If you have watched the World Cup in the past few days, you may have see some special characters around the soccer field that are not English or Portuguese. They are Mandarin – Yingli Solar (中国英利). Yingli Solar has provided 27 solar power-generating systems for the lighting of Brazil’s soccer fields. Why would a solar company sponsor the World Cup, let alone a Chinese one since the Chinese soccer team didn’t qualify for the event?
Who is Yingli?
Founded in 1998, Yingli Solar is one of the top solar panel manufacturer in China. It sold the largest amount of solar panel units in the world in 2012 and 2013, and has been listed on the New York Stock Exchange since 2007.
Why sponsor the World Cup?
The logic is simple. The World Cup will be watched worldwide, so Yingli will receive a huge increase in awareness and reputation, as their logo will be seen along with the world’s most famous brands such as Coca-Cola, McDonald’s and Adidas. Management believes it’s the most effective way of turning Yingli into an international brand.
This is important when considering the markets Yingli cares about most. Europe and South America are their two most important growth markets, and even though the Chinese soccer team rarely makes the World Cup, China doesn’t lack soccer fans. Soccer and basketball are the two most watched sports games in China. In addition, in the US World Cup viewership has increased 70% since 2006. Yingli actually also sponsors the US Men’s team, Women’s team and Youth teams.
History of Yingli’s road to World Cup
Yingli first became involved with the World Cup in 2006 in Germany, providing the Cup’s solar power generating system.
With this successful experience, Yingli signed on as an official sponsor for the 2010 World Cup, became the first World Cup sponsor from China and the first from the sustainable energy industry. According to MEC Global’s research, during February 3 and July 22, 2010, there were 2,202 reports generated about Yingli; media coverage increased 800% worth 70 million RMB ($12 million). The average daily visits to their website reached 20,000 hits, and their stock value increased $612 million.
According to Yingli’s statement, they estimated the value generated by the 2010 World Cup sponsorship at $50 million, but did not disclose how they measured it.
Their success in 2010 was the main reason Mr. Liansheng Miao, founder and CEO of Yingli Solar, decided to continue their World Cup sponsorship.
But having said that, was it really worth it?
Yingli is bleeding.
The whole solar industry is still in a cold winter. Yingli has been losing money for three consecutive years – $133 million last year alone.
And their stock price has plunged, despite the Dow Jones reaching a recorded high.
Why would Yingli spend so much sponsoring the World Cup when they are so unprofitable? After repeatedly being asked by media and questioned in the financial markets, Yingli finally gave their answer: they signed the sponsorship contract in 2010 and didn’t expect the “cold winter” for the industry. Even Mr. Miao admitted the market moved beyond their estimate. They received low interest loans from Chinese banks but had to replace those loans with higher interest ones since the second half of year 2011. It has created tremendous pressure on the company’s cash flow.
So is it worth it?
From a marketing perspective, the strategy is really questionable. Would the money been better spent in other places?
First and foremost, B2C companies like McDonald’s, Coca-Cola or Adidas get much more value out of such a worldwide sponsorship. More importantly, big B2C brands have dedicated marketing budgets and substantial marketing resources to create integrated campaigns worldwide. B2B companies are better off advertising through industry specialized channels. A logo on TV and free PR will not be enough to engage customers and eventually convert them into sales. It’s a start, not an endgame, in marketing communications.
Second, the marginal value of another World Cup sponsorship has been diminished. Last time, even most Chinese had not heard of Yingli. The sponsorship made them a household name and brought them fame as “the first Chinese company sponsoring World Cup”.
According to Yingli, first time visits to their website have only increased twice in the past few days.
The value is far below what they spent.