Business Hungers for Beijing Olympics

July 13, 2001 -- The International Olympics Committee made Beijing's dream of hosting the 2008 Games a reality — and gave a boost to many business leaders around the world.

Today, when some 100 former athletes and associated luminaries gathered in Moscow, the IOC picked Beijing over Paris, Toronto, Istanbul, Turkey, and Osaka, Japan. Experts say markets may jump — especially for those companies associated with China or the Olympics, or both.

That's because a Beijing Olympics is expected to have a major influence on the country's economic development over the coming years, as well as the many companies trying to tap its attractive market of 1.3 billion consumers.

U.S. investment bank Goldman Sachs says it estimates a Beijing Olympics would boost China's gross domestic product by 0.3 percent per year from 2002 to 2008.

"Hosting the 2008 Olympic Games would bring long-term permanent benefits to China," Goldman Sachs economist Fred Hu told Reuters.

Spending Spree

The first Chinese Olympics in history is expected to prompt the country to embark on a huge infrastructure spending spree.

Things that need to be done include constructing sports facilities, housing, roads, airport terminals, transit railways and telecom infrastructure and launching projects to reduce industrial pollution.

Such an effort will cost $20 billion, according to a recent report by Credit Lyonnais Securities Asia.

Stock market watchers say many speculators are snapping up any stock with "Beijing" in its name in hopes of profiting from a the expected spending boom.

Local businesses such as developer China Resources Beijing Land, tourism software firm TravelSky Technology and Beijing Capital Airport have all risen by nearly a third in the past three months.

The IOC's big sponsors, like Coca-Cola, Eastman Kodak and McDonald's, also stand to gain from a Beijing Olympics.

Not only are they already heavily invested in the 2008 Games, but they are among the handful of American companies that have made a successful investment in China.

Contrarian View

Prior to the announcement, some economists had cautioned against speculation.

Joe Zhang, China analyst at UBS Warburg in Hong Kong, told Reuters that "a lot of hot air" was causing stocks to rise.

He added that Olympics plays were "a very wrong way of investing" in China's growth story.

Jun Ma, economist with Deutsche Bank in Hong Kong, also warned that not all stocks associated with Beijing would be profitable. "Benefits may be distributed very unevenly," he told Reuters.

Even IOC marketing commission chief Dick Pound played down the market promises.

Referring to the big-name Olympics sponsors, he said, "their numbers will be the same whether it's China or Toronto." Toronto was a contender for the 2008 Games, but came in a distant second to Beijing in the voting.

With the possibility of a Toronto, Paris, Osaka or Istanbul win out of the way, Beijing sidestepped the biggest potential pitfall regarding the business enthusiasm.