The 2010 World Cup is as much a clash of logos, as it is the world’s best soccer players. Adidas and Nike are in a battle for consumer attention, and money.
Without a doubt, Adidas is the grand-daddy of soccer. For 40 years, the German company has been the main sponsor behind European football.
But at this year's world cup, there's someone in the other corner. Nike, who analysts say is the 800-pound American gorilla of sports marketing.
Both companies want the attention of the billions of people watching the global championships. Both companies want to dominate the estimated $10.9 billion football industry.
Nike’s approach has always been to use celebrity to sell. It has a corporate history of sponsoring the biggest names in sports, however the World Cup is different. Rival Adidas is already the official sponsor, so how will Nike capitalize?
Sports analysts like Matt Powell say Nike is a master of guerilla, or ambush, marketing, and that's partly how it's managed to elbow its way in to the football market with surprising speed.
“They started with it at the Los Angeles Olympics which were sponsored by converse at the time,” Powell told me in a recent interview. “Nike took over allsorts of buildings and put their banners on them and that really started Nike into being a very good guerilla marketer. Nike always finds a clever way to get its name out."
It's the kind of confidence that Nike exudes. Hannah Jones, Nike’s Vice President of Sustainable Business, told me on a recent visit to the company headquarters in Oregon: “It's never challenged us in the past. We love our athletes. We love our teams. We're all about celebrating the game. We're all about celebrating that young football crazy obsessed teenager and that is who you see turning up.”
But it's ditto for Adidas, which is certainly not a company heading for the sidelines any time soon. Before the competition began, company CEO Herbert Hainer told CNN: “We are quite excited for this event. And we have set aggressive targets. We want to achieve new record sales in football. In 2008 we had the best result with 1.3 billion euro and we are absolutely confident we will over-achieve this number."
Soccer is not nearly as big in the U.S .as football is in Europe, and that’s a challenge for Nike. At this year's World cup Nike sponsors nine teams, its most ever, including the U.S., England, Portugal and Holland.
And all its players are sporting uniforms made from recycled plastic bottles gathered in Asia. It’s just one example of how Nike plans to woo the environmentally conscious football fan.
At a recent unveiling of the new football kits, Nike’s Global Football Creative Director Phil Dickinson told me, “I'm super-biased on this but it's the world's best sport and we put the world's best athletes in a sustainable uniform. It’s inspirational and it’s high on the agenda for Nike, a sustainable business where eventually everything will be reused and recycled.”
So there’s something else to watch at the World Cup. The battle off the field is looking just as interesting as the one on it.
When I saw this story from CNNMoney.com’s Chris Isidor (“China close to catching U.S. in manufacturing”), my first thought was this:
The U.S. still makes things?
Since China’s economic star was sent into orbit on the back of becoming the world’s major manufacturing center, the surprise to me wasn’t that China was about to eclipse the U.S. in manufacturing, but that it hasn’t already happened yet.
According to economic research firm HIS Global Insight, the value of goods produced by China's factories in 2009 reached about $1.6 trillion last year, compared to $1.7 trillion by U.S. manufacturers. Isidor writes that China will likely pass the U.S. in 2011, but that it could be a “close call’ this year.
So what does the U.S. still make? Plenty, it seems.
The products Americans buy at Walmart and other chain stores may come from China, Myanmar, Sri Lanka or other low-cost textile centers, but many products higher up the value food chain - such as aerospace, heavy industry equipment and microchips - can still be tagged “Made in the U.S.A.”
With China’s ability to grow through the recession and the large hue and cry from U.S. politicians and union leaders about lost jobs to Asia, it’s a reality check for those who are quick to write off the U.S. economy. As Isidor writes, manufacturing is more than a third of China’s economy, while it makes up less than 13 percent in the U.S.
This is a telling point as people are quick to hand the economic mantle to Beijing. China may be on the cusp of overtaking Japan’s economy as the second largest in the world, but China has a long way to go to top the U.S. In 2009 China’s GDP was $4.9 trillion – the U.S. total economic output was about $14 trillion.
(CNN) – After a lot of finger pointing, squabbling, and teeth-sucking, the Chinese have finally loosened their grip on their currency.
Over the weekend, the government said it would allow the yuan to be more flexible. So far, no one thinks the Chinese will tolerate anything more than a small blip.
However, longer term the flexibility could bring greater purchasing power to Chinese consumers by making imported goods cheaper.
Brokerages say consumer companies globally could benefit from a new currency rate and the official push to encourage the Chinese to spend.
Internationally-branded cars and cell phones might become more affordable.
Other kinds of multinational firms like those in the construction business may also enjoy a bump in buyers. Analysts though say major retail chains could suffer a bit as some of their suppliers struggle to offset potentially unfavorable currency fluctuations.
In business, are you a Chinese currency winner or loser?
Hong Kong, China (CNN) – China’s surprise announcement that it will continue floating its currency after a nearly two-year hiatus is catching the financial world by surprise.
After Chinese leaders denied for months they would cave to international pressure, the Saturday announcement by China’s central bank is widely seen as a way to defuse the issue from being raised at next week’s G-20 summit in Toronto, especially since China’s May exports shot up nearly 50 percent year-on-year. But is that the whole story?
China is notorious for playing its cards close to its chest. In an interview with state-run news agency Xinhua in December, Chinese Premier Wen Jiabao said China would “absolutely not yield” to international pressure to raise the trading value of the yuan, which the Peterson Institute for International Economics had claimed was 40 percent under its market value against the dollar at the time. Wen echoed his refusal to budge at the March Chinese parliamentary meeting.
But now, China clearly sees an advantage to floating the yuan. Why?
The World Bank released a report on Friday that again urged China to strengthen its currency as a way to encourage domestic consumption and reduce inflation. A stronger yuan also would cut import costs for resource-hungry China.
Still many expected the euro's recent dramatic decline would forestall China’s move to end its peg to the U.S. dollar. Collectively, the eurozone is China’s largest trading partner and its weaker currency keeps Chinese goods competitive.
But now a different story line is emerging – we may actually see China’s yuan drop in value once it is allowed to float.
The Peterson Institute last week revised its estimates on the yuan to say it believes the yuan is now 24 percent overvalued against the dollar. Over the weekend, economist Nouriel Roubini told Reuters that if the euro continues its slide the yuan “would have to be allowed to depreciate relative to the dollar, a paradoxical outcome."
So will this help defuse economic tensions between the U.S. and China? So far, Western leaders are giving very broad applause to the move. If the yuan, however, begins to move down, that applause is sure to be short-lived.
If you’re looking for a scary summer read, here’s a suggestion: “The World Economic and Financial Surveys Fiscal Monitor” by the International Monetary Fund.
Sure, it’s not Stephen King, but in reading through the IMF’s look at growing public debt and extrapolate the ramifications, you’ll find a chilling tale.
To set the scene: Right now, in the G7 nations, the government debt-to-GDP ratio (essentially how much they owe versus how much they make) is rising “to levels exceeding those prevailing in the aftermath of the Second World War.”
The report suggests that the wave of austerity sweeping the eurozone due to public debt is a mere skirmish compared to the three economies where public debt is truly the largest offenders: The U.S., Japan and the UK.
By 2015, the report estimates the collective debt level of the U.S., Japan and most of Western Europe will hit 110 percent of GDP, compared to 73 percent in 2007.
“Events in Europe are providing the clearest demonstration of the increased attention being paid by markets to differences in underlying fiscal conditions across countries,” the report says. Translation: Just as investors turned sour on Greek bonds, they may turn on bonds from the U.S., Japan and other large economies that are sinking further in the red.
A dystopia as a result of public debt has already turned into popular fiction in Japan. The comic book series “Salary Man, Kintaro,” paints a world where Japan’s debt bomb explodes, swallowing the nation in red in the wake of a worldwide sell-off of Japan’s national bonds, CNN’s Kyung Lah reports.
Japan’s top leaders fear that fiction could turn to fact. New Prime Minister Naota Kan now is talking tough about reducing its public debt – which is the among developed nations – to avoid a similar crisis that Greece faced, saying Japan risks financial collapse if public debt mounts as confidence in the bond market drops.
The IMF report shows the amount of fiscal tightening needed to bring countries’ government debts below 60 percent of gross domestic product by 2030. The report is thick with graphs, appendices and a glossary, but its take-away seems clear: Developed economies need to cut spending, raise taxes and reduce medical benefits for their aging populations.
Yikes. How’s that for a popular platform to woo voters? But unless politicians and their public embrace austerity, the IMF report suggests that greater battles lie ahead than the credit implosion of the Great Recession.
William Kentridge is the perhaps the closest the African art world has to a rock star. He is a rarity because his work is in demand around the world by serious art collectors. He, along with a handful of others, is one of the continent’s most commercially successful artists.
So how has the economic downturn affected big name artists like Kentridge?
Speaking to me in his home studio, with his stark black and white charcoal drawings pasted on the walls, Kentridge seemed unconcerned about the bursting of the art bubble in the past two years. He did acknowledge that galleries which sold his paintings “had to work harder to sell the same amount of work.”
In fact, buyers from major institutions like New York’s Museum of Modern Art all bought Kentridge’s. So too did those wealthy international art patrons who sustain the global art market with their deep pockets and love of contemporary art.
Kentridge made me laugh when he described, in a rather scathing manner, how having money didn’t necessarily make you an art connoisseur. “Most people who have a lot of money, by cheap, stupid art,” he said, “an interior decorator will decorate the houses, overpay for mediocre work. And they spend their money on yachts and cars and airplanes and things like that.”
The value of art, particularly here in South Africa, has increased significantly. Strauss & Co, a Johannesburg auction house selling 20th Century art, says, although it is only halfway through 2010, they have already earned more than last year. In fact, recently, a new world record was set for a still-life by a South African artist. A stunning piece by Irma Stern sold for more than a million dollars.
Overall, local art experts say prices at the top end of the art market in South Africa have increased by an average of 500 percent in the last ten years.
That is pretty good news if you are William Kentridge or you bought one of his drawings twenty years ago.
About Business 360
CNN International's business anchors and correspondents get to grips with the issues affecting world business, and they want your questions and feedback.