Buffeted by corruption scandals, falling sales and an unprofitable diversification strategy, Hong Ta Shan (Red Pagoda Hill), China's biggest cigarette company, is seeking salvation in its home market with a foreign pitch.

For the sum of RMB8 million ($968,000, ￡599,000), the Hong Ta group is sponsoring the week-long trip by Spain's star-studded Real Madrid soccer team to two Chinese cities, including one exhibition game to be played in Beijing on Saturday.

Hong Ta sees the Real Madrid connection reinforcing its image as China's leading cigarette brand. Real Madrid, in turn, thinks its sponsor can provide a platform to make the club into China's leading soccer brand.

"It is undeniable that through this sponsorship activity we will be upgrading our corporate image," said Yao Qingyan, the president of the Hong Ta Shan group.

Real Madrid's tour marks a new stage in the fast-growing and increasingly international business of Chinese sport. Like the economy itself, Chinese sports teams are gradually being weaned off state ownership and becoming fully professional, which means that they need more fans, stars and sponsors to expand the revenue base.

A number of events have combined to stimulate the business - the choice of Beijing to host the 2008 Olympics, China's entry for the first time into the soccer World Cup last year and the success of Yao Ming, the basketballer, in the US.

Shanghai is pushing ahead with the construction of a track for the first Formula One motor race in China, to be held next year, another event bringing in corporate sponsorship dollars from tobacco companies.

Chinese law bans cigarette advertising but tobacco companies, including foreign ones, have skirted around the rule by calling their sponsorships "corporate" promotions.

Foreign soccer teams have visited China in the past but none with the profile of Real Madrid has spent a whole week with its best players on the mainland. Hong Ta took on the sponsorship of Real Madrid after companies in Shanghai decided that the Rmb8m price tag was too high.

As a result, Real Madrid's first stop is a training camp in Kunming, the capital of southern Yunnan province, where Hong Ta owns the local soccer club, before it heads to Beijing for Saturday's game against a Chinese all-star team, known as the Dragons. A second company, Shenzhen Jianlibao, which manufacturers soft drinks, is sponsoring the Chinese team.

"Our investment in football accounts for 80 per cent of our total spending on sports sponsorship of just over Rmb100m," said Zang Hai, the chairman of Jianlibao.

Real Madrid marketing officials, quoted in a wire service report, said the team would make $9.1m (￡5.6m) from the trip, which takes in Hong Kong, Japan and Thailand, after the game in Beijing.

The tour is significant for another reason: Real Madrid will be showcasing for the first time David Beckham, the England captain, who recently left Manchester United to join the Spanish club.

Beckham adds real value to Real Madrid in Asia, because of the popularity of the English Premier League in China and elsewhere in the region, through broadcasts on the ESPN Star Sports joint venture channel.

"We showed over 120 games [of the Premier League] live last season," said Edward Yip, a spokesman for ESPN Star Sports in Hong Kong.

The marketing of the English game in China, and much of Asia, has given it a higher profile than rival leagues in Europe. The "Manchester derby" - the game between Manchester United and Manchester City last season - attracted the biggest audience of any soccer game in China, aside from the World Cup, said Mr Yip.

Kejian, a Chinese mobile phone manufacturer, has sponsored another English club, Everton, counting on a return solely in its home market from television exposure and publicity.

Hong Ta's motivations are more complex. It needs to regain sales lost to local competitors but also to prepare for the eventual opening of the Chinese market to powerful foreign brands, now largely kept out of the mainland.

China is the largest tobacco market in the world: about two-thirds of adult men and 5 per cent of women smoke about 1,700bn cigarettes each year.

Hong Ta's sales have been falling since 1997, following the arrest of its long-serving chairman, Chu Shijian, on corruption charges, and the removal later of the management team that replaced him.

The group's cigarettes now have an old-fashioned, rather musty image, something that it hopes the Real Madrid association will help it overcome.

"We have been through a sluggish period of late," said Mr Yao, the chairman. "Through this sponsorship we can let Chinese consumers and fans get in touch with some of the best players in the world."

Close

Today's Top News		Top Sports News
+China's richest village: It takes brains and guts ( 2003-08-19) +Relief for indigent college students ( 2003-08-19) +Leaders meet Australian PM ( 2003-08-19) +New security official promises open mind ( 2003-08-19) +Government to rationalize auto sector ( 2003-08-19)		+Beckham is Collina's favourite player ( 2003-08-19) +The goal is unbelievable: Sun Jihai ( 2003-08-18) +Agassi, Clijsters top US Open seedings ( 2003-08-19) +Jamison goes from Warrior to Maverick in nine-man deal ( 2003-08-19) +I can handle the criticism, says Beckham ( 2003-08-19)