At present, China's sports industry is seeing a period of rapid development, but the challenges facing it are still many, and efforts are needed to maintain a healthy and orderly environment for the sustainable development of the industry.

In 2014, China released an official document for the sports industry, the No. 46 Document, to promote the development of the industry. In the following five years, the added value of the sports industry grew significantly faster than GDP growth. At the same time, important changes have taken place in sports consumption. Last year, during Alibaba's November 11 Shopping Festival, sports goods accounted for 3 percent of total sales, which represented an average level of sports goods consumption in a country with a medium developed sports industry.

There were certain noticeable features to the consumption pattern.

A large number of ordinary consumers have begun to pay attention to professional sports equipment. There is also growing interest in mid-to high-end sport events, and high-end sports such as fishing, skiing, skating, cycling, rock-climbing, and equestrian competitions are continuing to grow in popularity. Now the Chinese sports industry, in terms of the income level of consumers, the degree of government attention and the level of participation, is developing at a very high speed.

The internet and artificial intelligence have greatly improved the efficiency of sports services. Typically, sports have been a human-to-human on-site consumption for a long time. And as a classic service industry, its efficiency had been very low. For example, before 1961, 22 football players could only be watched by tens of thousands of spectators, and 10 basketball players by thousands. But satellite TV in 1962 made live TV possible and the number of spectators is now in millions.

With the internet and live TV, one game can now be seen by millions of spectators, and hundreds of millions of people can watch the replays and see the highlights. At present, despite the number of players remaining the same, the number of spectators and the size of the market have been expanded significantly. Therefore, the internet has greatly improved the efficiency of the sports industry.

The internet age has also made sports a global industry.

Last year, an exhibition titled "Globalization in the Past 100 Years" was held at the National Museum in Beijing showcasing 100 cultural relics highlighting the development of globalization.

The last exhibit was a football jersey belonging to soccer star Didier Drogba from Cote d'Ivoire, playing for the English Premier League side Chelsea. Chelsea's boss is a Russian, and its sponsor Samsung is from South Korea. This jersey was produced in Indonesia and sold in Brazil and Peru. It showed how sports have become globalized in the past century.

China's sports industry has unique advantages.

First, China's large population benefits the development of its sports industry. With a population of 1.4 billion, many popular sports can be accepted and developed. If only 1 percent of the public pays attention to a particular sport, it means an audience of more than 10 million people, which is almost unimaginable in many countries. Also, there are many big cities in China, the number of which is larger than that of the whole of Europe.

There are 14 cities in China with a population of more than 10 million, more than 100 cities with a population of more than 5 million, and more than 200 cities with a population of more than 2 million. A city with 2 million people and an output value of $20 billion is big enough to support one of the world's top professional sports clubs. So, we can imagine the potential of Chinese cities in sports development.

Large cities are beneficial for sports development, especially for the professional sports industry, as a high level of urbanization means higher prices can be charged for tickets to sporting events. In the United States, the National Basketball Association has different ticket prices in different cities. Tickets are sold for much more in the three largest cities - New York, Los Angeles and Chicago.

Second, the support of the government is beneficial for the development of China's sports industry. China's central and local governments have made plans, in terms of per capita fitness area, fitness time and committed investment, to make the country's sports industry reach a higher level. In addition, China's local governments have been creative in encouraging sports events to be held in old business areas, which can raise people's interest in sports and trigger growth in the local economy at the same time.

In general, the central and local governments are very motivated, which creates favorable conditions for the development of the sports industry.

Of course, the development of the sports industry is facing challenges, mainly due to the stagnated total volume of entertainment and competition from other options. New forms of entertainment that can replace sports pop up all the time. And there is a limit to the time people will spend on traditional sports. So, we have to ensure that our sports are made as interesting as other forms of entertainment in order to catch people's attention.

In fact, many shows and performances are now very similar to sports events, as they all provide the audience with a comprehensive experience. So, it is important for sports events to keep innovating to attract young people.

To some extent, the rapid development of Chinese sports industry is coexisting with the disorder. So it also needs to strengthen its regulation of the sports industry. With both a functioning market and the oversight of the government, the sports industry will be able to develop in a healthy and orderly manner.

The author is the dean of School of Public Policy& Management at Tsinghua University. This article is compiled from her speech at the 2019 Tsinghua PBCSF Global Finance Forum.

The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.

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