Moody's Investors Services, a segment of
), has played down the positive impact of the 2014 FIFA World Cup
on Brazil's economy. The credit rating agency believes the positive
impact will be limited to certain sectors only. Interestingly,
China - a non-participating country - has been benefiting more than
the host country. Experts believe that China will earn
significantly from the costliest FIFA World Cup tournament ever;
that too without making massive investments.
It is China's manufacturing sector that is expected to reap most
of the benefits. The nation has been busy manufacturing the
official match ball, World Cup memorabilia including the mascot
Fuleco and official instrument Caxirola, and the hybrid bus
(manufactured by China's South Locomotive & Rolling Stock Corp
Ltd). China has also produced electric multiple-unit trains that
will be used to connect stadiums with other areas.
According to industry experts, China's skilled workforce, and
the efficient network of material suppliers and infrastructure has
helped China become an important seller to the global markets.
Why Too Little for Brazil?
Brazil is reported to have invested $11.5 billion in stadiums,
transportations, and other Cup-related projects. However, global
credit insurance company Euler Hermes said in a report that neither
the ongoing World Cup nor the upcoming Olympic Games will do any
good to Brazil's economy. It projects growth will remain subdued at
1.8% and 2.1% in 2014 and 2015, respectively.
Moody's had said that the FIFA World Cup would give only a
"short-lived" boost to sectors including food and beverage,
lodging, TV broadcasting and car rental.
Barbara Mattos, Moody's Vice President -- Senior Analyst, had
said: "Some hope hosting the World Cup will help lift Brazil out of
economic slowdown, but the associated economic activity ultimately
pales before the country's $2.2 trillion economy, the usual levels
of investment spending and the annual revenues of most companies".
The report also noted that Brazil's estimated $11 billion planned
spending accounts for "only 0.7% of overall planned investment in
Brazil in 2010-14 and most of the impact has already been felt
Recently, Moody's noted that the financial benefits for Brazil
are limited. The agency said tourism sector and advertising
revenues is not powerful enough to 'give a major kick to the
national economy'. The social unrest and holidays have been cited
to causing losses.
China's Football Craziness
Interestingly though, China, which last played the World Cup
finals in 2002, stands a chance to win from the event this year.
Advertising revenues for China's largest video website, Leshi, is
estimated to have hit about $16 million. State television network,
CCTV, is expected to boost its earnings from the prior edition of
the World Cup by 50% to $240 million this summer.
The nation has been ardently following the tournament. The
enthusiasm has been such that Beijing had briefly renamed its
subway stations after FIFA World Cup participating teams. Xinhua,
China's official news agency, has even reported death of
sleep-deprived football fans. Shanghai's hospitals are witnessing
increasing emergency cases; 40% of them being breathing or stomach
problems. Several bars in Beijing are open for 24 hours.
Brands Cash in Their Gains
For a nation with such enthusiasm, it is easier for brands to
reap benefits. For instance, when bars are open for 24 hours, it is
obvious that breweries would see their sales soar. Moody's
commented that large corporate sponsors would benefit from
Anheuser-Busch InBev SA/NV
), a major sponsor, was focused in establishing themselves as the
"King of Beers in China" right from the beginning of this year.
They announced plans to buy China's domestic Siping Ginsber Beer
Group early this year. They "wholly" acquired the Chinese brewer in
Reportedly, China is the world's biggest beer drinker and AB
InBev would most likely see sales jump during World Cup. In fact,
Anheuser-Busch InBev owned Harbin Beer is the official World Cup
beer. The company has also been busy with on-line promotions and
delivery of beers. AB InBev currently carries a Zacks Rank #3
(Hold). Soccer fans have been gulping the Harbin Beer apart from
what beverage maker and official world cup sponsor
The Coca-Cola Company
) has to offer.
E-Commerce & Internet
Popular e-commerce company Alibaba Group said online shopping
website sold 1.6 million cans of beer during a sales promotion on
June 4. This generated revenues of about $1 million. Meanwhile,
Alibaba Group itself should be a beneficiary from the World Cup.
This e-commerce business, where
) owns significant stake, has introduced in association with CCTV a
mobile application via its cloud computing subsidiary. This
application will provide China's only live streaming for handheld
China soccer fans are following World Cup news on Internet.
) subsidiary Weibo Corporation, where Alibaba too owns a stake, had
22 million visitors on the first day of FIFA World Cup. There were
83 million published posts within the first two hours of the event.
Separately, while Japan-based
) is manufacturing the official tournament television, China has
played its role in putting up the live score boards inside the
stadiums. Among others, three Chinese companies have been supplying
the live scoreboards.
Alibaba Group has also been selling world cup merchandises.
Talking of which, China's Yiwu city has enjoyed robust demand for
merchandises. Yiwu International Trade City in eastern Zhejiang
province is the world's largest wholesale center for small
commodities and accessories. A Caxirola manufacturer said they have
sold about two million Caxirolas since April. Zhejiang and
Guangdong provinces manufacture 90% of the world's Caxirolas. A
dealer in Yiwu confirmed that sale of commodities to soccer fans
has jumped 30% thanks to the World Cup in Brazil. Hong Kong-based
Kayford Holdings Ltd is the only company outside Brazil to hold the
license for plush mascot and 3D figurines.
Separately, Chinese gifts and souvenirs manufacturer Wagon
Enterprises is said to be responsible for 80% of the official World
Cup souvenirs this year. The company has produced 8 million world
cup related products so far. Company's president Simon Lee said
that they have witnessed sales surge 40% this year and attributed a
third of that due to the biggest sporting extravaganza.
A major achievement for China has been
Yingli Green Energy Holding Co. Ltd.
) featuring among the official world cup sponsors. Yingli Solar -
the world's largest vertically integrated photovoltaic ("PV")
module manufacturer - was the first Chinese and renewable energy
company to sponsor a FIFA World Cup event even way back in 2010 in
South Africa. This time, Yingli Solar is installing solar panels in
some stadiums. (Read:
Sun Shines on 2014 FIFA World Cup, Thanks to Yingli
The company's name is displayed pitchside during all the
matches. Yingli Solar features prominently alongside other major
Johnson & Johnson
Official Match Ball
Adidas AG is entrusted with the responsibility of manufacturing
the official match ball - Brazuca. While some of the six-panel
soccer ball was made in Pakistan, a major share has been developed
by a factory in the southern Chinese city of Shenzhen. A subsidiary
of Taipei-based sports gear maker Long Way Enterprise, this factory
has been partnering Adidas since 1997 and had also manufactured the
2010 World Cup in South Africa official matchball- Jabulani.
Thirteen million official balls were sold during the last
All these would ultimately translate into broader benefits for
the Chinese economy. The manufacturing sector will get some boost.
Separately, Chinese products have been flocking the Brazil market.
Till May, Yiwu alone saw its total exports to Brazil increasing
31.4% year over year to $160 million. Exports of sports commodities
to Brazil jumped 42% year over year to $2.78 million.
The trade relation therefore is being well supported. Brazil and
China are the biggest partners among the BRIC nations with trade
flows between the nations surging to over $90 billion in 2013 from
just $6.68 billion in 2003. China toppled the US in 2009 to become
Brazil's primary trade partner.
No matter the Chinese soccer players failing to represent the
nation in the event, the Chinese manufacturing sector has played
its due role. The 'factory of the world' has won.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
SONY CORP ADR (SNE): Free Stock Analysis Report
VISA INC-A (V): Free Stock Analysis Report
YAHOO! INC (YHOO): Free Stock Analysis Report
MOODYS CORP (MCO): Free Stock Analysis Report
MCDONALDS CORP (MCD): Free Stock Analysis
SINA CORP (SINA): Free Stock Analysis Report
JOHNSON & JOHNS (JNJ): Free Stock Analysis
ANHEUSER-BU ADR (BUD): Free Stock Analysis
YINGLI GREEN EN (YGE): Free Stock Analysis
To read this article on Zacks.com click here.