Will boom continue post-Olympics?

BEIJING--"This is the world's largest Omega outlet. It shows how important the Chinese market is to our company's global strategy," said Kevin Rollenhagen, president of Omega China and Hong Kong, on Monday.

The remark was made to Olympic officials and other guests attending a ceremony to mark the opening of the outlet directly managed by the Chinese subsidiary of the Swiss luxury watchmaker.

In fact, China has become the largest market in Omega's global sales.

Brand-name product manufacturers around the world are competing to expand their store networks in Beijing. This can be seen in Shin Kong Place, which opened in April as the capital's largest department store. Chanel, Gucci, Prada and other brand-name products occupy a good part of the department store.

"[The Beijing Olympics] will provide a great opportunity to ensure brand-name products firmly establish their image among 1.3 billion consumers in the domestic market," a Beijing-based advertising agency official said.

There are 65 corporations sponsoring the Beijing Olympics--12 companies that have signed contracts with the International Olympic Committee as TOP (The Olympic Partner program) sponsors and 53 firms that have signed on with the Beijing Organizing Committee for the Olympic Games. Listings include a number of global corporations such as Coca-Cola Co. and McDonald's Corp.

An intense battle two years ago between well-known sporting goods manufacturers to be named an Olympic sponsor is still an oft-told story among people associated with the 2008 Games.

Germany's Adidas signed a contract with the Beijing Organizing Committee as an official partner, defeating competitors such as Mizuno, one of Japan's leading sporting goods producers.

Corporations that have contracts with the organizing committee are more rigidly limited than TOP participants in exercising privileges granted to the partners, including their right to advertise in connection with the 2008 Games.

However, Adidas pledged to donate 500 million yuan to 600 million yuan--about 8 billion yen to 9.6 billion yen--to the organizing committee, according to a source familiar with the case. The figure is about twice the amount to be donated by TOP sponsors.

"[The figure] is more than triple [the amount of donations promised by each partner] in the Athens Olympics. What was seen as the norm [concerning the amount of a sponsor's donation in previous Games] does not apply to the Beijing Olympics. It's all outrageous," the source said.

Gan Mingqi, senior manager of Adidas China, defended his company's actions. "[China] is incomparably larger than Greece and Australia as a market. If you think ahead [about what will emerge] 50 years and 100 years later, investing in the Beijing Olympics is not a big-ticket purchase," he said.

Undoubtedly, no country can rival China as an alluring market if the nation's economic growth continues, a development that would transform the new economic powerhouse into an advanced consumer society. However, it is unclear whether the Chinese economy will remain as robust in the future.

As the 2008 Games approach, overheating is increasingly obvious in China's economy--most prominently in Beijing and Shanghai. In recent years, speculative funds have flooded into Beijing from all parts of the country. This has doubled the price of new homes over the past six years, according to a local real estate agent.

Many market players in the Shanghai Stock Exchange (SSE) have said stock prices will not drop before the Olympic Games because the Chinese government is behind them. This seemingly overly optimistic belief has continued to raise the stock prices in the SSE.

In May, former U.S. Federal Reserve Board Chairman Alan Greenspan commented on the situation, saying China's stock bubble was in for a "dramatic correction."

His view was echoed by Guo Shiping, a professor at Shenzhen University, who said: "The Olympic Games are a factor in the postponement of a necessary economic adjustment. [The Chinese economy] will enter an adjustment phase after the event."

However, Hu Angang, director of the Center for China Studies at the Chinese Academy of Sciences, Tsinghua University, said, "Beijing is home to a convergence of financial, information and other corporations in China's service industry."

"The economy will never decline, even after Olympic-related investments end," said Hu, who reportedly can influence the Chinese government's economic policy.

Are skeptics--such as Greenspan--correct in their predictions about the post-Olympic Chinese economy? Or are Hu and other optimists on the right track in their analysis of China's economic growth?

The international community is closely looking to the future of the Chinese economy--not just the fate of the Beijing Olympics.