The company competed with over 6,000 franchise stores and counters to market Beijing Olympics-licensed goods, of which there were over 8,000 kinds in 12 categories. Once the games were over, sales dropped like a stone, leading to sizable stocks of unsold goods in its warehouse. JuneYao was not alone in this predicament: Kayee, a Beijing-based toy company, was the north China exclusive supplier of soft-toy Fuwa, the five mascot characters. Two years on, dust is still gathering on 200,000 unsold sets of the cuddly creatures.

With the Olympic memory still fresh, JuneYao recalibrated its business strategy for the World Expo. Daily sales figures from the company’s outlets are sent to its headquarters for scrutiny, the result of which determines how big the next production run should be.

“It wasn’t through poring over print-outs and accounts that we got wise to managing stock for big events. We got our training – a baptism by fire – at the Beijing Olympics,” says He Wei.

JuneYao’s Olympic experience helped the company establish a sales strategy for its World Expo products. From 2007, the company began to establish its franchise stores all over China, in addition to more than 200 agents.

Ideas Sell

Although they count among the winners in the World Expo gifts market, JuneYao and Fanrong both report greater pressure than at the 2008 Olympics. Huang Ming complains that the number of licensed producers is higher than at the Games but the qualification level is lower, so production of goods in one category is split between several companies. In the case of precious metal items, for instance, a dozen or so companies are competing, some of them with no R&D teams of their own who stoop to stealing designs, a malpractice that allows them undercut their rivals. The competition has been cut-throat.

In this situation keeping your nose ahead of the rest is more critical than ever. In the JuneYao store at the Shanghai International Plaza the best-seller is a talking Haibao (the blue Shanghai Expo mascot). At RMB 218, it is also among the most expensive. Next fastest mover is a dancing Haibao, priced at RMB 160. “Their designs have something special about them,” explains the store manager Xiong Wenjuan. Confident in its product development strength, Fanrong predicts that its turnover from Expo products will top RMB 500 million this year.

Licensed products for major events or established brands are mutually advantageous to both the producers/dealers and the event organizers/brand owners. Because such merchandise embodies brand values associated with the event or brand name it is more likely to make better profits for those who produce and sell it. In return, well designed and marketed products can raise the profile of the events and brands they represent. Well aware of this correlation, event organizers and brand owners are always on the lookout for suppliers who can invest the licensed products with creative ideas.

JuneYao has a 40-strong design team and has served the IAAF Golden League, NBA, F1, the FIFA Women’s World Cup and other international events, developing 1,900 types of merchandise for them, 700 of them for the Beijing Olympics alone. The company has sustained a handsome annual profit rate of 10 percent.

“The success of a licensed product stands or falls by its design, and this has to embody the essence of an event or a brand,” states Zhang Qing, CEO of Key Solution, specialist sports consultants. Zhang believes that licensed products add an extra dimension to consumers’ emotional and mental experience of events. He also takes the view that the events with the greatest commercial potential for licensees are series events with broad public recognition and intense media coverage.

Manufacturers Have a Choice to Make

“Processing on orders will only land a company at the bottom end of the industrial chain,” warns Zhang Qing. But licensing and developing a full range of products under a respected brand – garments, toys, stationary and home supplies, for example – can create a cluster effect in the market, and put the producer in a different league from traditional manufacturers.