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Posted by: Frederik Balfour on July 01, 2009
PepsiCo (PEP) announced today it is spending $5 million in China to sponsor the U.S. pavilion at the 2010 Shanghai Expo, joining 3M (MMM) and General Electric (GE) Pepsi chairman and CEO Indra Nooyi signed the deal during her marathon 12-day stay in China, a sure sign of how important the mainland China market is to the soft drink and snacks giant. It also helps raise the profile of the Shanghai Expo, which has only a handful of international corporate sponsors with their own pavilions, including Siemens and Coca-Cola, (KO).
There is however, one small problem: The U.S. pavilion may never see the light of day. So far organizers have only raised less than one-third the roughly $61 million needed to build and fit-out the pavilion for the Shanghai Expo which opens on May 1 next year. The money must come entirely from the private sector because of a 1991 bill passed by Congress that prevents the U.S. government from funding national pavilions. Meanwhile 191 other countries have already confirmed their participation in Shanghai 2010.
[Thanks to my alert colleague Dexter Roberts, I have learned today, July 2, that Hillary Clinton has REITERATED her support for the USA Pavilion in Shanghai and has named Jose Villareal as the Commissioner General to Shanghai Expo. ]
The fact that the U.S. is one of the few countries which has not made a firm commitment to the fair is proving to be a major embarrassment for the U.S. business community in China, especially in Shanghai. The Shanghai American Chamber of Commerce is on a charm offensive to raise money from other U.S. corporations, but the going is tough, people close to the effort have told me. Unlike the Beijing Olympics, which proved to be a marketing bonanza for sponsors, the Shanghai Expo just doesn’t have the same cachet. “The Olympics took all the oxygen out of the room, it was so successful and the sponsors are still reveling in it, marketing off it. There is a half life there,” one of the U.S. pavilion’s fund raisers told me a month ago. The second hurdle, the fund raiser said, was the economic turmoil which has put everyone into survival mode.
That may be true, but you’ve got to think more U.S. companies will follow Pepsi’s lead. Sure it’s tough to put a price on goodwill anywhere in the world, but in China, the intangible benefits of giving the Chinese “face” are huge. “The Chinese government has made it clear that supporting the U.S. pavilion is regarded as supporting the Chinese expo,” says Geoff Li, spokesman at GE China.
I’m frankly surprised that Disney hasn’t signed on to help pay for the U.S. pavilion. More than 60 million Chinese are expected to visit next year’s fair, and any mainland family affluent enough to make the trip to Shanghai would seem to be Disney’s target market. A partnership with Disney, which could cost as little as $1 million, would seem like a smart investment, especially since Disney (DIS) is waiting for Beijing to give the green light on a mammoth Disneyland, slated for Shanghai in 2014.
For more on this check out this entry on Adam Minter’s blog Shanghai Scrap “Why can’t the US find $61 million for an Expo 2010 pavilion?” Hat tip to commentor Bob Jacobson [Bluefire] for alerting me to this blogpost by Minter.
BusinessWeek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.