Frank Norton, Staff Writer
Chinese computer maker Lenovo made a big bet sponsoring the 2008 Beijing Olympics: The event could catapult its name onto the world stage and help it win customers around the globe.
It beat out 300 candidates last year to design Cloud of Promise, the 2008 Olympic torch. It created an elaborate Web site in March to track the torch relay around the world. This week it sponsored music and dance floats en route and gave cardboard periscopes with the Lenovo logo to onlookers of the longest torch relay in history.
It could hardly have turned out worse.
Anti-China protesters crashed the meticulously planned event, co-sponsored with Coca-Cola and Samsung.
Critics are asking the sponsors to withdraw their support. The tour drew ire in Paris and London and was diverted in San Francisco, an attempt to avoid possible clashes.
The Cloud of Promise on which Lenovo had pinned its hopes is now the focus of a public relations mess for the Olympics and its sponsors.
And worst of all, "there is nothing they can do about it," said Rob Enderle, a brand analyst in San Jose, Calif., who tracks the computer and broadcast industries.
"It's not their fault, there was no way to anticipate this, but that's the danger of tying yourself to such a big event," Enderle said. "When you get associated with a lot of negative focus, it can eventually damage your brand."
At stake is Lenovo's ability to swiftly break into new consumer markets worldwide, including the United States, where it lags far behind household names Hewlett-Packard and Dell. That partly explains Lenovo's decision to become one of the top 12 corporate Olympic sponsors, which reportedly paid at least $100 million each.
But the very public support and sponsorship that was supposed to increase Lenovo's brand awareness through messages of strength, innovation and world citizenship is backfiring in fits of protest. Tibet supporters and others say sponsorship of the China-hosted games is tantamount to support for China's rule over Tibet, its controversial economic ties to Sudan and lengthy record of human rights abuses.
That's especially touchy for Lenovo, whose world headquarters are in Beijing and Morrisville. Not only is the company a major Olympic sponsor, its biggest shareholder is the Chinese government, albeit indirectly.
Chinese investment firm Legend Holdings owns 41.8 percent of Lenovo; the Chinese Academy of Sciences, a government agency, owns about 65 percent of Legend. That effectively makes the Chinese government Lenovo's biggest owner.
Lenovo spokesman Bob Page on Friday deflected criticism aimed at Lenovo, saying that what erupted in London, Paris and San Francisco was a small part of the entire event.
"The Olympic torch relay is not a three-day event," he said by telephone from Buenos Aires, where the tour was proceeding Friday. "So one cannot yet draw conclusions."
As for accusations of supporting totalitarian rule over Tibet, Page said, "people have a right to express their opinion." But the company has no plans to pull its support, he said.
"Lenovo resists efforts to politicize the games," Page said. "We do hope for a peaceful resolution to the situation in Tibet, but we also believe the Olympics is not the place for a corporate sponsor to insert itself in government policy or advise governments on political policy issues, regardless of the host country."
Brent Bracelin, who follows Lenovo for Pacific Crest Securities, disagrees with the notion that Lenovo's sponsorship of the torch relay has been a train wreck.
Though the mayhem can affect brand appreciation, it is unlikely to affect Lenovo's business operations, sales and profitability, Bracelin said.
"Did you really think the Olympics was going to be a huge driver for computer sales?" Bracelin asked. "Lots of companies are sponsoring the Olympics. I don't think Lenovo's growth prospects or success hinges on it."
In Buenos Aires, pro-China demonstrators far outnumbered protesters Friday. They waived Argentine and Chinese flags as the torch continued its journey. Former tennis star Gabriela Sabatini was among 80 torch bearers.
But Olympic supporters still fear that the public image mess could become a disaster. United Nations Secretary-General Ban Ki-Moon bolstered protesters Friday when he joined a list of world leaders planning to skip the opening ceremony in Beijing. Indonesian officials have shortened the torch's route there, and many speculate that Australia will as well.
For Lenovo, the long-term effect depends on how much potential customers remember and why.
The fact that Lenovo's name rides alongside Coca-Cola is good, Enderle said, as long as people remember the brand connection and not the underlying turmoil.
"This could end up being a way for Lenovo to get on the map," Enderle said. "Still, something like this is a huge risk that would give any ... [chief marketing officer] a heart attack."
(Staff researcher Brooke Cain contributed to this report.)
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