Japanese companies struggling because of the Olympics

In 1964, the world watched the Tokyo Olympics via the world’s first ever satellite broadcast using a gigantic antenna developed by NEC. In the Tokyo Olympics from July, NEC will deploy new technologies again.

Company’s facial recognition system to be installed in stadiums to identify athletes and staff as government moves forward with what it has promised to be ‘safe and secure’ Games despite the pandemic of Covid-19.

But there will likely be little promotion by NEC or other Olympic sponsors of the technology used at the Games this summer, whether related to Toyota’s autonomous vehicles or security robots developed by Secom.

As one sponsor sadly acknowledged, silence is the best marketing strategy for navigating a toxic environment where any association with the event could potentially be damaging to the company’s brand.

Another GM quietly retracted a comment he made to the FT a few months ago that he loved the sport and wanted the Olympics to continue, saying what would have been a harmless comment in any other context was inappropriate given persistent public opposition to the games.

Another sign of how dangerous the current situation is, NEC has been unexpectedly embroiled in a scandal that reveals how the Olympics raised the ante for both the government and Japanese businesses.

Since Friday Takuya Hirai, the digital minister, was talked about on Japanese TV shows following a record leak obtained by Asahi newspaper. He is heard urging his subordinates to use “threats” against the president of the NEC. A comment from the April online conference particularly stands out: “If they complain too much about these Olympics, we’ll put them out of the way altogether. “

At the center of the incident is a $ 66 million contract – which appears unrelated to Olympic sponsorship – signed between the government and a consortium including NEC to develop a smartphone app to track the health of foreign spectators. and other personnel associated with the Games. . With the decision to ban foreign spectators, the government demanded the cancellation of its contract with NEC.

Japanese Digital Minister Takuya Hirai has defended the use of his language as a reflection of a “strong determination” to cut costs © Kyodo via Reuters

Hirai has since admitted his comments were inappropriate, but has denied that they were made directly against NEC. He also defended the use of his language as a reflection of his “steadfast resolve” to cut costs. NEC declined to comment beyond confirmation that it agreed to a contract change.

The incident may have been just a ministerial blunder, but for NEC and the 46 other Japanese companies that have collectively paid more than $ 3 billion to support the Games, there are serious questions to be asked. if the association with the Olympics is really worth their money.

The Games should be most sponsored sporting event in history, but even before it was postponed due to the pandemic, some executives had privately expressed doubts about returns on investment.

While the decision to participate in what was considered a national project initially seemed low-risk, the companies agreed to non-exclusive deals, creating a situation where direct rivals such as Japan Airlines and ANA Holdings were both offspring. sponsors.

When Tokyo last hosted the Games in 1964, official and exclusive corporate sponsorships were not yet established, and companies participating in Japan’s postwar period to demonstrate its resurrection after defeat seemed almost the thing. natural to do. But that same patriotic spirit will no longer be enough to justify their sponsorship this year.

Certainly, public sentiment may well change by the time the Games are held as the vaccination program accelerates, and companies may even be able, albeit belatedly, to reap the marketing benefits they hoped for.

But even if they manage to navigate safely during these Games, another minefield awaits global Olympic Games sponsors such as Toyota and Panasonic. Beijing 2022 Olympic Winter Games are fast approaching and companies should undergo pressure from activists take a stand against China’s human rights violations in Xinjiang.

For too long, Japanese companies have simply viewed the sport as something they should support, but more sophistication will be needed as Olympic sponsorship becomes even more political and controversial.


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