The World Cup and Economics 2014
When Will China and India Play in a World Cup Final?
Together, China and India account for more than one-third of the world’s population. China’s sporting achievements include having won more Olympic medals than any other country, and India has a very young and growing population. Yet, they languish in football rankings because of the small number of players in both countries, China’s limited success in team sports, and poor infrastructure and administration in India. While the popularity of the sport is high in China and increasing in India, we think they are unlikely to participate in a World Cup final in the next 20 years unless significant changes are made.
Chinese football: Trend reversal?
Since the reform process started 36 years ago, China’s influence on the international stage has increased. In sports, China’s ranking in the Olympic medals table has risen steadily. But football is a notable exception: China’s world ranking has generally been on a downward trend, and has stayed with a range of 70-100 since 2008.
A foreigner visiting China could easily get the impression that football is very popular if he/she were to switch on a TV, as the Chinese are avid football fans. So, how is it possible that 1.3 billion Chinese have been unable to produce 11 footballers with sufficient talent to take the national team to a World Cup final? In reality, not that many people play football in China. The number of registered players is around half that in the Netherlands, which has a smaller population than either Shanghai or Beijing.
Competitive sports in China are dominated by the state, whose priority has been to maximise the country’s medal count, especially in the Olympics. Winning a large number of medals has proved very popular, and it is more efficient to invest in a large number of relatively minor sports than in football. A limited number of medals are on offer in football, and it is also much more difficult to be dominant in the sport.
Moreover, China has been relatively less successful in team sports involving many players. Of the sports where China is highly competitive (such as table tennis, badminton, diving and weight lifting), few involve the participation of more than one or two players. The country has had some success in sports such as basketball and volleyball but much less so than individual sports. So, while China can produce world-class players like Sun Jihai and Yao Ming, basketball requires four more players, and football requires another 10 of the same calibre, which so far it has failed to produce.
A possible turning point
The relatively better performance of Chinese football in the early years of the reform process could have been related to the fact that Deng Xiaoping himself was a football fan. China now has another football fan at its leader, and investment in football has risen dramatically since the power transition in late 2012. A number of big names in world football have worked in China, including Marcello Lippi and Sven Eriksson, and some prominent property owners are supporting the sport financially. However, with the economy slowing and the property market cooling, investment in football is likely to suffer a temporary lull in China.
That said, the aggressive anti-corruption campaign under the new leadership should help to improve the environment for football. The government started to make changes several years ago and a number of officials and players have been gaoled for corruption. These changes should encourage the selection of players and coaches based solely on their ability and performance.
Moreover, Chinese society seems to have become less obsessed with winning Olympic medals, after the point was made when China topped the gold medal table at the Beijing Olympics in 2008. People are more aware of the need to develop sports for the young as obesity is becoming an increasing problem amid the rapid improvement in living standards. This may lead to a rise in the number of children who play football.
China’s football performance should improve in the coming years, especially if it is able to develop a sustainable system that offers a high standard of training to a large number of young players. But to become a first-tier football nation with a chance of winning the World Cup will be a long process, and we may need a couple more generations before that can happen.
India: Still playing in the backyard
India is ranked 147 out of 207 countries in the latest FIFA World Ranking, and has never qualified for the World Cup. Much smaller countries in terms of population and territory – such as Senegal, Botswana, Ghana, Rwanda, Gambia and Haiti – are ranked much higher than India. But India seems unable to produce 11 word-class players, even though 30% of its 1.2 billion population are aged between 10 and 24.
Indian football and our growth environment score (GES)
Despite the large amount of open space and a young population, football in India has not been professionally successful. We look at this through the lens of our growth environment score (GES) framework. Our GES captures the political, economic and social indicators that affect an economy’s ability to grow. Surprisingly, there is quite a strong correlation between improvement in the GES and the FIFA World Ranking for developing countries. Most of the above-mentioned countries that are placed higher in the FIFA rankings have improved their respective growth environment scores substantially over the years. Meanwhile India, which has seen very little improvement in its growth environment score over the last decade, has remained low in the FIFA rankings.
What is holding back Indian football?
There are reasons for the dismal state of football in India:
- Poor infrastructure: India’s football stadiums lack basic amenities and infrastructure.
- Competition from cricket: Football faces intense competition from peer sports, especially cricket – which is the most popular game and attracts sponsors and media spotlight. Football is not as popular, and is played professionally only in small pockets of eastern and western India and in Kerala in the south.
- Less urbanised: Football is mostly played in rural areas and players generally find it difficult to reach national level due to the lack of support from the state. Most countries with a higher proportion of urban population have a higher football ranking.
- Weak administration: Administrators in football bodies are generally not directly linked to the game, and are political appointees. This can potentially lead to indifference towards the game.
- Lack of training: Consistent coaching of a high standard is also a significant hindrance for the development of Indian football.
In sum, Indian football still has a long way to go to mark its presence on the world stage. This requires support from the government, the media, business and, most importantly, the general public. Some of the recent steps taken are heartening, such as the establishment of the Indian Super League which unites football bodies, corporates and celebrities on a single platform in India. Moreover, English Premier League teams have launched some talent-hunting schemes in India. Football is becoming increasingly popular in urban schools. However, there is still a lot to be done to lift Indian football to international standards. We think that even a 20-year horizon is probably too short for India to make it into a World Cup final.
Yu Song and Vishal Vaibhaw
Yu Song - Beijing Gao Hua Securities Company Limited
Vishal Vaibhaw - Goldman Sachs India SPL
(212) 934-9792 email@example.com
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We, Yu Song and Vishal Vaibhaw, hereby certify that all of the views expressed in this report accurately reflect our personal views, which have not been influenced by considerations of the firm's business or client relationships.
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