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Reuters/Shailesh Andrade
Spending big.
WINNING DEALS

A little-known Chinese firm funds 50% of India’s sports sponsorship

By Suneera Tandon

A Chinese smartphone maker has emerged as the unlikely leader in Indian sports-sponsorship in recent years.

In 2017, China’s BBK Electronics, the world’s third-largest smartphone maker, bet record amounts of money on Indian sporting events.

BBK’s two smartphone brands, Oppo and Vivo, which are among India’s most popular today, together committed Rs3,540 crore ($550 million) on sponsoring sporting events in India—mostly cricket. This amount, to be spent over the next five years, was roughly 50% of all such sponsorship committed in the country that year.

The contracts signed by these two brands alone helped India’s sports-sponsorship market grow by 14% over the previous year, says a report released on March 21 by ESP Properties, part of advertising firm GroupM and media company SportzPower.

“Most Chinese smartphone companies have been targeting Indian youth in a big way and there is no better connect in India than cricket,” Tarun Pathak, senior analyst at consultancy firm Counterpoint Research, told Quartz. These sponsorships, both in cricket and non-cricket events, are likely to help shrug off increasing competition. They also help increase Vivo’s and Oppo’s recall value, he said.

Big brands rarely miss an opportunity in India to pay big advertising dollars to get their names on jerseys, banners, and on-screen advertisements for matches and other events.

Not surprisingly, the Chinese electronics company BBK has caught on. Its two rival brands also compete over sponsorship deals in the country.

In 2015, Vivo first associated with the Indian Premier League (IPL) after Pepsi dropped its association mid-way following a betting scandal surrounding the cricketing gala. The smartphone maker then paid Rs196 crore to sponsor the league for two years (2016 and 2017). In June 2017, it renewed its deal, effective from 2018, with an eye-popping Rs2,199 crore (roughly Rs440 crore per year)—a premium of 450% over the previous amount paid by Vivo.

“The fact that Vivo chose to bid at a 450% markup…suggests that it got full value from its investment. Whether that will still obtain over the coming five years remains a moot point though,” the report said. The IPL season kicks off in April.

In May 2017, Vivo also paid Rs262 crore for the Pro Kabaddi League, looking to reach the country’s young population.

Meanwhile, in March 2017, Oppo made the highest bid ever for the Indian cricket team sponsorship for Rs1,079 crore. That roughly translates to Rs4.61 crore per regular match and Rs1.56 crore for a match in an International Cricket Council tournament. Incidentally, the only other player in the sponsorship race was Vivo which offered Rs768 crore.

Over the past few years, Chinese companies have taken over the world’s fastest-growing smartphone market, cornering more than 50% by 2017. Besides BBK, other players vying for a larger share include Xiaomi and Gionee. BBK, which shipped 200 million phones globally in 2017, has Vivo and Oppo holding a 9.4% and 7.5% market share, respectively, in India.