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Torch Relay Sponsors Facing Ambush from Rival Olympic Backers

May 30, 2008

By Wing-Gar Cheng
Bloomberg
May 29, 2008

May 29 (Bloomberg) -- Corporate backers of the Olympic torch relay
are having their multimillion dollar marketing campaigns undermined
by other Beijing 2008 sponsors, according to the top Olympic
marketing executive.

Ambush marketing is rife as the torch makes its way around China,
said Gerhard Heiberg, chairman of the International Olympic
Committee's marketing commission, and it's not just small local
companies using the five-ringed Olympic logo to push their products
without paying for the rights.

Some of the rule-breakers include Olympic sponsors who aren't
supposed to advertise at the torch relay, Heiberg said, while
declining to identify any. It's the latest challenge for Samsung
Electronics Co., Coca-Cola Co. and Lenovo Group Ltd, the official
backers of the flame's 129-day global journey to Beijing, following
violence, reshuffled routes and criticism from groups pressing China
over human rights.

"There are a lot of companies wanting to benefit from the torch relay
and they are doing things they should not do,'' Heiberg, 69, said in
an interview from Oslo. ``We know that, unfortunately, there are
Olympic sponsors also involved in what we think is ambush marketing.''

Heiberg was pinpointing some of the companies that signed endorsement
contracts with the Beijing Olympics Organizing Committee, rather than
those affiliated to his organization.

The Lausanne, Switzerland-based Olympic committee is eager to protect
its 12 international sponsors, who contribute about 16 percent of its
revenue -- paying an average $72 million each to tie their products
to the 2006 Turin and 2008 Beijing Games.

'AMOUNTS TO THEFT'

Samsung, Coca-Cola and Lenovo spent extra to back the
137,000-kilometer (85,000-mile) torch relay, which ends at the Aug. 8
opening ceremony in the Chinese capital.

Meantime, the Beijing organizing committee has signed contracts with
20 companies worth more than $1 billion, giving those sponsors the
right to use Olympic symbols within China -- but not at the torch relay.

"Ambush marketing amounts to theft,'' said Christina Lau, director of
external affairs at Coca-Cola China.

One sponsor who attended the torch relay's procession through
Shanghai last week said it had stuck to the rules.

Uni-President Enterprises Corp., a Taiwan-based food-maker, had a
group of about 20 employees in Shanghai's financial district on May
23 parading three banners and an Olympic panda mascot while handing
out red balloons bearing company and Beijing Olympics logos.

"We only sent a cheering team, we did not have any marketing
activity,'' Uni-President Director Young Shung Chen said in an
e-mail. ``We followed the rules of sponsorship.''

Violent Protests

Samsung, Coca-Cola and Lenovo last month scaled down promotional
efforts on the torch relay's international leg following violence in
London and Paris by groups protesting China's crackdown on riots in Tibet.

The companies found themselves fielding questions on whether they'd
done enough to pressure the Chinese government to review policies on
Sudan, Tibet and human rights.

Now, with the flame touring more than 100 Chinese cities and
receiving an enthusiastic welcome, the three sponsors are
intensifying their advertising drives, only to see other companies joining in.

"Ambush marketing is a concern,'' added Suwon, South Korea-based
Samsung -- Asia's largest maker of chips and mobile phones -- in an
e-mail. Chinese computer maker Lenovo declined to comment.

The challenge from ambush marketers is greater in China because
sports marketing and sponsorship norms aren't widely understood,
especially outside the main cities, Heiberg said.

`NO IDEA'

"We knew from day one that China would be a challenge, and it is,''
said Heiberg, a former chairman of Den Norske Bank ASA and the head
of the 1994 Lillehammer Winter Olympics. ``For smaller companies out
in the provinces, they have no idea.''

Beijing's government handled 95 cases of Olympic rights violations
last year and imposed fines of 1 million yuan ($150,000).
Manufacturing hubs such as Guangdong and Jiangsu have also stepped up
enforcement, with Jiangsu forcing 64 prosecutions since August.

"It's a violation even when it is for non-commercial purposes,'' said
Wang Yefei, from Beijing's copyright agency.

Carrefour SA was rapped last month for infringing copyright after
getting employees to wear Olympic-embossed caps. The French
supermarket chain had taken the measure to show support for the
Olympics following calls in China to boycott its products over the
trouble at the torch relay in Paris.

For now, Olympic officials are focusing on bigger companies that
should know the rules, including Beijing 2008 sponsors, to avoid
ambush marketing before and at the games, Heiberg said.

``We are going to stress the rules vis-?-vis our partners and
sponsors,'' the Norwegian said.

To contact the reporter on this story: Wing-Gar Cheng in Beijing at
wgcheng@bloomberg.net
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