazar.
Adidas' Mr Hainer has said the criticism of sponsors has been particularly loud in the German and French media, but other countries have focused on the positive aspects of the Games.
Volkswagen, one of Germany's most recognised brands and the first foreign auto-maker to enter the Chinese market, took the opportunity of its annual meeting last month to urge the host to open up its society. The group has rejected boycott calls, underlining the Games as an opportunity for China.
The German firms - which unlike the main sponsors including McDonald's, Coca Cola and Visa have marketing rights for the logo in China alone - are not the only targets of controversy about China's Tibet policies.
French retailer Carrefour, not an official sponsor to the Games, said its trading in China had suffered when it became a target of Chinese demonstrations, sparked by pro-Tibet protests in Paris.
Three corporate sponsors of the Olympic torch relay in Japan - Lenovo, Coca-Cola and Samsung - decided against sending vehicles to take part in the flame motorcade through Nagano, two of them citing security concerns.
But the stakes for the German companies are high: China is Germany's most important Asian trading partner and 90 per cent of German companies have expansion plans there, according to the German chambers of industry and commerce (DIHK).
Adidas is targeting €1 billion in sales in China by 2010: Volkswagen expects to sell at least one million vehicles in China this year.
Top global sponsors
May 20 - The Olympic Games are one of the most effective international marketing platforms in the world, reaching billions of people in over 200 countries and territories. Here are facts about the Beijing Games' top 12 global sponsors.
Atos Origin (France): Information Technology. French IT company Atos Origin is building the Olympics computer network. The International Olympics Committee (IOC) does not release details on how much sponsors pay, but Atos Origin is believed to have a combined cash and services payment deal.
Coca-Cola: Non-alcoholic beverages. It has clocked up 80 years of continuous Olympic sponsorship and backed the torch relay since 1996. On April 16, about 100 pro-Tibet activists protested outside its annual meeting. A company statement expressed "deep concern for the situation on the ground in Tibet," but said Coke believes "the Olympics are a force for good".
General Electric: Various products and services. It will provide power, lighting and security such as alarm systems, and ultrasound for doctors to treat athletes. Along with Vivendi, it owns NBC Universal, which has exclusive US TV broadcast rights. GE won the best 'grade' awarded to Games sponsors by US advocacy group Dream for Darfur in November 2007; a C-plus, largely for making contact with the IOC over Sudan's war-ravaged Darfur region.
Manulife: Life insurance/annuities. Canada's Manulife Financial Corp, the world's fifth-largest life insurer, became a global sponsor after merging with subsidiary John Hancock insurance in spring of 2004.
Johnson & Johnson: Healthcare products. US-based Johnson & Johnson is sponsoring the Games for the first time as a global partner. It will supply consumer, pharmaceutical and other healthcare products.
Kodak: Film, photographics and imaging. In Beijing, Eastman Kodak Co. will run an imaging centre for photojournalists, a diagnostic centre to treat athletes' injuries, and provide thousands of Olympic identification badges. A sponsor since the first modern Games in Athens in 1896, the company has said it will end its long-running association after Beijing to redirect its marketing strategy.
Lenovo Group: Computing equipment. China's top PC maker Lenovo is the only Chinese company that is a global partner. It aims to showcase technological prowess in computer products and build its brand globally. Lenovo designed the high-tech Olympic torch, constructed to burn brightly even on Mount Everest.
McDonald's: Retail food services. Fast food giant McDonald's Corp. is building four Olympics outlets in Beijing to be staffed by 1,300 of its best personnel from around the world. The official restaurant for the last seven Games, it has been a sponsor since 1976. In 1968 it airlifted hamburgers to US athletes at the Winter Games in Grenoble, France. On Tibet, it said political issues need to be resolved by governments and global institutions such as the UN.
Omega: Time pieces and timing systems. Omega, owned by Switzerland's Swatch Group, has supplied time pieces and timing services for all but three Games since 1932. US actor George Clooney, who advertises Omega watches and has been outspoken over China's role in Sudan's Darfur region, has said he has raised the issue with Omega.
Panasonic: Audio/TV/Video Equipment. Osaka-based Panasonic, a global Olympics partner since 1988, will make Beijing the first Games to be produced and broadcast in high-definition (HD) television, and is also installing 2,000 surveillance cameras at venues. On Tibet, Matsushita Electric Industrial Co Ltd, maker of the Panasonic brand, has said it would not comment "on political issues concerning any government".
Samsung Electronics: Wireless Communication Equipment. South Korea's Samsung Electronics Co Ltd has been an Olympic TOP sponsor since 1997. On Tibet, it said the Games should not be a focus for demonstrations "and we hope that all people attending the Games recognise the importance of this".
Visa: Consumer Payment Systems (credit cards, etc.) Credit card network Visa Inc.,issuer of more than 1.4 billion cards, has been the official payment service at the last 11 Olympics, and a top-tier sponsor since 1986.
A further 11 China sponsors have rights to use the Olympic logo in China: China Mobile, the world's biggest mobile carrier, Bank of China, the country's largest foreign exchange bank, and Sinopec Corp, Asia's top refiner, are all country sponsors for the Beijing Games.