Shawei Makes a Strong Kick Off

By JONATHAN S. LANDRETH

(Virtual China News -- Mar. 27) In July, 1999 Fritz Demopoulos, 31, founded what he claims is now the largest independent sports Web site in China, Shawei.com. Half a year later the site, which Demopoulos and his partner, Lu Xiaohu built with their own money, has three Silicon Valley venture capital firms behind it, 40 full time employees in offices in Beijing and Shanghai, and a monthly burn rate of "less than half a million dollars."

With a surprisingly casual frankness Demopoulos admitted in a recent phone interview with Virtual China that his labor of love has yet to make money. The reason? TV. For now, according to Demopolous, Chinese people want their sports on a television, not a lap top.

Drinking Beer

Soccer on television is hugely popular in China. A live football match in the Middle Kingdom can often attract more viewers than the dramas that regularly top the ratings charts.

"You'll maybe see a two to three percent range rating for an average game and a four to five percent rating for a big match," Demopoulos says, basing his estimates on a combination of the Chinese rating system and the Nielsen Ratings (the Nielsen Ratings's do not gauge Chinese television audience numbers).

"You're going to [be able to] see 500 channels here before you get a decent Web connection," Demopoulos explains, "The Web is great for team news and scores but you want to be hanging out with other people drinking beer in front of a game on TV."

Logistical Nightmare

But if Shawei can find a way to uniquely supplement soccer TV rather than seeking to replace it they may have a fighting chance. After all soccer magazines and all kinds of soccer paraphenalia are big business in the PRC. Live coverage isn't the only game in town when it comes to making money on sports. The spillover might be enough for an aspiring sports Web site. Demopoulos is certainly hoping so. He has big plans for Shawei. The site currently has a two year contract to claim the traffic from a co-branded Web site with the China Sports Broadcasting Network (CSBN), a cable network that reaches 70 million households.

Shawei's "14 Cities Voice" online program takes loyal Shawei soccer surfers to see and hear the fans, coaches and players of the nation's biggest clubs in a multimedia package.

"It's a logistical nightmare," says Demopoulos of the weekly Web event, "But some of the television stations are copying our programming, so it's great."

Sports is Tribal

Demopoulos isn't worried about the big multinational competition either. He used to work for both his potential competitors, News Corp and Disney. "Michael Eisner's made maybe one trip to China in the last 20 years," Demopoulos says, and as to its property, ESPN's Soccernet: "The name isn't big enough."

Demopoulos recounts what a member of the News Corp. staff once said to him to illustrate why he thinks Shawei can survive the onslaught of multinational competition.

"Sports is tribal. Which means that in Beijing they like their soccer team and in Shanghai they like their basketball team," Demopoulos says. "[ESPN] would have to come in and do what we've done all over again."

Sure, Demopoulos admits, Li Ka-shing's Tom.com bought the Web rights to the Chinese Football Association, and Pacific Century Cyber Works, and Sina.com are throwing money at other Chinese sports rights, but he's not too worried about Shawei. It will have a place he says.

"The talent is already locked up and not many of ESPN's rights are world-wide."

Extra Two Million

But the landscape for Shawei's already been tough going. The site had an agreement granting them the Web rights to "certain Chinese sports teams, and then a foreign company came in and broke up our contract by offering two million in cash," Demopoulos says.

"I guess if you've got a P&L in China and you can make an extra two million, you do it."

His expenses are going through the roof and Demopoulos concedes that now his plans to make money include selling club jerseys to fans over the web. This is no small business and, as many European clubs have proven, it's business that can transcend international borders. According to Wang Dong, host of Shanghai Cable TV's "Soccer Weekly," European clubs have already opened concessions in Southeast Asia and it's only a matter of time before Manchester United jerseys are seen in the streets of Beijing.

"I guess if the network is good enough, the Web can do anything," says Demopoulos.

For more on soccer in China, see Soccer's Next Frontier, The China Web

To reach Jonathan S. Landreth: jslandreth@virtualchina.net