Beijing's Olympic goldmine - revenue to Australia

Business Asia, August, 2001

Beijing has the Olympic Games in 2008, which could mean billions for Australian exporters wanting to showcase their Sydney Games experience.

AUSTRALIA'S Olympic-inspired business gold rush may not be over just yet. Last month's announcement of Beijing being named the host city for the 2008 Summer Olympic Games could mean billions of dollars worth of new opportunities for Australian businesses still flushed from the success of the 2000 Sydney Games.

And with China expected to spend US$20 billion ($37 billion) in infrastructure developments alone, those opportunities are expected to come thick and fast in the lead up to 2008.

Austrade's national manager infrastructure, sports and the Olympics, Peter Cripps, said no better publicity for Australia's skills could have surpassed the highly successful Sydney 2000 Games.

"If you're looking at this from an international view, the only comparison China can look at to see how to stage a massive event such as this is the successful Sydney Games," Cripps said. "And who better to repeat that than the people who built and presented those Games?"

"It (the Sydney Games) gave us a significant boost in that it was like a massive trade fair -- it showcased a whole range of Australia's expertise across all sectors and demonstrated that we could produce the leading edge.

"It wasn't just our expertise in sport -- it also showcased our skills in environmental restoration, renewable energy, volunteer programs, and in many more areas."

In winning the 2008 Games, Beijing beat out finalist cities Toronto, Paris and Istanbul. After losing out to Sydney in their first try to secure the Olympics, China spared no expense in its latest attempt. Beijing's investment plan was at least twice as big as Toronto's and 10 times as big as Paris' proposal.

Beijing said it wanted to bring the Summer Games closer to the one-fifth of the world's population living in China, and to Asia for only the third time (Tokyo hosted the event in 1964, and was in Seoul in 1988).

Analysts and economic observers say that, for the most part, hosting the Olympics would be positive for China. "They will have a housing boom, they will improve all the infrastructure," William Overholt, chief Asia regional strategist at Nomura International (Hong Kong) Ltd said. "Probably the biggest benefit is they get to clean up the pollution."

The economic effect of getting the Games may come quickly. China's per capita income has already doubled in the eight years since its last bid to US$850 from US$425. Goldman Sachs Group estimates the successful bid will add 0.3 per cent a year for the next seven years to China's economic growth.

In a report, Fred Hu, the firm's top economist for China, said hosting the games would "spark a multi-year infrastructure spending boom", which should lay the foundations for strong growth after the games are over.

Much of the US$20 billion Beijing plans to spend upgrading its roads, subways, waterworks and stadiums for the 2008 Games would have been spent even if the city had not won the bid, Deutsche Bank AG Hong Kong senior economist Jun Ma said.

"It's very likely that Beijing can double its per capita income in the next eight years," Ma said. "There will be a natural tendency for Chinese and Beijing citizens to spend more on Olympic-related goods and services."

China and its neighbours are also seen as benefiting politically from the Games. Analysts expect Beijing to stop rattling the sabres against political foe Taiwan over the next seven years, as it might be anxious to avoid having any country boycott the Games. That means greater political stability across the Taiwan Straits.

"Investors see the Olympic win as a positive move as it will help boost political stability and accelerate China's development," SG Securities Asia senior economist Steven Xu said. "Business people will be reassured of political stability, which underpins China's economic development."

Political analysts also say the Games could provide a harmless outlet for national pride, whose power was evident in protests after the US bombing of China's embassy in Belgrade, YugoSlavia, in 1999, and this year's loss of a Chinese pilot after his jet collided with a US spy plane.

Austrade's Cripps says despite the Beijing Games being seven years away, it was not too early for Australian businesses to start looking into what opportunities China may hold for them.

"It may be early for some, but not for others, to actually start closing deals and signing contracts," Cripps said.

"For fields such as architecture, design and planning, these companies need to start working now. Actual product suppliers will come later. We expect the first series of tenders from the Beijing Games to be announced at the end of next year.

"But it's never too early to get in there and start building relationships -- don't want for the tender. Companies have to be patient and develop the relationships to make sure they're seen as being serious and committed to the region."

For New South Wales Department of State and Regional Development director general Loftus Harris, Beijing represents a prime opportunity to build on the success of the Sydney Games.