How global sports brands are breaking into China

Western companies have found it difficult to break into the Chinese market over the years, but a number of international sports brands are now finding success in the region, thanks in part to new technologies, and an openness to partner with Chinese companies.

Executives from Mercedes F1, WWE, and ONE Championship (the world's largest martial arts organization), told Arjun Kharpal at CNBC's East Tech West conference in the Nansha district of Guangzhou, China, how they've used a combination of local heroes and local platforms like Weibo to reach large numbers of Chinese consumers.

"Finding Asian heroes, putting them on a global stage, making sure we have a big media presence, that's the way to summarize the strategy," said Hua Fung Teh, group president of ONE Championship. "Ultimately people want to see people who look like them succeed."

One such local hero is legendary Chinese basketballer Yao Ming, who played for the Shanghai Sharks in China and the Houston Rockets in the U.S. "We are all trying to find the next Yao Ming for our platform, but he happens once every generation," said Teh.

For Jay Li, VP and general manager of Greater China at WWE, it's all about trying to understand what makes Chinese audiences tick.

WWE has recently rolled out a new show that is locally produced in China. "Instead of focusing 100% on the storyline, or the wrestling action, a lot of it is about the superstar's interests, entrance music, and making it more general interest," he said. "The Chinese audience respond more to that rather than it being all about the wrestling."

Hua Fung Teh, Group President of ONE Championship, Jay Li, Vice President and General Manager of Greater China of WWE, Rick Garson, CEO and founder of VX Entertainment and Harry Wang, Head of Brand Partnership of Greater China of Mercedes-AMG Petronas Formula One Team speak with Arjun Kharpal, technology correspondent of CNBC on Day 3 of CNBC East Tech West at LN Garden Hotel Nansha Guangzhou on November 20, 2019 in Nansha, Guangzhou, China.

Zhong Zhi/Getty Images for CNBC International

Partnering with tech giants

Li said that WWE is also working with tech firms who use algorithm-based distribution models to "get the right content to the consumer." These platforms recommend content to people based on what they've previously watched.

"That is allowing us to have better monetization of that content," Li explained. "A lot of our strategy, in terms of localization, is to identify these technology partners in China."

Consumers are increasingly interested in short clips that they can watch on the go on their smartphones, Teh said. "If we look at the deals of the big digital giants like Facebook and Twitter and YouTube, you notice a lot of those deals are not for the live sport itself, but for shoulder content, be it a 30-second clip of a highlight or an athlete walking his dog and talking about how he likes animals."

Mercedes F1 is just starting to build its fan base in China, according to Harry Wang, head of brand partnerships for the Mercedes F1 team in Greater China.

"Our top driver, Lewis Hamilton, has over 1 million followers on Weibo," he said, adding that WeChat is another platform Mercedes is looking at. "We also realize that you have to produce specific content for specific platforms."

Embracing new viewing experiences

Sports companies are also embracing new technologies like augmented reality (AR) and virtual reality (VR) to win over Chinese consumers.

"Consumers here are a bit more advanced, I believe, than the rest of the world," said Rick Garson, CEO and founder of content development studio VX Entertainment. "Everything is on your phone. Everything."

The Chinese audience is looking for an immersive, interactive experience, said Garson. "They are part of it," he explained. "Let them be next to the big stars, the drivers, and interact with them."

Consumers haven't truly embraced virtual reality technology, partly due to the bulky headsets it requires, but augmented reality, think "Pokemon Go" and the new "Harry Potter" mobile game, is only going to get bigger, according to Garson.

Some sports are easier to augment than others due to the nature of how they're played.

MMA fights are perfect for technological augmentation, according to Teh. "It is in close quarters, in the ring or cage," he said. "In terms of having an immersive, close up and personal perspective, from the perspective of the athlete or from the audience, there is a lot we can do."

ONE Championship already has a number of experiments under way including the use of coach avatars that viewers can interact with.

Treading carefully

While China is a huge opportunity, it's also a risky one and international companies have found themselves in hot water when they weigh into political matters.

Last month, Houston Rockets General Manager Daryl Morey deleted a tweet that showed support for Hong Kong anti-government protesters after his views were attacked by the Chinese Consulate-General in Houston and the Chinese Basketball Association.

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