Society

Li Na: The Global Marketing Of A Chinese Sports Superstar

After her historic French Open victory, Li Na instantly became the apple of advertisers eyes to the tune of $42 million. Though she was knocked out of the first round of the U.S. Open, a whole star system is counting on her earning power to keep growing.

Li Na, Chinese Tennis Star (#96)
Liu Xiang, Wang Jielu and Zhang Ben

Two years ago, when Max Eisenbud of the IMG sports star management group signed up the then 27-year-old Chinese tennis player Li Na, all agreed her age was a problem in a sport famous for its short professional life spans. But Eisenbud never had any doubt about Li Na, and his bet has proved to be right many times over.

Two months after becoming the first Asian tennis player to have won a Grand Slam singles title, at the French Open 2011, Li Na has signed at least seven endorsement contracts for commercial brands, totaling an estimated value $42 million, becoming the world's No. 2 female athlete as ranked by annual revenue, right behind Maria Sharapova. Fans hoping for a second grand slam at this month's U.S Open in New York were disappointed, as Li was stunned by Simona Halep in the first round in straight sets, 6-2, 7-5.

Still, back in China, there is little taming the "Li Na Gust," which has blown open a door for major promotion of tennis for the first time to the Chinese market of 1.3 billion people. Nike, Rolex, Haagen Dazs and SpiderTech have signed on, while Eisenbud said last week that two other top global brands and one Chinese company were also set to ink deals soon.

IMG provides the overall marketing service globally for Li, guaranteeing a fixed income beyond tournament prize money, and sharing revenue with her from individual advertisements and sponsorships. IMG composes only one part of the chain of Li Na's professional support, along with her coaching staff and technical support team. But IMG also provides additional services, like providing her with the best medical professionals and setting her travel schedule.

"What a company like IMG provides for an athlete is a systemic solution," explains Zhang Qing, the Director of Key-Sports Research Institute. "Not only does it help Li Na raise her competitive level, but aims to maximize the tangible and intangible value throughout her entire professional career."

Zhang says "scarcity" is the key for making the most of a marketable sports star like Li. "Scarcity makes it a seller's market. When Li appears in too many different ads, one after another, it can create a vague and confusing memory for consumers."

The only comparable cases of Chinese athletes and sponsorships are the recently retired basketball player Yao Ming, and the Olympic gold 110 meter hurdler Liu Xiang. In their heyday, Yao never had more than a dozen sponsors, whereas Liu Xiang was attacked for being "excessively commercially exploited" when he accepted more than twelve contracts at once.

700 emails

Li is not the first women's tennis star Max Eisenbud has helped turn into a gold mine. The first was Maria Sharapova, after she won the 2004 Wimbledon women's singles title.

"After Maria was crowned, I received more than 700 emails within two weeks asking to sign her", Eisenbud recalled.

The potential impact that Li brings is no less. "I had to take phone calls day and night. There were simply too many people waving their check books in front of me. But my main task is how to choose the most appropriate few for Li Na among so many."

One anecdote that was widely circulated is that among the potential brands that wanted Li as a sponsor was a cockroach killing product. With his experience, Eisenbud politely declined.

However, to have the world's two most expensive women tennis players as clients can come with its callenges. For instance, how to maintain Sharapova's exalted status as the queen of tennis, or who to root for when they play each other, as they did in the semi-finals of the French Open.

There was also Thomas Hogstedt, the Swedish coach who helped lead Li Na into the world's top ten. He left Li to coach Sharapova last November, rising the ire of Chinese media and fans.

Li's elimination from the US Open begs certain questions: Was she just a flash in the pan? Will Li's new sponsors renew their large investment in her? Still, one thing is certain, regardless of Li's path in the coming two to three years time, for IMG and Eisenbud, Li Na is already a very successful bet, and the return on the investment is still growing.

Read the original story in Chinese

Photo - #96

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Economy

Merkel's Legacy: The Rise And Stall Of The German Economy

How have 16 years of Chancellor Angela Merkel changed Germany? The Chancellor accompanied the country's rise to near economic superpower status — and then progress stalled. On technology and beyond, Germany needs real reforms under Merkel's successor.

Chancellor Angela Merkel looks at the presentation of the current 2 Euro commemorative coin ''Brandenburg''

Daniel Eckert

BERLIN — Germans are doing better than ever. By many standards, the economy broke records during the reign of outgoing Chancellor Angela Merkel: private households' financial assets have climbed to a peak; the number of jobs recorded a historic high before the pandemic hit at the beginning of 2020; the GDP — the sum of all goods and services produced in a period — also reached an all-time high.

And still, while the economic balance sheet of Merkel's 16 years is outstanding if taken at face value, on closer inspection one thing catches the eye: against the backdrop of globalization, Europe's largest economy no longer has the clout it had at the beginning of the century. Germany has fallen behind in key sectors that will shape the future of the world, and even the competitiveness of its manufacturing industries shows unmistakable signs of fatigue.

In 2004, a year before Merkel was first elected Chancellor, the British magazine The Economist branded Germany the "sick man of Europe." Ironically, the previous government, a coalition of center-left and green parties, had already laid the foundations for recovery with some reforms. Facing the threat of high unemployment, unions had held back on wage demands.

"Up until the Covid-19 crisis, Germany had achieved strong economic growth with both high and low unemployment," says Michael Holstein, chief economist at DZ Bank. However, it never made important decisions for its future.

Another economist, Jens Südekum of Heinrich Heine University in Düsseldorf, offers a different perspective: "Angela Merkel profited greatly from the preparatory work of her predecessor. This is particularly true regarding the extreme wage restraint practiced in Germany in the early 2000s."

Above all, Germany was helped in the first half of the Merkel era by global economic upheaval. Between the turn of the millennium and the 2011-2012 debt crisis, emerging countries, led by China, experienced unprecedented growth. With many German companies specializing in manufacturing industrial machines and systems, the rise of rapidly industrializing countries was a boon for the country's economy.

Germany dismissed Google as an over-hyped tech company.

Digital competitiveness, on the other hand, was not a big problem in 2005 when Merkel became chancellor. Google went public the year before, but was dismissed as an over-hyped tech company in Germany. Apple's iPhone was not due to hit the market until 2007, then quickly achieved cult status and ushered in a new phase of the global economy.

Germany struggled with the digital economy, partly because of the slow expansion of internet infrastructure in the country. Regulation, lengthy start-up processes and in some cases high taxation contributed to how the former economic wonderland became marginalized in some of the most innovative sectors of the 21st century.

Volkswagen's press plant in Zwickau, Germany — Photo: Jan Woitas/dpa/ZUMA

"When it comes to digitization today, Germany has a lot of catching up to do with the relevant infrastructure, such as the expansion of fiber optics, but also with digital administration," says Stefan Kooths, Director of the Economic and Growth Research Center at the Kiel Institute for the World Economy (IfW Kiel).

For a long time now, the country has made no adjustments to its pension system to ward off the imminent demographic problems caused by an increasingly aging population. "The social security system is not future-proof," says Kooths. The most recent changes have come at the expense of future generations and taxpayers, the economist says.

Low euro exchange rates favored German exports

Nevertheless, things seemed to go well for the German economy at the start of the Merkel era. In part, this can be explained by the economic downturn caused by the euro debt crisis of 2011-2012. Unlike in the previous decade, the low euro exchange rate favored German exports and made money flow into German coffers. And since then-European Central Bank president Mario Draghi's decision to save the euro "whatever it takes" in 2012, this money has become cheaper and cheaper.

In the long run, these factors inflated the prices of real estate and other sectors but failed to contribute to the future viability of the country. "With the financial crisis and the national debt crisis that followed, economic policy got into crisis mode, and it never emerged from it again," says DZ chief economist Holstein. Policy, he explains, was geared towards countering crises and maintaining the status quo. "The goal of remaining competitive fell to the background, as did issues concerning the future."

In the traditional field of manufacturing, the situation deteriorated significantly. The Institut der Deutschen Wirtschaft (IW), which regularly measures and compares the competitiveness of industries in different countries, recently concluded that German companies have lost many of the advantages they had gained. The high level of productivity, which used to be one of the country's strengths, faltered in the years before the pandemic.

Kooths, of IfW Kiel, points out that private investment in the German economy has declined in recent years, while the "government quota" in the economy, which describes the amount of government expenditure against the GDP, grew significantly during Merkel's tenure, from 43.5% in 2005 to 46.5% in 2019. Kooths concludes that: "Overall, the state's influence on economic activity has increased significantly."

Another very crucial aspect of competitiveness, at least from the point of view of skilled workers and companies, has been neglected by German politics for years: taxes and social contributions. The country has among the highest taxes on income in Europe, and corporate taxes are also hardly as high as in Germany anywhere in the industrialized world. "In the long run, high tax rates always come at the expense of economic dynamism and can even prevent new companies from being set up," warns Kooths.

Startups can renew an economy and lay the foundation for future prosperity. Between the year 2000 and the Covid-19 crisis, fewer and fewer new companies were created every year. Economists from left to right are unanimous: Angela Merkel is leaving behind a country with considerable need for reform.

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