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In This Corner of China, Boxing’s Next Frontier

April 23, 2013 by Leave a Comment

Of course he had.

For much of his 81 years, for more than six decades, Arum has sold his sport, his fighters and himself. He has sold fights all over the world, from the Orange Bowl to Cowboys Stadium to a cow pasture in Gardnerville, Nev.; from Ohio to South Africa and so many points in between. He has worked through several boxing generations, from Muhammad Ali to Manny Pacquiao, as his sport shifted from a national treasure to a mainstream sports staple, and now from a niche sport in the United States to an increasingly global one.

But Arum had not seen it all. Not until this month. Not until he put on a bout in Macau, China’s gambling enclave, and looked over the numbers and so many of them were staggering. Arum knew then that he had seen the next frontier, both for boxing and, to a greater extent, for sports. That is the vision he is selling. That is his next next.

“There’s a real story there,” Arum said excitedly, his hands moving as he talked. “Look into the future, and the truth is, the U.S. market is going to be secondary. The opportunities in the Asian market far exceed what you can do here.”

Arum insisted that he had seen the future of boxing, and that it was in China and Singapore and would perhaps spread elsewhere in Asia, like the Philippines. That April 6 bout in China, the country that once banned boxing because it was too Western and too violent, featured a decorated Olympian from China in his professional debut, boosted gambling revenue at and drew high rollers to the Venetian Macau hotel and casino, and came with a favorable tax rate.

For all its success — the casino said it sold out the fight and estimated that 200 million to 300 million people watched on television — that event was in part a test run. Arum said Pacquiao would “definitely” stage his next bout, his first since Juan Manuel Marquez knocked him out in December, in either Singapore or Macau. Arum hoped to sell the fight for $3 to $5 on pay-per-view in China and at the usual rate (about $60) in the United States.

“Follow the money,” Arum said.

He laughed. But he was serious.

Before Pacquiao became a global superstar, Arum envisioned showcasing him in Asia. He targeted Macau in particular. Then the Ultimate Fighting Championship held a mixed martial arts event there in 2012, and it went well, and Arum had his aha moment. Earlier this year, he heard from the agent for Zou Shiming, the Chinese boxer with two Olympic gold medals. There it was, the final piece. Like most everyone in sports, including the power brokers for professional leagues in the United States, Arum wanted into China, with its population of more than 1.3 billion and heightened interest in Western culture, sports included. Kobe Bryant ran a basketball clinic in Macau. Rory McIlroy stopped there during a seven-day, seven-city golf tour. The Venetian sponsored a golf tournament on the Asian Tour.

Arum traveled to sign Shiming with Edward Tracy, the chief executive of Sands China, which includes the Venetian in Macau. Tracy once managed the Trump Organization, which featured fights in Atlantic City. He agreed to do one bout in Macau, the one in April.

The logistics fell to Brad Jacobs, the event producer for Arum’s Top Rank Boxing. Jacobs traveled to China in February, and for two days he met with vendors, casino officials and production types. He learned it would be too expensive to deploy the television trucks normally used for an international production; so Top Rank flew in crates, ferried equipment from Hong Kong and created the equivalent of a production truck inside the arena at the Venetian.

Rather than start setting up on the Thursday or Friday before a Saturday night bout, they started the prior Monday. Top Rank sent roughly 20 people from its production team, then hired another 70 or so to aid in lighting, sound and production. Producers learned certain sayings in Chinese to guide the cameramen — pan left, zoom in.

Arum wanted to recreate the authentic experience of Vegas for a prime-time fight. He flew over the broadcaster Larry Merchant, the former heavyweight champion George Foreman and the ring announcer Michael Buffer. Top Rank used a similar sound system, similar lighting, even brought a D.J. from Las Vegas. Jacobs estimated the costs at double what it would have cost to produce the same event in the United States.

“I don’t think the crowd knew what to expect at first,” Jacobs said. “When we got to the third fight, the guy would get cracked on the chin, and they would react like we were in Las Vegas or New York or anywhere else. They were really into it.”

Tracy said the casino witnessed a 35 to 40 percent increase in overall gross gaming revenue on the weekend of the fight. This is gaming revenue, it should be noted, that dwarfs the take in Las Vegas (six times as much by some estimates, four or eight by others). Combine that with the ticket sales, Shiming’s popularity, the history of combat sports in Asia and the potential size of the TV audience (the Venetian, Tracy said, helped to underwrite “The Voice” in China, which nearly half a billion people watched) to understand the business model Arum sees. This is the same model some of the casinos followed.

Before he left in April, Arum and Tracy agreed to put on another card in Macau, in late July or early August, perhaps followed by Pacquiao in the fall. Arum said he could see Pacquiao signing a contract with the Venetian for three to five years at $5 million annually.

“There’s no question boxing has always followed the money,” Tracy said. “Right now, the money trail leads right to Macau.”

Boxing, a sport long proclaimed dead or dying in the United States, has become increasingly global in recent years. Arum cited the sport’s popularity among Hispanics; the fights staged in England, Germany and Montreal; how in America boxing’s “center of gravity has shifted to the west and southwest.”

Arum claimed that if the model in China worked, it would boost boxing’s popularity stateside, because it would show a global interest and because boxing would have made the inroads in China coveted by other sports and by the television networks. That is the sell, at least.

“This is an intriguing part of boxing’s globalization,” Merchant said. “What’s intriguing is the newness and the numbers. The number of zeros on the estimates are staggering, unprecedented and tantalizing to a promoter. Where it goes, nobody knows.”

This is an odd time in boxing, even by boxing’s typically strange standards. Floyd Mayweather Jr., who is scheduled to return to the ring in early May, jumped to Showtime from HBO. HBO made what Arum called an unprecedented announcement and said it would no longer work with fighters from Golden Boy Promotions, the company established by the former world champion Oscar De La Hoya.

While this chaos ensued, Arum turned toward Asia, toward the future of boxing or simply another site for Top Rank to showcase a fight, or five. Those events will need to make sense, the way Shiming made sense, the way Pacquiao makes sense. The future, Arum called it.

Follow the money.

Article source: http://www.nytimes.com/2013/04/23/sports/in-this-corner-of-china-boxings-next-frontier.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Tesco to Pay Dearly to Leave United States

April 17, 2013 by Leave a Comment

Tesco has yet to decide how to exit the U.S. market, where it set up the Fresh Easy convenience stores in 2007, but said the move would cost 1.2 billion pounds, or $1.8 billion. Some analysts have said the withdrawal, which was expected, comes after the British chain grossly misjudged American consumer habits.

“With profound and rapid change in the way consumers live their lives, our objective is to be the best multichannel retailer for customers,” the chief executive, Philip Clarke, said in a statement. “Our focus now is on disciplined and targeted investment in those markets with significant growth potential and the opportunity to deliver strong returns.”

Mr. Clarke started a review of Tesco’s businesses over a year ago, scaling back operations oversees to focus on its struggling business at home. Large investments abroad over the past decade, including in Asia, proved expensive and somewhat less successful than hoped. At the same time, sales struggled in Britain, where Tesco relied too much on its large market share alone to generate sales growth.

Reporting a drop in profit for the year that ended Feb. 23, Tesco said business in South Korea and Europe was difficult. The economic crisis in Europe meant that consumers were cutting back spending and in South Korea, new restrictions in opening hours hurt sales.

Even in Britain, Tesco is slowing its expansion. It said it decided not to go ahead with planned expansions of about 100 properties here, adding to a total write-down on its real estate of 804 million pounds. Tesco has been losing market share in Britain to cheaper rivals like the discount retailer Aldi, and it was affected by the horse meat scandal earlier this year, which forced it to withdraw some products.

To attract consumers to its British stores, the chain invested in the upmarket coffee chain Harris + Hoole, the bakery brand Euphorium and the family-friendly restaurant chain Giraffe, which it bought last month.

Tesco’s announcements have “given investors mild indigestion,” Richard Hunter of Hargreaves Lansdown Stockbrokers said.

Tesco shares fell 2 percent in London on Wednesday morning. The supermarket chain said trading profit fell 13 percent to 3.45 billion pounds in its fiscal year that ended in February. Sales rose 1.3 percent to 72.4 billion pounds.

Article source: http://www.nytimes.com/2013/04/18/business/global/tesco-to-pay-dearly-to-leave-us.html?partner=rss&emc=rss

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New Openness From Chinese Telecom Giant

March 4, 2013 by Leave a Comment

The simple question — How old are you? — would not faze the top executive of a Western company. But Ryan Ding is not a typical corporate leader.

Mr. Ding is the chief executive of the telecommunications carrier network equipment business at Huawei, one of biggest and most successful international companies in China. Last week, he was the company’s face at the Mobile World Congress, the industry’s biggest event in Europe.

For any other company, this might be considered business as usual. But Huawei, like many Chinese concerns, has offered scant access to its decision-makers while the country has become the engine of the world’s economic growth.

At the telecommunications convention, Mr. Ding was working the crowds and taking on his rivals, Hans Vestberg, the Swedish chief of Ericsson, and Rajeev Suri, the head of Nokia Siemens Networks. He was also, uncharacteristically, speaking with journalists.

“We hope that the more people know about Huawei, the more it will help us,” Mr. Ding said through an interpreter in Huawei’s crowded exhibition stand. “It is certainly a positive influence and help with our global business when we are open towards the government, media, customers and the general public.”

For Mr. Ding, a spry, 43-year-old, for Huawei and perhaps for China, now is the time to tell the company’s story, instead of letting others do it for them.

That is a priority for Huawei, which has been virtually shut out of the U.S. market, the world’s biggest for telecommunications equipment, because lawmakers are concerned about its links to the Chinese government and military. A recent spate of hacking incidents tied to the military has not helped its cause.

Huawei denies that it is subsidized by the Chinese government and that its equipment poses a threat. The company says the U.S. blockade, encouraged last year by a congressional committee, is trade protectionism.

Mr. Ding, born Ding Yun, grew up in Beijing and has worked for Huawei, which is based in Shenzhen, near Hong Kong, for 17 years. By company standards he is an elder — Huawei’s 40,000 workers in Shenzhen average 27 years of age.

Mr. Ding oversees Huawei’s business of selling network equipment to telephone operators, its biggest enterprise, which generated $25 billion in sales in 2012, according to unaudited figures, and employed 80,000 people. Mr. Ding started out as an engineer at Huawei, honing designs for telephone switches, the industry’s bread-and-butter hardware at the time. When he was hired, Huawei employed 2,000 people. Last year, the company tallied about 150,000 around the world.

Over a decade, Mr. Ding’s fortunes rose with Huawei’s, and in 2005 he was appointed president of its newly consolidated core network group, a business created from the merger of its landline and wireless divisions. Under his leadership, Huawei developed one of its most successful products, the mobile soft switch, which has played a large role in the company’s pursuit of Ericsson, the industry leader, and in Mr. Ding’s rise within Huawei.

In a phone network, the switches direct calls to their intended destinations. Huawei’s soft switch for the first time relied more on software than on hardware, allowing operators to configure networks on the go as they added customers. In the industry, the price of switches is linked to an operator’s size, with licenses sold for every customer using a switch. Mr. Ding’s team sold licenses in perpetuity, letting operators avoid recurring charges common at the time.

Operators snapped up Huawei’s switches. Currently, the calls of three billion consumers around the world are routed through Huawei switches, the company said.

“The soft switch was one of the most-successful products ever for Huawei,” said Christophe Coutelle, the marketing director in Huawei’s core network group.

The product helped catapult Huawei, which began by reselling telephone switches in rural China in 1987, to become the world’s No. 2 maker of telecommunications gear behind Ericsson. The steep upward trajectory has forced Huawei to grapple with rapid growth, and Western demands for openness.

Gradually, Huawei has responded by opening up, accommodating demands for greater transparency as it conquers Western markets.

Article source: http://www.nytimes.com/2013/03/04/technology/new-openness-from-chinese-telecom-giant.html?partner=rss&emc=rss

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Chrysler Pauses to Mark an Unlikely Comeback

January 14, 2013 by Leave a Comment

The smallest of the American automakers kicked off the annual Detroit auto show on Monday with new versions of two Jeep models, the Grand Cherokee and Compass, that have helped turn the company around since its government bailout and bankruptcy in 2009.

Chrysler outperformed the industry last year with a 20.6 percent increase in domestic sales in a market that grew by 13.4 percent. By comparison, sales increased just 3.7 percent at General Motors and 4.7 percent at Ford.

Sergio Marchionne, the chief executive of both Chrysler and its Italian parent Fiat, said Monday he expected Chrysler’s upward sales trend to continue this year, particularly in pickup trucks and SUVs.

“I think there’s a general feeling that the U.S. market is in healthy shape,” Mr. Marchionne said in a meeting with reporters. “And we’re certainly going to improve in the market.”

Last year was a stellar one for Chrysler. Its bread-and-butter products like the Grand Cherokee and the Ram pickup had big gains, and new cars like the Dodge Dart began to mitigate the company’s traditional reliance on larger vehicles.

Now Mr. Marchionne is laying plans to build a new, entry-level Jeep at an underutilized Fiat plant in Italy – evidence of how the American company is shepherding its European parent company through difficult times.

Sales of Chrysler products now account for more than 60 percent of the total vehicles sold under the Fiat corporate umbrella, which also includes brands like Alfa Romeo and Maserati.

When Mr. Marchionne negotiated Fiat’s acquisition of Chrysler during its federal bailout, industry executives were skeptical that the American company could thrive after the failures of its previous owners, the German carmaker Daimler and the private-equity firm Cerberus.

Now, however, “it’s not Fiat saving Chrysler, it’s Chrysler saving Fiat,” said David Cole, a founder of the Center for Automotive Research in Ann Arbor, Mich.

Mr. Marchionne said a key part of Chrysler’s growth will come from its iconic Jeep brand, which has updated its rugged image with better fuel efficiency and improved quality.

The company showed off the first diesel-engine version of the Grand Cherokee on Monday, which officials said could get 30 miles per gallon in highway driving.

A new version of the Jeep Liberty is scheduled to be introduced later this year, Mr. Marchionne said, as is the compact Jeep that will be built alongside a Fiat model in the Italian plant.

The plan helps solve Fiat’s glaring overcapacity issues in Europe, where vehicle sales have dropped to their lowest level in years. It also represents an aggressive step to grow the Jeep brand outside the United States.

“The brand needs an entry-level Jeep” that people can get at a lower price point, Mr. Marchionne said.

Chrysler was also close to finalizing plans to build Jeeps in China, he said.

Mr. Marchionne said it was important for Chrysler to expand its product lineup to help Fiat weather the European sales crisis, which is affecting most auto companies there.

He estimated that mass-market carmakers in Europe lost a combined 5 billion euros last year, mostly because demand fell well short of supply.

Automakers have so far announced a handful of plant closings to address the overcapacity issue. But Mr. Marchionne has consistently argued for a broader reduction in the number of factories throughout Europe.

“The gap is too large,” he said. “You can’t close a 5 billion euro gap in operating profit by tweaking the machine.”

Mr. Marchionne said that he was driving Chrysler to make up the difference in profits as Fiat falters and as comeback plans for Alfa Romeo take shape.

“We are living with the consequences of a collective inability to resolve the issue,” he said. “But this is not for the fainthearted.”

He said that overcoming the “threat of complacency” is Chrysler’s biggest issue. After the Ram pickup won the truck of the year award at the Detroit show, Mr. Marchionne cut short the celebratory mood at the company’s exhibit.

“Celebration is fine, I’m delighted,” he said. “But it’s over.”

Article source: http://www.nytimes.com/2013/01/15/business/chrysler-pauses-to-mark-an-unlikely-comeback.html?partner=rss&emc=rss

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Publicis Buys Ad Unit With Luxury Focus

December 4, 2012 by Leave a Comment

Publicis portrayed the deal as a vote of confidence in the continuing buoyancy of luxury goods advertising, in which, the company said, spending was expected to rise 7 percent worldwide this year, despite a generally downbeat outlook for advertising.

“The luxury market is an advertising segment ripe with investment opportunity,” Jean-Yves Naouri, chief operating officer of Publicis, said in a statement.

AR’s staff of 50 has worked with fashion brands like Valentino, Versace, Salvatore Ferragamo, Jimmy Choo and Dolce Gabbana, as well as brand owners like Moët Chandon, Banana Republic and Conrad Hotels, creating advertising and advising them on strategy.

While AR focuses on the U.S. market, Publicis said it would add the agency to a mini-network of agencies specializing in the luxury sector, including Publicis Shanghai, Publicis 133 Lux and Publicis EtNous. By joining Publicis, AR will also gain more direct access to the media buying clout of Publicis, one of the big four global advertising giants, alongside WPP, Omnicom Group and Interpublic Group.

“AR New York will now have the expanded resources of Publicis Groupe to continue to deepen our international growth — particularly in Asia and India, where many of our clients are actively driving new initiatives,” AR said in a statement attributed to Diane desRoches, the chief executive, and Raul Martinez, the chief creative officer.

Publicis declined to disclose what it paid for AR, which has grown quickly since its founding in 1996 and has gained a reputation for hip creative work.

“They are passionate about the powerful influence of contemporary arts, design and culture on consumers’ engagement with brands,” Mr. Naouri said.

Article source: http://www.nytimes.com/2012/12/05/business/media/publicis-buys-ad-unit-with-luxury-focus.html?partner=rss&emc=rss

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