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The rush to China

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Barcelona is the latest European football club to invest in China on the back of President Xi Jinping's plans for a football revolution.  They have opened a €4m complex featuring a football school, Barcelona shop and fan zone on the island of Hainan.  They believe that revenues from China will be critical to Barcelona's target of generating €1bn of revenue by 2021, up from €679m in the 2015/16 season.

Bayern Munich and Wolfsburg have opened offices in Shanghai and Beijing respectively, joining Real Madrid, Manchester City and Manchester United.  Clubs realise that they need a physical presence in China, not just on social media platforms.

The downside is that most consumers are unwilling to pay much for football content..   Piracy is rife from illegal broadcast feeds to fake replica shirts.   European clubs are trying to generate more immediate revenues from sponsorships and commercial partnerships.

In the case of Wolfsburg, 16 per cent of the club's sponsorship revenues already come from outside Germany, the bulk of that from China.   By opening an office in Beijing, the club hopes to expand this business.   Partly thanks to its ownership by Volokswagen, a popular marque in China, Wolfsburg has twice as many followers on its Chinese language Weibo account as its German Twitter feed.

Many Chinese companies are keen to demonstrate their backing for the government's football plans by sponsoring European clubs and bringing over European coaches.   However, in a country where the lines between business and politics are blurred, it is difficult for European clubs to find the right partners.

Li Rulgang, a Chinese media tycoon, has a 13 per cent stake in Manchester City.  City's chief commercial officer spends one week a month in China leveraging Mr Li's connections to win more sponsors.   He is targeting Chinese companies that want to go global, such as Tenco, a mobile phone company with a big following in Africa, and international companies that want to grow in China, such as Australian winemaker Wolf Blass and German software group SAP.

Chinese investors have spent more than $2bn taking over or acquiring stakes in European football clubs over the past couple of years, but the spending spree is running up against Beijing's intensified capital controls.   The head of the State Administration of Foreign Exchange warned that some buyers were overly indebted and not well placed to buy more assets.

Chinese football investors fall into two broad camps.  First, there are the heavy hitters with solid finances and some synergies with their existing businesses.  These include Dalian Wanda, the media and real estate group that owns 20 per cent of Atlético Madrid; Fosun, the insurance and entertainment conglomerate that bought Wolverhampton Wanderers; and Li Rugang's China Media Capital which invested in Manchester City.

The second camp includes lesser known investors with less of a record in media and sports or unclear sources of wealth, like Tony Xia who bought Aston Villa, and Yonghong Li who bought AC Milan with funding from a US hedge fund.

Chinese investors continue to eye further acquisitions such as Brentford and Southampton.