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KEY STAT | Alibaba sees Olympic vision hanging in the air after postponement of Tokyo Games

The China e-commerce giant is said to have devoted at least USD 800 million in sponsorship for the Olympic Games.

As the COVID-19 pandemic outbreak keeps accelerating and disrupting the normalcy in almost 200 countries and territories, more and more countries have closed their borders, imposed lockdowns, and canceled large gatherings such as musical events, trade shows, and sports events.

Japanese officials, who have been shunning away from making the decision to cancel this year’s Tokyo Summer Olympics, as it would imply huge economic loss, have finally made the move to postpone the Summer Games and Paralympic Games until next year.

In a joint statement, the Tokyo Organising Committee, together with the International Olympic Committee (IOC) said that, given the deteriorating situation in the rest of the world, the Tokyo Olympics “must be scheduled to a date beyond 2020 but no later than summer 2021” to safeguard the health of anyone involved.

The delay is also going to represent up to USD 6 billion direct economic loss to the host country, Japan, as estimated by Nikkei Asian Review.

This will be the first delay in 124 years of the Games’ modern history, except for the cancellations that occurred during the two world wars. Tokyo Olympics is the most heavily sponsored event in sports history, which speaks to the Japanese government’s initial hesitation in calling it off. Over 60 local and global brands have contributed to a total of more than USD 3 billion in sponsorship, three times that of the 2008 Beijing Olympics.

One of those sponsors is Alibaba, (NYSE: BABA; SEHK: 9988) the first and so far only Chinese Olympics Partner Programme (TOP) of the IOC. The Chinese internet magnate has signed a twelve-year deal with the IOC in 2017 to become the official “Cloud Service” and “E-Commerce Platform Service” partner for six games till 2028, with the aim to “help transform and upgrade the games”, as Alibaba chief marketing officer Chris Tung told The Associated Press.

It is still unclear how much Alibaba had spent and would lose from the schedule change, however, the “black swan” crisis hit the company at a time when Alibaba was banking on this international event to bolster up its global image, in a bid to further seek overseas expansion.

Alibaba reportedly won the partnership over US-based giant Amazon, and has spent at least USD 800 million on the deal. Also, the Chinese conglomerate had already initiated a series of promotional activities related to the Olympics on its ecosystem of platforms, covering from online shopping to tourism and video streaming.

The Olympic postponement to 2021 will represent a new challenge for Alibaba, together with other big companies such as Toyota Motor Corp, Panasonic Corp,  and Coca-Cola Co, just to name a few.

Three decades ago, Korean telecommunication company Samsung sponsored the 1988 Seoul Olympics despite its own financial crisis. The global reputation generated from the game overturned the brand’s impression. Samsung reported a 27% growth the next year after the Olympics, and started its transformation from “a cheap product seller” to become the world’s major phone maker.

In response to the postponed Tokyo Olympic Games, Alibaba said it fully understands and supports this decision. “We look forward to overcoming the difficult time with the world, and to make the flame of Olympic a symbol of hope for the shared human destiny,” said the company, as quoted by BJ News.