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Businesses funding Beijing bid

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BEIJING — Foreign companies are already salivating about Beijing's prospects of winning the 2008 Summer Games, helping to underwrite the city's Olympic bid as corporations push to establish themselves in the world's largest country.

"This could potentially be the most explosive event ever for sports sponsorship and entertainment. China's big market will yield big rewards," said Dean Bonham, whose Denver-based company, the Bonham Group, specializes in analyzing sponsorships, sales and contract negotiations for sports and entertainment companies.

General Motors Corp. and Xerox Corp. from the United States, Amsterdam's Heineken NV, Tokyo's Fuji Photo Film, Australia's Telstra and Taiwan's Acer Inc. are among 20 corporations underwriting two-thirds of Beijing's $20 million bid budget.

Foreign businessmen hope a Beijing Olympics could speed the opening of Chinese markets.

"We all see it as part of the continuous process of China engaging the world. It's not just business, it's also the social fabric of the country," said Emory Williams, a board member of the American Chamber of Commerce in China.

The value of Olympic sponsorships has soared since the IOC opened the Games to corporate support in 1983. In 1988, nine corporate sponsors paid $100 million for Games marketing rights. Now, to buy just one space for a company logo on a medal stand can cost $55 million.

Western corporate sponsors could be placed in an awkward situation if Chinese leaders again use military force to quell unrest as they did in 1989 with the Tiananmen Square pro-democracy protests.

"Companies need to negotiate special arrangements to protect against these sorts of risks," Bonham said.

Chinese companies, eager for international recognition, have also signed on. Legend Computer donated money, equipment and ad space to Beijing's bid committee.

"It has a symbolic value, but it also has very good business implications

for us," said Edward Tian of telecoms firm China Netcom Corp., another sponsor. "It will drive people to try new things and invest in new infrastructure."

Beijing has pledged to spend $21 billion on roads, sewers, rail lines and other infrastructure ahead of 2008 and $1.6 billion on 22 Olympic venues.

Beijing picked a master plan by Baltimore-based urban design firm RTKL for an Olympic park to the north of the city, including an 80,000-seat stadium, accommodation for athletes and other facilities.

The long-term benefit for local residents remains an issue of debate. Studies of recent Olympics by sports economist Philip K. Porter found no significant increase in hotel revenues or other business associated with the 1996 Atlanta Games.

Porter says Olympics-related spending can siphon money from construction of housing and other needed facilities and into investments that show a poor rate of return.

Jiang Xiaoyu, the bid committee's vice chairman, said Beijing intends to "study Ueberroth" — referring to Peter V. Ueberroth, who as president of the 1984 Los Angeles Olympic Organizing Committee managed to post a record $235 million surplus.

"If the market works well, I'm very confident we can succeed," Jiang said.

A Beijing Games is projected to yield a slender profit of $19 million, with estimated revenues of $1.625 billion and costs of $1.606 billion, Jiang said.