Download The Analysis of Governmental Actions in Optimizing the Sports

The Analysis of Governmental Actions in Optimizing the Sports
Structure of Henan Province
YU Hongguang
Institute of Aeronautica Industry Management, Zhengzhou, P.R.China, 450015
[email protected]
Abstract: The development goal for optimizing the industrial structure and keeping economic growth
steadily was put forward in the 11th Five-Year Plan. There is a new growth stage for the sports economy
of Henan Province, which emphasizes structure readjustment.From the angle of the impact of the
government behavior in current adjustment of the industrial structure in Henan, this article focuses on
the problem of industrial structure in the sports, which is based on the situation about the industrial
structure. After the gaming between the market mechanism and government control, some advice on the
optimizing the industrial structure of the sports of Henan is put forward, which is mainly about the
necessity of governmental action.
Keywords: Sports Industries; Industrial Structure; Governmental Actions; Market Mechanism
1 Introduction
As social and economic development, the concept of changing people's lives and improved quality
of life in China's, the sports industry has been developing rapidly. Industrial structural adjustment has to
be continuous development of the sports industry, the industrialization of sports development direction
has been confirmed that the sports industry in national economic development play an increasingly
important role. With the development of the sports industry, many sports industry and the relevant
theoretical issues need to be resolved. China's theoretical experts and practitioners have discussed some
questions about sports industry from different perspectives. From the published literature, the scope of
the study is very broad, theoretical research have gradually from the current biased towards
macroeconomic to the urgent need to reform the sports industry to solve the practical problems of the
study, what is the sports industry, sports industry in the areas of industry ownership of the sports industry,
sports industry and the characteristics of the role, impact on the development of the sports industry,
sports industry development in the Government's responsibility, and so on. On the sports industry
theoretical issues of the development of the sports industry will have important practical significance,
but there's not enough in-depth.
The development goal for optimizing the industrial structure and keeping economic growth steadily
was put forward in the 11th Five-Year Plan. There is a new growth stage for the sports economy of our
country, which emphasizes structure readjustment. The long-term strategic target which has identified
sports industry as the 10 major industries of the third industry in the 21st century will provide a good
political and economic environment and strong industrial policy support for the development of the
sports industry, all of which has created a good social atmosphere for the sports industry Rapid growth.
Henan is a populous province and it is an urgent problem about how to optimize the industrial structure
sports.
2 The problem of the evolution of the industrial structure in Henan province
The sports under the strong support of all levels of government in Henan province have been made a
lot. With the development of market economy, the business activities of sports market are bound to
follow the laws of the market mechanism. Although the Government acts have promoted the sound
development of the sports industry currently, some negative impact has been brought about as the
followings:
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2.1 Excessive Government Intervention
In some major races government departments are still reluctant to let the community go of running,
but come forward to be their own business, thus affecting the community's enthusiasm to do sports,
bringing certain difficulties for the enforcement of sports law. As the governmental departments are in
charge of too much functions and work while provide less management, the role of individual sports
associations and the masses of sports associations are not played enough and the enthusiasm of the
community for running the spots are inhibited. Such a system and mechanism is arranged to meet the
needs of the government rather than the diverse needs of the public, which is not conducive to the
cultivation and development of the sports industry .In 2004, China Football Association has paid heavy
price due to their excessive intervention, ignoring the laws of the market and blind acting, which led to
the main investors’ protest and the teams’ giving up the match. The Chinese Football League has gone
through a miserable year, which should be an alarm for the government's excessive intervention.
2.2 Lack of Policy Guidance and Support
In the market economy system, some of the sports industry is profitable while most of it is the
non-profit public welfare undertakings. Compared with the growing industries as education, culture and
so on, which are enjoying preferential policies, the sports industry hasn’t share the same treatment.
Lacking liberal economic environment and conditions and being short of supporting policies in the early
stage, the sports industry started quite difficultly, which resulted in low rate of return on investment and
reduced the input of social investment. At present sports enterprises in Henan Province did not enjoy the
preferential policies, but in fact some enterprises are bearing heavy taxes and fees.For example, from
May 2001,according to the provisions of the relevant departments ,all of the entertainment industries
including nightclubs, karaoke bars, dance halls, shooting, hunting, Happy Valley, games, golf, bowling,
billiards, rock climbing, water skiing, skating are imposed with 20 per cent sales tax levy. Excessive
taxes and fees makes the operators of these projects overburdened. Some operators exclaimed,
"Chaoyang industry, suffering, loss-making business, watch tomorrow."In the United States, Britain and
other sports developed countries, preferential policy are provided to support the development of national
sports by the government. Sports events held by The sports departments, donation received by the sports
organizations and the operating revenue of the sports venues have received various degree of tax relief,
the sponsorship for the games sponsored by the enterprises can be credited to the cost of production or
for advertising expenditures, the construction of sports venues can enjoy the Land Acquisition and
low-interest loans and other preferential policies. Henan Province is far from enough support for the
sports industry in terms of preferential policies.
2.3 The investment and financing mechanism is not perfect
Funds have become the cause of sports in achieving sustainable development imperative in Henan
province. However, due to the lack of mechanisms for investment in Henan Province and unreasonable
investment policies, which made the capital market of Henan province operate unsatisfied, it is difficult
for enterprises to raise the funds needed for development. Single Investment mechanism, in the
investment mechanism and single financial instrument makes investors in Henan face two
extremes.Investment in the bank means low beneficiary investment in securities means high risky and
investment in the stock market makes you manipulated by others which cause you upset all the time, so
too few channels can be chosen and saving becomes really helpless choice .because of unreasonable
Investment policy dislocation, single investment mechanism, many fields are operated by the
government rather than the market that can earn steady profit, which led to the embarrassing situation
that the government are not capable of running the sports while the community has no opportunity for
that . As for the issue of how to realize economies’ taking off in the developing countries, Rostow, an
economist has pointed out that the main obstacles is the issue of capital formation.
In his three pre-conditions, the first condition is to increase the rate of net investment to 10 percent.
Research shows that Henan Province, the sports industry is in a takeoff stage (see Figure 1). At present
the capital accumulation of sports industry in Henan Province is difficult to achieve Rostow’s conditions.
The imperfect investment and financing mechanism is a major constraint for the reasonable
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development of Henan Province.
Figure 1 Rostow's theory of take off
2.4 Commercial Operation Levels Are Low
At present, Henan is short of the persons who know international sports industry processes, who can
develop sports opportunities and especially the senior sports management personnel. Professional sports
manager covers a low proportion of sports enterprises in our province and it is popular for the previous
well-known athletes or team leader to act as general manager of the club. These managers who have
not conducted a formal study and lack of economic and legal knowledge, restrict the development of the
sports industry, while the business managers who specialize in the sports, have poor knowledge about
sports, and especially lack horizontal links, have led to low levels of the commercialization in the sports
industry in our province, which also become bottlenecks and obstacles for the development of the sports
industry.
3 The necessity of the optimizing the sports industrial structure in Henan
In a sound market economic system, the restructuring is mainly accomplished by the market ,the
main attendant ,through market mechanism. Even so, the developed countries in the areas of market
failure, need the help of state power to regulate the allocation of resources. According to the fact that
economic mechanism is restructuring and the characteristics of the sports industry, the state intervention
should be used to promote the industrial structure optimization in Henan.
3.1 Market Allocation VS Government Regulation and Control
Will the sports structure be formed by the enterprises or the government? Will it be oriented to the
market or the government? The answer is in what extent the two can cooperate together to achieve the
optimization of the overall allocation of sports resources and the rationalization of the industrial
structure
Government intervention is necessary, but not always effective. The market is not a panacea, and the
public property of sports makes it a failure. Government and market is not expected to mutual
agreement. On the one hand, it is difficult for the government to grasp proper "degree” of intervention
and is easy to expand the scope of their activities, which will be always resisted by the market. On the
other hand, the market needs the government's appropriate regulation. This paper attempts to seek a
harmonious relationship between the two on the basis of comparison according to the analysis about the
basic characteristics, advantages and disadvantages of the two. (See table 1)according to the table we
can conclude that the Government should cultivate a long-term environment for the development of
sports industry, in which conflicts and confrontations between the market mechanism and government
regulation and control of still exist, while the possibility of cooperation and compromise can be greatly
improved, thus the running of the policy is not likely to divide from the objectives and the frequency
and magnitude of distortion of the policies will be greatly reduced, which can greatly enhance the
efficiency of government action.
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Table 1 the game between the market mechanism and government regulation and control on the evolution of
the sports industrial structure
Market mechanism
The government regulation and control
To allocate resources through the price To intervene the economic activities and
Basic
mechanism and emphasize the free allocate resources through economic lever and
characteristics
competition in the market;
the industry policy
Thorough competition , strengthen the Unified and harmonious development, keep
international competition ability of athletics the equilibrium of the supply and demand for
business enterprise in Henan, reasonable the athletics product and service, solve the
Advantage
price system, in line with nations, reduce the employment and keep the steady of the
decision cost, economize a social cost, reuse society, hold the Olympic games, enforce the
the bad property of idle athletics;
fit plan for the people , optimize athletics
industrial structure;
The industrial structure be out of balance,
Neglect market economy regulation, the
neglect the public product of athletics supply,
Weakness
efficiency isn't high, the power and duty isn't
turn worse the unbalance between regions
pure, the management is lagged ;
development;
4 The Analysis of the Government Behavior in Optimizing the Industrial
Structure
Due to the “market failure” caused by imperfect information, monopoly, external and public
property, government is needed to allocate resources. Viewing the process of the industrialization of the
sports industry in Henan Province, we can find that the development among the industrial organization
lacks coordination, in spite of certain achievements, from which we can conclude that market is not a
panacea. Under the market economy, market plays a fundamental role in the allocation of the resources
of the competitive sports. If the sports market is regulated purely by the invisible hand, the market
mechanism, according to its own principle, there will be more comprehensive relations in the
inner-interest and the distributions, which would lead to many problems ,such as game strike, stadium
violence, fraud bribery, athletes income polarization and so on. these problems can not be resolved
through the market, but though the government who can make up the market failure.
4.1 The Strategic Planning of the Development of the Sports Industry
The optimization and upgrading of the industrial structure are mainly caused by the change of the
leading industries and the pillar industries, which is an ongoing dynamic process, and the main signal
for guiding the structure adjustment is still the government action. From the sports market development
in Henan Province, Henan Province, at this stage the entertainment and fitness race performances
should be regarded as a leading industry, which will be a guidance and support for the development
of other industries.The manufacturing of the sporting goods, which is the basic industry and the
starting point at the sports industry chain, is the material foundation for the e entire sports industry. So
we should have sporting goods industry, sports gambling business, fitness and entertainment industry
as the pillar industries in Henan province.
4.2 Perfect Sports Market Investment and Financing Mechanism
Funding is the blood for the enterprise, the material foundation for the competitors and the
permanent power for the development of the sport in Henan. There are tremendous business
opportunities in the emerging industry, the sports industry, which are regarded as the most profitable
growing industry. Although the invest return is steady and growing, there exist much problems because
the investment in sports has a character of large scale, long term and high cost.
Under-investment has
become related to the survival of various sports organizations and sports and has been a bottleneck
which restricts the sports industry to a higher level. With continuous deepening of reform sports, we
have carried out much reform and try and changed the development mode that depend the state funding
completely, which has brought about positive effects on the funding and raised the huge amounts of
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money. But it also should be noted that, so far, Henan Province, have yet to establish the market
mechanism for sports investment and financing. The next step we should intensify our efforts to build
the sports market investment and financing mechanism to turn the government's main role in investment
and financing into macro-control, regulation, guidance and oversight and to accelerate investment and
financing Sports Council to standardize the construction market in Henan Province sports investment
and financing mechanism through the legal system.
4.3 Macroeconomic Policies
Government should formulate a series of policies to foster the sports industry and to help the sports
industry to adapt to market demand on the basis of growth and development. For economic policy,
preferential policies in financial, tax, financial and others should be adopted to create a favorable
external condition for the sports industry on the basis of the actual situation in Henan Province
according to the popular approach in domestic and the international community.
For the fiscal policy, without reducing the total financial input in national circumstances, we should
adjust investment structure and investment pattern and increase specific input guaranteed by the special
policy. At the same time, we should also establish special funds for the masses’ sports development
which will be mainly used to compensate the shortage of the funds in poor areas and the masses’ sports
activities.
For the tax policy, any analysis about tax is related to tax rate, in which the tax difference and tax
relief can be used to promote the development of sports industry and to adjust the aggregate and the
structure of sports. For instance, we can impose different tax policy, which include high-tax, low tax and
tax relief, on the different entertainment about fitness, such as additional tax for the sports entertainment
projects of high consumption, less tax for or no tax for the popular sports and elegant sports and no
regulatory tax for the sports project set up by the community.
Finally, it is about financial and credit policy. Sports industry should be included in the scope of
loans, which can be used to support the key projects, such as the reconstruction of the subsidiary
facilities of the sports venues and welfare Business activities of the sports with the support of
low-interest loans which are encouraged by the state, through the capital flows and interest rate.
5 Conclusions
According to the analysis above ,conclusions can be made about how to optimize the structure of
the sports industry through the government intervention.
5.1 First, Government should make the development plan of the sports industry, which will identify the
sports as the leading industry, the pillar and basic industries and will improve the sports market
investment and financing mechanisms to strengthen the building of sports facilities.
5.2 Secondly, government should make industrial policy which is conducive to the development of
sports and is matched with related polices. Sound economy means strong nation and vice versa. The
analysis about the structure optimization and government action would be beneficial to the development
of sports and economy in Henan province and the dream of being sports power and economic power for
generations.
References
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countermeasures [J]. Physical Culture Guide, 5(2007),P10 12.
[4] Lin Ling, Peng-even. Sports structure of several theoretical issues [J]. Tianjin Sports Institute Journal,
2(2004),P7 9.
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