ANALYSES

China’s Championing of Football makes State led U-Turn for home

Tribune
26 février 2021
By Prof. Simon Chadwick, Professor and Director of Eurasian Sport at EMlyon


When Argentinian player Carlos Tevez signed for Chinese Super League club Shanghai Shenhua at the end of 2016, it marked perhaps the most significant episode in what, at the time, seemed to be a booming market for football.

Tevez’s salary (reportedly worth upwards of euro €670,000 per week) has become the stuff of legend, and was taken to be a sign of China’s commitment to developing its football. Others, including Tevez himself, tended to see such ostentatious spending as unfathomable yet highly lucrative. Indeed, when he left Shanghai to return back to Argentina after just a year with Shenhua, Tevez talked of his ‘holiday in China’.

The origins of a rapid growth in spending on expensive overseas players are found in statements supposedly made by President Xi Jinping, in which he supposedly claimed that he wanted China to win the men’s FIFA World Cup. These statements came just ahead of the country’s launching of its 13th Five-Year Plan, which advocated the need for a more outward looking China and also encouraged outbound Chinese investment.

One of the early movers in responding to what became a tidal wave was Wang Jianlin, owner of the Wanda Corporation. Wang had been a long-time football fan and owner of a club in China, who then acquired a 20% stake in Spain’s Atletico Madrid. Many other such acquisitions followed, with Chinese investors buying a host of clubs including England’s Wolverhampton Wanderers (by Fosun), Italy’s Inter Milan (by Suning) and the Czech Republic’s Slavia Prague (by CEFC Energy).

Why there was a sudden surge in such acquisitions is, even now, still being debated. Some observers have seen it as a means through which China could learn about elite professional football – both on and off-the-field. Others have seen it as symbolic, a signal by China that it intended to play the game (and, ultimately, win the World Cup). Otherwise, investing into an industrial sector in response to state diktats has always been a way to for Chinese businesses to ingratiate themselves with the government.

Yet there were also investors whose motives were questionable, at least to officials in Beijing. Some probably saw an opportunity to move their assets, which may have been accumulated by suspect means, overseas whilst too many of these Chinese investors in football proved unable to demonstrate any tangible return-on-investment from their rush into the sport.

The latter was a particular point of concern, especially among those working in the Chinese financial system. Not only was football becoming a significant leakage from the Chinese economy, overseas club investors were also exposing China’s financial system to undue financial risk by borrowing at home and spending abroad (often on highly expensive players who were of little use to the Chinese national team’s performances).

By mid-2017, China’s government stepped in, famously labelling overseas club acquisitions as ‘irrational investments’. At that time, there was also a sense that these new club owners were becoming celebrities in their own right and beginning to see themselves as somehow being bigger than the Chinese state.

Hence what had started with Wang began to end with Wang, the businessman being forced to offload all but 3% of his stake in Atletico. Ahead of this disposal, in the second half of 2017, Wang was detained by Chinese officials and had his passport confiscated. He did, nevertheless, subsequently reappear, around the same time that it was announced that Wanda would be acquiring the Chinese Super League club Dalian.

Wang wasn’t alone; CEFC Energy was quickly forced to sell Slavia Prague and the power company’s owner, Ye Jianming, was imprisoned upon his return to China. Meanwhile, Fosun’s owner, Guo Guangchang, was also reportedly detained by the Chinese authorities (perhaps a reflection of the conglomerate being one of China’s most indebted companies).

More recently, Suning (a high street electrical retailer) has actively been seeking a buyer for Inter Milan. This comes at a time when the company needs debt financing, brought about by the Italian football club’s precarious finances. It is no coincidence that Suning is supported by Alibaba, whose owner Jack Ma has also recently been detained by the authorities (following issues with Alibaba’s stalled stock market floatation of Ant Finance).

As overseas club ownership has been consigned to Chinese football history, so the influx of playing talent has also reversed. Indeed, several of the country’s high-profile signings have left China to go and play elsewhere. The Chinese Football Association’s imposition of a player salary-cap is one reason for this, gone are the days of Carlos Tevez style ‘pay days’ and expensive, often unnecessary, imports.

Instead, China appears to be turning inward upon itself, though with a specific purpose in mind. The 14th Five-Year Plan (due for ratification in 2021) explicitly refers to the need for domestic industry to strengthen and develop its position. It also emphasises the need for inbound investment, not just a call to the country’s investors to come home but also to foreign companies to spend in China.

Both prior to and following the launch of the next plan, there is already a clear sense of China’s priorities, not least that business and football should follow state orders, commit to their own country, reduce debt exposure, and focus on making Chinese football great. As such, football is now being played in all Chinese schools, some of the world’s largest football stadiums are currently being built in China, and Chinese corporations continue to cluster around FIFA.

This is one area of overseas football investment that China’s government has not sought to curtail. Over the last five years, numerous Chinese brands have become FIFA partners leading football’s world governing body to publicly acknowledge its financial inter-dependence with China. Dependent relationships often involve shifts in power between the two partners, which hints at where China is now going.

Rather than winning the World Cup by 2050, China is actually seeking to become a leading FIFA nation in different terms by that date. Hence, its staging of the 2030 men’s tournament would be a part of the country’s trajectory as well as being a major coup for the government in Beijing. If a Chinese bid to stage the event transpires and is then successful, the country will play host to the World Cup’s centenary tournament. This would be hugely symbolic, for China, for FIFA and for the world of football in general.

Under such circumstances, Xi will not want his team to be embarrassed. Hence the pace of training local players, at home in China, has become more like a frantic quest. Talent development is a long-term process, but as a short-term fix the naturalisation of overseas players has started taking place. This carries with it all manner of issues, though China appears intent on trying to qualify for the 2022 and 2026 men’s World Cups.

It has been a short but intense journey from Tevez’s Shanghai holiday and Wang’s Spanish sojourn to China’s more focused football intent. Whether the country will become a leading FIFA nation remains to be seen, however the country’s more purposeful and strategic approach points to a different outcome than that which was delivered over the last five-year planning cycle.

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This article belongs to the GeoSport platform, developed by IRIS and EM Lyon.
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