Models help promote treadmills at a sports equipment fair in Wuhan, Hubei province. Sports industry is expected to account for about 1 percent of the GDP by 2025, from 0.6 percent in 2012. [Photo by SUN XINMING / CHINA DAILY]
Cabinet encourages more listings, foreign investment in athletic sector
China issued a national plan on Oct 20 for the development of its fast-growing sports industry, encouraging more companies in the field to go public and attract foreign investment.
The industry’s value may exceed 5 trillion yuan ($815.6 billion) by 2025, the State Council, or cabinet, said in a statement. The industry is expected to account for about 1 percent of GDP by then compared with 0.6 percent in 2012, analysts said.
Liu Fumin, director of the finance department at the General Administration of Sport, told China Daily that an increasingly mature sports market will offer “great opportunities” for foreign companies.
Foreign enterprises account for just 1.55 percent of all service companies in the industry, and the number of foreign sporting goods companies accounts for 23 percent of the total. These numbers have “great potential to increase” because the sports market is becoming increasingly open, said Liu.
“There are great opportunities for foreign investors, particularly in areas such as sporting events, overseas sports tourism and venue management, where their strengths are clear,” Liu said.
The directive includes measures for cutting red tape for sports event approvals, which will help the industry attract more funds.
He Wenyi, a sports industry researcher at the Peking University Institute for Sport Science, said that ownership and intellectual property rights of many sports events were “quite ambiguous” in China. The new policy on event approvals has eased some concerns among investors, He said.
Increasing investment in the sector, including sports facilities, will create a “new generation of consumers”, which will benefit foreign and domestic investors, said He.
The directive also encourages the involvement of private capital in the industry and the listing of qualified companies.
Zhang Yuxian, a researcher at the Information Center of the National Development and Reform Commission, said more domestic sports companies are on track to be listed. The number of listed sports companies remains relatively low and many actually focus on property or other business, rather than sports.
More sports service companies such as event managers or stadium management companies will go public, he said.
The directive encourages sports companies to expand their sources of funding with debt issues.
The authorities plan to designate new and high-tech sports companies as being eligible for a 15 percent reduction in income tax.
Sports companies can also qualify for a sales tax rate as low as 3 percent, the directive said. Liu said these financial and tax preferences could be in place in one or two years.
The directive also encourages qualified gymnasiums to establish chain stores across regions.
Yang Renwen, a senior analyst at Founder Securities Co Ltd, said that investors see great opportunities in three sectors: sports events, big gym clubs and intelligent sporting goods.
BIG TARGETs FOR 2025
-- Industry to be worth around 5 trillion yuan:
-- Average sports ground area per person to reach 2 sq m;
-- The number of people who participate in physical exercises to reach 500 million;
-- 15-minute fitness cycle for urban communities;
-- Sporting facilities in all new urban communities;
-- Sports facilities available to all in rural areas;
-- Primary and middle school students to spend at least one hour every day on sporting activities on campuses and master at least one sports skill.
Sun Xiaochen contributed to this story.