Some in Congress are threatening boycotts of the Beijing 2022 Olympics. Can U.S. sponsors stick to sports?
The Tokyo 2020 Olympics showed that it’s possible to host the Games amid a pandemic. They also showed that the Olympic Games continue to be one of the world’s greatest marketing opportunities.
“People see sports as a good thing. So they want to connect their brands to the positive images of the Games,” says Weisheng Chiu, an associate professor of sports management at the Open University of Hong Kong. “Sponsoring the Olympics is almost always worth the money companies invest.”
But the decision to sponsor the 2022 Winter Olympics, which will be held in Beijing and run from Feb. 4 to 20, may not be so simple—especially for American multinationals.
In the U.S., a bipartisan group of congressional representatives has called for a boycott of the Games over human rights abuses by the host nation. The U.S. lawmakers condemn Beijing for alleged mistreatment of Tibetans, and the mostly Muslim Uyghur population in the western Chinese province of Xinjiang, as well as for a national security crackdown in Hong Kong. Some U.S. representatives have proposed a bill that would prohibit U.S. firms from doing business with the federal government if they sponsor the Beijing 2022 Games.
In China, on the other hand, sponsoring the Beijing 2022 Olympics offers multinational companies a unique and valuable opportunity to boost their profiles in a market of 1.4 billion people. Global brands know that, in China, they are also dealing with an increasingly nationalistic government and domestic audience that can turn on them at any moment, especially if they make any moves that might appease critics of China in the U.S.
In the lead-up to next February’s Olympics, U.S.-based multinationals will be walking a tightrope, hoping to reap the rewards of China’s massive market while evading criticism or repercussions at home. That balance may become increasingly difficult to strike if U.S.-China relations deteriorate further before Beijing 2022.
Calls for boycotts
The International Olympic Committee (IOC) splits up sponsors into a tiered system, with each level providing access to things like exclusive rights in selling products, logo placement, and rights to host events, depending on their level and duration of financial commitment.
The top tier of sponsors are part of the Olympic Partner (TOP) program. TOP firms sign multiyear contracts directly with the IOC. For Beijing 2022, there are 15 TOP sponsors including U.S. multinationals like Coca-Cola, Visa, and Airbnb. Airbnb, for example, has exclusive rights to market “unique accommodation products and unique experiences services” at the Olympics. In practice, this means that Airbnb can officially market its home-stay services to fans traveling to the host cities while providing free accommodations for guests.
Airbnb paid $500 million in 2019 to become a TOP partner through 2028, covering five Olympic Games. The sum Airbnb paid is roughly in line with the going rate of $100 million to $125 million per Olympics that other sponsors have contributed to be TOP partners.
In July, the Congressional-Executive Commission on China, a congressional body that monitors human rights issues in the nation, conducted a hearing on corporate sponsorship at the Beijing Olympics. Representatives from the five TOP American sponsors of Beijing 2022—Coca-Cola, Visa, Intel, Airbnb, and Procter & Gamble—participated in the hearings. All five firms declined Fortune’s request for comment about their sponsorship.
In their testimony before Congress, each of the sponsors defended its participation in Beijing 2022.
“We want to support connections at a global scale,” said David Holyoke, head of Olympics and Paralympics partnerships at Airbnb. “The Olympic Games have shown that sports can accomplish this goal, bringing the world together through an incredible and inspirational athletic competition.”
The commission was not impressed.
“This is the most pathetic, disgraceful hearing in which I’ve participated in eight years. Obviously every one of you…were sent here with orders not to say anything that could offend the Chinese Communist Party,” Sen. Tom Cotton (R-Ark.) told the representatives. “I rarely in life agree with Senator Tom Cotton. I’m pretty much in full agreement with him today,” said Rep. Tom Malinowski (D-N.J.).
In May, Rep. Michael Waltz (R-Fla.) introduced the Beijing Winter Olympics Sponsor Accountability Act, a bill that would prohibit the U.S. government from signing contracts with any corporation that sponsors Beijing 2022.
“This is the only way I think I can get [American Beijing 2022 sponsors] to respond,” Waltz tells Fortune. “I hope it will be a real wake-up call for these companies.”
But what a corporate boycott would achieve is not entirely clear.
Alfred Wu, a Chinese politics professor at the National University of Singapore, says that there is essentially no amount of pressure the U.S. could exert—corporate or diplomatic—that would prompt China to change its policies in places like Xinjiang, where it denies human rights abuses are occurring, or its other alleged human rights violations.
“The U.S. can try to use this event to pressure Beijing,” says Wu. “But the problem is that China will not change.”
Representative Waltz, who is calling for a full U.S. boycott of Beijing 2022, said that calling attention to China’s human rights concerns should be reason enough for sponsors to boycott.
Through a boycott, “we would not be sending a signal to all of these various groups that are being persecuted [in China] as we speak that the world doesn’t care,” says Waltz. “We would send a very strong signal to the [Chinese Communist Party] that this behavior is unacceptable.”
Calls for a boycott may have discouraged some lower-tier sponsors already.
After the IOC’s top-tier sponsorships, remaining deals are delegated to local authorities. Beijing has split the local sponsors into four levels: official partners, official sponsors, exclusive suppliers, and official suppliers.
In 2008, Beijing listed 36 lower-tier sponsors of the Summer Olympics including at least four American firms: candymaker Mars, office supplies firm Staples, health care giant Johnson & Johnson, and technology firm Cisco Systems.
Justin Tan, managing director of Mailman, a global sports digital agency headquartered in Shanghai, notes that the vast majority of the 45 sponsors that have signed on so far are Chinese firms. Mars is the only American firm listed as a lower-tier sponsor after striking a deal to make Snickers the official chocolate bar of the Games.
(Yum China, a firm that operates fast-food outlets like KFC, Taco Bell, and Pizza Hut in the Chinese market, is also an official supplier of the Games. But Yum China is a Chinese-owned firm that was spun off from Louisville-based Yum Brands in 2016.
“There was much for global corporations to look forward to back in [the Beijing 2008 Olympics], and there were many themes of high ideals for them to play into to drum up their businesses globally,” says John Zhang, director of the Penn Wharton China Center at the University of Pennsylvania. Now the situation is different, he says, given the tensions between the U.S. and China and the fact that unfavorable views of China globally are at an all-time high.
The companies are also wary of the prospect of losing their markets in China.
Airbnb, for example, has roughly 150,000 home listings in the Chinese market. Coca-Cola reports that China is its third-largest market for soft drinks. For Procter & Gamble, China is the firm’s second-largest market for a range of household, cleaning, and health care products.
“These companies don’t want to make the Chinese government angry and will follow the rules in China,” says Chiu.
Wu mentioned how quickly China can turn on foreign companies that do not toe the government line. In March, online users called for boycotts of companies like fashion retailer H&M and shoe giant Nike after users found statements saying the companies condemned forced labor practices in Xinjiang. Months after the controversy, H&M reported in July that its sales in China were down 28% in the second quarter compared with the previous period and that 10 of its stores remained closed owing to the controversy.
To avoid H&M’s fate, Beijing 2022 sponsors may paradoxically be forced to avoid at least some of the limelight in the lead-up to the Games.
“The sponsors want to keep a low profile, at least when it comes to [discussing human rights] issues. The simplest path forward is to focus only on sports,” says Chiu.
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