Chinese Company Ties Success to N. Korean Soccer — And Wins

In 2000, Erke was an unknown brand attempting to establish a name in China’s sporting apparel market alongside popular global names such as Nike and Adidas.

Now, nearly a decade later, the apparel company has achieved widespread brand recognition in China with help from an unlikely ally — North Korea.

The company was set for another boost after North Korea’s national soccer team qualified Wednesday for the 2010 World Cup in an emotional draw against Saudi Arabia, with audiences around the world watching as players decked out in red Erke-emblazoned uniforms jumped for joy.

It was North Korea’s first World Cup qualification since 1966 when it surprisingly beat Italy to reach the quarterfinals. For the sponsor company it means further rewards carrying on from the 2008 Olympic Games in Beijing, where the North Korean national team took home six medals — elevating Erke’s brand in China.

In 2006, when Erke (pronounced “ARE-keh”) became the first apparel brand to sponsor all of one country’s teams for an Olympics, North Korea was a unique choice. Because of political sensitivities, such sponsorships would not even have been on the radar for bigger international brands such as Nike and Adidas.

“Through demonstrations of their capabilities in the games and the medals they’ve won, it has indeed raised the visibility of our brand in the China market,” Jenny Yeo, a spokeswoman for the Fujian-based China Hongxing Sports, Erke’s parent company, said by e-mail.

Calls to the North Korean Embassy in Beijing rang unanswered Friday.

Since sponsorship for North Korean teams began, Hongxing’s domestic presence has grown to nearly 3,800 retail outlets across China from about 100 in 2000. And with the World Cup qualification, Erke is confident its investment in an overseas market versus competing for domestic sponsorships with Adidas and Nike will pay off.

“Football is one of the areas which we feel have a lot of potential for development and we hope to be able to raise our brand visibility … in major events, such as the World Cup,” Yeo said.

In 2008, the company expanded its scope of international sponsorships to include the International Table Tennis Federation Pro Tour and its tournaments in Qatar, Austria, Germany and France.

But Erke’s North Korea sponsorship has not gone without challenges, drawing criticism from human-rights activists, similar to that of China’s largest sportswear brand Li Ning’s sponsorship of Sudan’s track-and-field team.

Erke rejects that, saying the deals are about sports and not politics.

“As a sports brand, our focus is on sports excellence and showmanship, not politics,” said Yeo.

The company hopes Chinese consumers will carry positive associations with the brand since China and North Korea have long ties, she said.

The Singapore-listed China Hongxing Sports reported a RMB56 million ($8 million) profit on sales of RMB567.8 million ($83 million) in the first quarter of 2009.

6/19/2009 4:27 AM CHI-CHI ZHANG Associated Press Writer BEIJING