Editorial

Shanghai Triad - 2004 Sinopec Chinese Grand Prix
 

 by Steven N. Levinson
September 28, 2004

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The Chinese 'tifosi'

Shortly after Captain Tanaka skillfully landed All Nippon Airways flight # 006 on Narita International Airport's rain slickened runway in Tokyo, I immediately made my way to ANA's Signet Lounge and saw an excited group of passengers huddled around the TV monitor watching the "Autumn Grand Sumo Wrestling Tournament". As I watched these massively rotund and lightening quick combatants go through their pre-match rituals of strutting into the ring, throwing the ceremonial rice, doing stretching exercises in the time honored tradition, gracefully bowing, then squatting directly before their opponent BEFORE attempting to throw him out of the ring by "Any Means Necessary". Wow, although the matches only last 30 seconds or so, they have all the aura that a 200 year old tradition could possibly bring to a sport. This really is the last vestige of "Bushido"..the way of the Samurai, where "Honor" Is Valued Above Life itself.


The main road from Shanghai to the track

Bernie Ecclestone and his F1 "Circus" were now descending upon Shanghai's magnificent International Circuit attempting to establish a "new sport" in China. China has one of the oldest cultures and civilizations on earth, but with absolutely no cultural or historical ties to motorsports. Although F1 drivers are not Samurai, they are certainly engaged in a profession that requires as much skill, courage and bravery as any endeavor outside of mortal combat itself. The question then, is whether or not this $380 million dollar gambit will enable The Sport of F1, along with its sponsors, to totally fascinate what soon will be the largest consumer market on earth. That is the Shanghai Triad. The NBA has done that successfully with Yao Ming.

Tradition is not something that is created in a moment of time or decreed upon its audience. It is something that grows with time and stature. No one can anoint an event with "immediate tradition or stature. (Example, no matter how much hyperbole from Tony George and his IMS minions, the "Freedom 100" will never achieve tradition or stature as a major event.)


A Sinopec gas station

Shanghai was chosen for the F1 launching pad in China. That was a prudent decision, and possibly the only sensible choice. Shanghai for well over 150 years has always been China's "Window to the West". It is the commercial and business center of China. It is the home base for China's burgeoning consumer status obsessed society. It houses all of the world's leading multinational companies, as well as the most elegant shops of the world’s leading fashion designers. Make no mistake, Shanghai takes a backseat to no one as a "World Class International City" and is fully capable of catering to the most sophisticated of tastes. Its nightlife is symbolized by Miao Miao, Queen of Shanghai's all night club scene. Her best selling books weave sensual tales of sex, drugs and Rock 'n Roll'. She is so provocative, that she brags about being "watched by the morals police"!   She's leading an irreversible "evolution", not a Tiananmen Square REVOLUTION". China even has "Rappers" who rap in Chinese and wear "hip hop" gear. Yep...we're talking about The People's Republic of China founded by none other than Chairman Mao. Mao may very well have turned "RED" had he gone to the Sinopec Chinese Grand Prix. He certainly would have been swallowed up in a sea of " Ferrari Red Chinese Tifosi".


Mercedes and BMWs everywhere

China is already the world's second largest consumer of "imported oil" behind the United States. And next year it will replace Japan, as the world's second biggest consumer market for automobiles, behind the US. Just within the last week SINOCHEM, China's state-run oil trader, acquired South Korea's smallest oil refiner, Inchon Oil for $552 million as part of its attempt to quench its ever expanding hunger for oil. This acquisition follows a string of investments by Chinese companies in South Korea as well as massive capital investments by the huge Korean companies seeking a foothold in China. There are now more Korean students learning Chinese than who are learning "English". South Korea is now turning "east" not "west". China is legitimately seeking economic and commercial hegemony in Asia. Many Asian financial analysts see China's Sleeping Giant awaking from its historical isolation while America has diverted its attention to unilateral geopolitical and military adventures (some call them "misadventures") and political isolationism. This does not augur well for US multinational commercial and business interest in the future. Germany's Lufthansa Airlines alone, will increase its flights to China by 50% by the year 2007. I personally want to see America get back to the "Business of Business"..and SOON!

The list of the Chinese Grand Prix sponsors and signage yields some interesting observations:

Track Signage
1. Sinopec (China)
2. Petronas (Malaysia)
3. DHL (now allied with Deutsche Post)
4. Vodaphone (UK)
5. China Mobile (China)
6. Bridgestone (Japan)
7. Honda (Japan)
8. Toyota (Japan)
9. Olympus (Japan)
10. Panasonic (Japan)
11. Mobil One (USA)

Event Program Ads
1. SAP (German)
2. Siemens (German)
3. BMW (German)
4. Porsche (German)
5. Shell (Netherlands)
6. HSBC (Hong Kong)
7. Budweiser (USA)
8. Advanced Micro Devices (USA)


Chinese Ferrari fans

So, we basically have the indigenous Chinese companies, the nearby Japanese who were mortal enemies with China during WW II. (Just recently Chinese soccer fans rioted when the Chinese National Team lost to Japan. No love lost there as the Chinese are still sensitive about the "Rape of Nanjing," when 330,000 Chinese were killed in three (3) days of bloodletting by the Imperial Japanese Army). Then we have the "Germans" well represented. Remember what I said, Lufthansa will increase its flights during the next 3 years to over 50%. America has very little when you consider no "signage" by any company other than Mobil One. But this is a tie-in with Mercedes Benz. Budweiser, although having a big marketing campaign in China, just did a program ad, as did AMD, the high tech firm headquartered in Palo Alto, California.

2004 is the "YEAR OF THE MONKEY" in China's Lunar Calendar. For Ferrari it has been the "Year of the Prancing Horse". When Schumacher faltered in the last two Grands Prix, Barrichello thoroughly redeemed himself with back-to-back wins in Italy and now China. For Rubens it was the "Shanghai Samba".


The Sinopec GP dragons

Upon his arrival into Shanghai, Bernie Ecclestone would have preferred 2004 to be the "YEAR OF THE SHEEP". The "flock" appear to be deserting him. He has not only traded threats with Luca di Montezemolo, but totally denigrated Jaguar for abruptly leaving F1. With the acrimony having temporarily subsided, the F1 circus arrived at Shanghai's $350 million (MORE) than "State of the Art" facility at a reputed $20 to $30 million sanctioning fee. The Chinese designated Sinopec as the event sponsor. Sinopec is the "China Petrochemical Corporation". It is capitalized at US$12 Billion, and is the national oil company that is the equivalent of Mexico's Pemex, Brazil's Petrobras and Malaysia's Petronas.

This magnificent circuit is in the shape of the "SHANG", which means "over" or above". Hence, Shanghai means "above the sea". The grandstands, garages, toilets and facility layout are incredible. It even has the "Sky Restaurant" over the track on the main straightaway. What a way to impress your corporate clients. Seriously, it makes Texas Motor Speedway and IMS look like the local county fair tracks. In certain places, the grounds are surrounded by a "Moat", similar to the one at Beijing's "Forbidden City", which protected the Chinese Emperors from the common folk. To discourage people from driving to the circuit, parking "licenses" were priced at a minimum of $140 to $150 and more, depending on the location.


A refreshment stand selling foreign goods

F1, not only hopes to add to its bi-weekly TV audience of 162 million viewers, but wants to add another 10 million or so in China. In addition, F1's cigarette sponsors hope to entice China's 350 million smokers to buy their more expensive imported cigarettes. In fact, imported cigarettes and imported automobiles are the only two things that don't have the " MADE IN CHINA" label.

VW's "Santana", made in China, is the best selling car in China.   GM-Shanghai is the second largest seller of cars in China, producing the popular and sporty looking Buick Regal and a Buick minivan called the GLB. GM has 10% of the Chinese market, and will soon start producing the Cadillac for the status conscious Chinese. Curiously, neither VW or GM are involved in the F1 Manufacturers Championship. Nonetheless. Mercedes, BMW, Toyota, Honda and Renault hope to utilize the F1 marketing platform to boost their brand names. According to BMW's Mario Theissen "we sell more 760's in China than any country in the world, which is unbelievable and gives a glimpse into the potential." BMW hope to increase annual production from 30,000 units to 100,000 in the next decade.


Foreign cars and vans loaded the highways

While auto sales surged 76% in 2003, it should be noted that two factors may influence future growth. (1) In an attempt to cool inflation and control an over-heating economy, China's state owned banks have cut back sharply on car loans and now finance 1 in 10 retail sales purchases, down from 1 in 3 earlier in 2004. (2) China will also begin to implement new fuel economy regulations in order to help stem its rising dependence of imported foreign oil. China's increased demand for oil has also greatly affected the per barrel price of oil on world markets.

With China joining the World Trade Organization (WTO), attending the Group Of 7 meetings, being awarded the 2008 Olympic Games for Beijing, and now hosting a round of the F1 World Championship simply means that they have arrived as big time global players. The sense of Chinese patriotism and pride that I felt when the massive Chinese flag was unfurled on the main straight prior to the race was compelling. Centuries of isolation and humiliation by the Western Imperialist powers left China with an inferiority complex that is now beginning to totally evaporate. Shanghainese has a pyramid of status, with Shanghainese at the top, with foreigners second, and then the 'people from the countryside at the bottom of the ladder.'



More than a state-of-the-art facility

I thought the fans looked pretty normal, eating KFC fried chicken, pizza and drinking Foster's Beer (dreadful stuff). The place was cramped with displays, pretty girls, souvenir shops with "RAP" music blaring in the background. Most people stayed to the end of the race. They seemed to understand and enjoy F1, despite the exorbitant ticket prices some as high as $300 to $500. Shanghainese never wilt under that kind of pressure. They spend what they have to and I wouldn't be surprised to see the place filled again next year. But wouldn't it be something if Bernie could develop the F1 equivalent of the NBA's Houston Rocket's Yao Ming.

Now that would secure F1's future in China and provide crowds of 400,000 people or more. So far, China only has one driver in the pipeline of development, Ho-Pin Tung who grew up mainly in Holland. He has three podiums this year in German F3. In addition, Han Han is a 22 year old Formula BMW Asia Series driver. He hopes to beat Ho-Pin Tung to F1. With the rapid pace of modernization in China, and, China's ascension in the global market in terms of production and consumption, anything is possible. Chinese drivers in the US are generally stereotyped as the worst drivers in the country. But never say never, when it comes to the Chinese ability to be successful in whatever they do. If you don't believe it, look at what China has done in the last 20 years. In fact look at Shanghai or Beijing in 1995 and look at them today. The change is incredible!

The author can be contacted at SteveL@autoracing1.com

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