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: Antonio_graceffo@hotmail.com

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 Billion
Only 51% in cities
Less than 50 million in tier-one cities
US 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 things
One 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 Sports
Targets teenagers and college students
No money
Little 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 busy
Cheap
Tired
They 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 actually
They 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 Center
MMA and Muay Thai for adults, closed down
Muay Thai and grappling instructors visa problems/expensive
Karate, 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 the
Taekwondo 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 Sport
China MBA, Shanghai Jiaotong University
Linkedin:
https://www.linkedin.com/in/antoniograceffo
Twitter: Brooklynmonk:
http://twitter.com/Brooklynmonk
Contact: Antonio_graceffo@hotmail.com

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