Panacea or Pandora’s Box? Pro cycling’s Asia pivot

As sluggish economies and sporting scandals continue to drag on sponsorship in traditional pro cycling markets, exposure to Asia, where unprecedented levels of sports funding is on tap, is becoming a salient consideration for some teams. However, the case study of one Australian team that turned to Asia for a lifeline might provide some precautionary pointers.

 

FROM MODEST BEGINNINGS

Search2retain (abbreviation: STR) materialised with little fanfare on 26 February 2009. The amateur squad, financed by its namesake sponsor – a Melbourne-based recruitment and executive search company of relative youth, having only registered as a company in November 2006 – had its first serious outing at the 2009 Tour of Gippsland. It was anything but a success. Search2retain rider Hugh Singleton crashed in the first stage, sustaining serious head injuries which eventually required an airlift to Melbourne. Only Thomas Donald finished the race, more than one hour in arrears to winner Leigh Howard.

The silver lining was Team Principal Peter Shandon’s meeting with 22-year old Neil van der Ploeg; an accomplished mountain biker in transition who also happened to be racing in the National Road Series (NRS) for the first time with Loy Yang Power Team. The vision presented by Shandon, also Managing Director of the search2retain company, appealed to the affable youngster from Mt Beauty. Shandon secured a new talent, and van der Ploeg a team, for the next season.

Pushing aside its disastrous beginnings, search2retain further bolstered its roster and quickly matured into its surroundings; to the extent that it placed third overall at the 2010 Tour of Gippsland and broke into the top ten on the final 2010 NRS team rankings.

A solid 2011 season followed, with a 14-man squad including Neil van der Ploeg and his younger brother Paul, former professional triathlete Jay Bourke and promising youngster Luke Fetch, who went on to place 3rd in the Melbourne to Warrnambool. The team was gaining in stature and it was time for Shandon to change gears.

 

PARALLELS IN SINGAPORE

As search2retain was unveiling a slimmer, more focused, roster of nine individuals for the 2012 season, an amateur Singaporean team was also making a momentous announcement.

OCBC Singapore Cycling Team had risen from aspiring club team into a consistent regional performer in UCI Asia Tour races; aided by its quasi-official status as Singapore Cycling Federation’s national development squad and ability to slip on red and white jerseys at a whim to secure race invitations.

Now, in January 2012, with SGD160’000 annual backing from OCBC (Oversea-Chinese Banking Corporation) in addition to SGD100’00 equipment support from the local Pinarello importer, the OCBC Singapore Continental Cycling Team (abbreviation: TSI) was a reality. Benefits flowed immediately with the team receiving a coveted invitation to the UCI 2.HC Tour de Langkawi in February.

 

MIXED FORTUNES

Even as another commendable NRS campaign drew to a close, UCI Continental status remained elusive for search2retain. Recent recruits Neil van der Ploeg and Luke Fetch were more frequently delivering the type of results expected and a new sponsor Health.com.au had stepped in; but only after another had pulled out amidst the scandal embroiling Cycling Australia, following the resignation of Road Co-ordinator Matt White and Vice-President Stephen Hodge who both finally admitted to doping in their pro cycling years. The net loss of sponsor-related funding scuttled STR’s plans to join the third-division pro cycling fraternity in the 2013 season.

But progress was still made. The team signed Tour d’Indonesia winner Eric Sheppard (whose true value would only be realised later), van der Ploeg continued to surprise his more experienced peers by placing fourth in the 2013 Australian National Road Cycling Championships, and 2012 signing Cameron Bayly was also proving his mettle in early season domestic events.

A mediocre and injury-plagued 2012 was meanwhile a source of consternation for OCBC Singapore Continental Cycling Team’s management. The team lacked firepower, but supply from Singapore and neighbouring Malaysia was limited. Hiring foreign riders from renowned cycling countries was expensive, so a cost-effective solution was urgently needed. By late January 2013, an unorthodox solution was close to being finalised.

 

ALLIANCE WITH ASIA, ACT I

Search2retain-Health.com.au revealed its exchange program with OCBC Singapore Pro Cycling in March 2013. In exchange for TSI making places available for STR riders in its Continental squad from the second half of the 2013 season onward, STR would guarantee one slot at every NRS race and Victorian race on the Australian road cycling calendar for a rider nominated by TSI. The deal would give STR riders an opportunity to race in the Asia Tour and lend much-needed force to TSI’s squad. At the same time, a Singaporean rider would gain experience in the intensely competitive NRS scene.

Five STR riders, including Sheppard, raced in the 2013 Asia Tour wearing TSI jerseys. At the time, Shandon described the two-year arrangement as “the most elegant solution ever”.

As 2013 wound down, the uncoventional partnership – in theory an exchange, though the relationship was undoubtedly feeder-parent – proved its worth in a way familiar to Australian domestic squads with successful programs; riders graduated to bigger and better things. Neil van der Ploeg joined WorldTour-neopro-factory Avanti Racing while both Sheppard and Bayly signed 2014 contracts with TSI.

TSI also farewelled riders; the most prominent being Malaysia’s Sea Keong Loh – winner of the GC at the 2013 Jelajah Malaysia – to the Giant-Shimano WorldTeam.

2013 Jelajah Malaysia stage 5_26

 

THE ALLIANCE COLLAPSES

Where gaps were made by departing riders, emerging talents plugged them: amongst those added to STR’s roster for 2014 were Patrick Bevin (now Cannondale Pro Cycling) and Brendan Canty (now Drapac Pro Cycling).

The alliance yielded immediate benefits in 2014, with TSI receiving an invitation to the UCI2.1 Jayco Herald Sun Tour in February. Proving they were not just there to make up numbers, Sheppard finished 26th on GC, while Kiwi sprinter Rico Rogers sprinted to second place on the third stage; Singaporean Ji Wen Low also featured in the top ten that day in Nagambie.

In the following months, Bayly and Sheppard made considerable athletic progress courtesy of an intensive Asia Tour stage race program traversing Malaysia, Thailand, the Philippines, Japan and Korea.

Back in Australia, Patrick Bevin was on his way to finishing fifth overall in the 2014 NRS individual rankings, whilst STR would eventually place third amongst the 32 teams; to date, its best overall result in the domestic competition.

Yet for all its apparent strengths, the STR/TSI partnership was in jeopardy. In June 2014 Shandon’s team discovered, through its former riders, that the Singaporean squad was unravelling. Bayly and Sheppard had just finished 8th and 14th overall respectively in the UCI2.1-ranked Tour de Korea, but no further racing was on the horizon. With the writing on the wall, both riders promptly returned to Australia to support STR in its NRS campaign.

TSI Team Principal Daniel Loy was summoned to sponsor OCBC’s offices in September 2014. As he recounted to Channel NewsAsia the following January, “There was a meeting and that’s when they said: ‘Thanks for all your hard work, but we’re officially telling you that we’re not continuing next year’.”

In December 2014, TSI disbanded permanently.

 

A NEW PLAYER IN TAIWAN

Inhon Group started out in 2006 as a Taiwanese Original Design Manufacturer (ODM) of composite accessories for notebooks and smartphones, under its InhonTech division.

Founded by Wei Hung-fan, second son of billionaire Wei Ing-chou – Chairman of Ting Hsin International Group which, under the ‘Master Kong’ brand owned by Ting Hsin subsidiary Tingyi (Cayman Islands) Holding Corp, became the biggest producer of instant noodles, ready-to-drink tea and bottled water in China – Inhon Group had no shortage of resources; it slotted effortlessly into the mighty Tingyi empire.

After several years of tinkering with carbon fibre bicycle frames, the Group established two additional companies in 2011: Leadforce International Bicycle Co., Ltd and Kunshan Create Composite Materials Technologies Co.,Ltd (aka Create Carbon Leader, or CCL).Gusto road bike 2012

InhonTech unveiled its four-model ‘Gusto’ range of premium composite road bikes in March 2012. Manufactured by InhonTech’s CCL factory, the premium model weighed a reported 5.9Kg with the frame a scant 780 grams; all at a pricepoint lower than its globally-respected competitors. Gusto’s mission after all was to make “elaborate bikes with affordable price”.

The achievement of Wei’s company was all well and good but without a sound go-to-market strategy, there was no guarantee consumers would buy into the vision. Responsibilty for such planning fell to Leadforce, which launched the ‘Attaque’ retail store concept in 2013.

Essentially, it was a simple franchise model: in exchange for stocking Gusto bikes and any other bike brand that Leadforce marketed, existing bike shops would receive a full Attaque re-brand and tap into an extensive marketing program that would otherwise be financially suicidal.

Bicycle retailers in China were also being given quite remarkable incentives to sign up as franchisees: no licencing fee, no minimum inventory requirements and lifetime warranty on Leadforce’s Gusto, Amis and Dios Vient brands (the latter two respectively promoted as entry-level and mid-range aluminium bikes). Foreign brands Battagli and Sintessi were also later added into Leadforce’s product mix.

Gusto launch April 2012 Wei Hung-fan

 

LAUNCH OF TEAM GUSTO

After a quick October 2013 trip to China to announce a RMB30m (USD4.8m) investment into Attaque’s mainland roll-out, Wei Hung-fan set about finalising a critical marketing component that would bind everything together. He had seen how Giant’s and Merida’s headline sponsorship in pro cycling had boosted their revenues and cachet, so it was logical to follow suit.

On 04 March 2014, at the landmark Taipei 101 building (owned by Taipei Financial Center Corporation, in which the Wei family has a 37% stake) Team Gusto was launched.

Led by dual Road/ITT National Champion Feng Chun-kai, Taiwan’s newest UCI Continental team would be financed to the tune of TWD60m (USD1.8m) and would be pivotal in promoting the Attaque retail network; which Wei Hung-fan anticipated would become a 2’500-store Asia-Pacific powerhouse (with 2’000 stores in China alone) by 2019.

Wei Senior was also present at the launch, but left quickly before the media was able to press him too deeply on the food scandal enveloping the company he and his three brothers controlled.

Ting Hsin had used illegal colourants in its cooking oils whilst mislabelling olive oil diluted with cheaper oils. Later that year, in an unforgivable affront to Taiwanese consumers, the company would also be found to have sold products in Taiwan that used Chinese ‘gutter oil’; waste oils made from restaurant waste and slaughterhouse byproducts.

 

STR BEGINS TO FADE

Thanks to a pre-warning of OCBC Pro Cycling Team’s demise by its former squad members, search2retain-Health.com.au was still afforded adequate time to plan for the upcoming 2015 season.

Considering the team’s trajectory in the NRS, both Shandon and Sports Director Mark Isaacs felt there was sufficient talent within the squad for STR to pursue its own UCI Continental licence – even without Bevin, who had signed with 2014 NRS champions Avanti Racing Team.

With its 2015 Continental licence in hand, search2retain-Health.com.au again won an invitation to the Jayco Herald Sun Tour in February. Although the squad finished last in the final team’s classification, returned alumni Cameron Bayly convincingly seized the KOM jersey.

Thanks to the OCBC connection, it had become almost formulaic for STR riders to fly north to the Asia Tour at this point in the season. Unfortunately for Shandon, event organisers in Asia didn’t necessarily share his view that the team deserved the opportunity to race; throughout the entire 2015 season, STR managed only one Asia Tour start (at Tour of Iran in May) out of 30 possible events. At home, the team slipped down the NRS rankings, finishing 7th overall.

 

THE SIDE-EFFECTS OF BAD OIL

Eric Sheppard had himself a new team. On 07 January 2015, the 23-year old packed his bags and travelled to Taiwan, where a place on the Attaque Team Gusto squad awaited.

In fact, a number of places were on offer – ATG had lost the majority of its Taiwanese riders the previous year; all had left due to the food scandal. They felt it was better to quit than ride for a team so identifiably associated with a company labelled a national disgrace.

“They literally removed the logo of Ting Hsin from team jerseys,” Sheppard told Cycling iQ during a recent interview. “The entire population of Taiwan wanted to boycott anything to do with that company. It was so serious because it turned out (Ting Hsin was) selling the bad oil in Taiwan but not in China.”

 

Three of Sheppard’s former TSI teammates – Ying Hon (Ronald) Yeung, Thomas Rabou and Chanjae Jang – had also been picked up by the renamed Team Gusto squad. Yeung (who this year received a stagiaire role with Delko Marseille Provence KTM) had already appeared as a ATG guest rider in 2014 and it was under his recommendation that Sheppard and Rabou were signed.

As an all-Taiwanese 11-man squad in 2014, Team Gusto hardly set the Asia Tour alight. If not for Feng Chun-kai’s performances – including the KOM title at Tour de Taiwan and a stage win at the Tour of Thailand – Wei Hung-fan’s team would have found itself further down the final 2014 Asia Tour rankings than the 56th place where it eventually settled. To give that result some perspective, OCBC Singapore Pro Cycling still managed to finish 13th even though it hardly raced at all in the second half of the season.

A disappointing first season wasn’t the only reason for Attaque Team Gusto’s recruitment of foreign riders; Feng Chun-kai had been poached by the Lampre-Merida WorldTeam. Wei had already been made to feel like an industry imposter by his established peers but if he resented losing his best rider to one of them, he didn’t show it publicly. Instead, when facing the press he placed great emphasis on his team’s role as a Taiwan-centric development platform.

Fortunately, Sheppard got the team’s 2015 season off to a great start with an opening stage win at Le Tour de Filipinas in February. Hong Kong’s Yeung followed with a Tour of Thailand stage victory two months later, and 31-year old Dutch rider Rabou won one stage apiece at Tour de Kumano and Tour of Singkarak. In contrast, the four Taiwanese riders on the squad – Chin Chao-kai, Liu Shu-ming, Lu Shao Hsuan and Wang Yin-Chih – had relatively anonymous seasons and were underraced by comparison.

Attaque Team Gusto wound up its 2015 Asia Tour campaign in November, finishing 37th in the overall team rankings.

Attaque Gusto 2015 Tour of Thailand

 

ALLIANCE WITH ASIA, ACT II

“We are super happy to announce that the team that you know as search2retain-health has secured 2 new naming sponsors for 2016. As most of you would have heard, we are looking to spread our wings into Asia and are pleased to introduce you to Attaque Bike stores and Gusto bikes. Attaque operates hundreds of concept and franchise bike stores throughout Asia and Gusto manufactures a range of premium carbon frame bikes which are sold throughout the Asia region.

 Our new name will be Attaque Team Gusto and although we will be a continental team registered in Taiwan we will have a firm footing in Australia and New Zealand.”

2016 Attaque Team Gusto squad 2

When on 14 December 2015 search2retain announced it was being absorbed into the Attaque Team Gusto (abbreviation: ATG) operation, two notable points stood out.

Firstly, the growth of the Attaque retail network. It was increasing, but certainly not at the rate Wei Hung-fan aspired to or the scale that search2retain’s announcement indicated. Depending on which Attaque representative was speaking to the media, and how informed that media outlet was, 2’500 Attaque stores would be open by the end of 2015. Or by 2017, or 2019. Or simply, “within the next three years.”

Similarly, the existing number of Attaque stores opened in the latter half of 2014 was reported to be more than 200 in Taiwan and China. Or 50 in Taiwan, with several in China and Malaysia. Even as late as August 2015, Attaque’s own website stated the number of stores across Asia-Pacific was simply “more than 200”.

In reality, at the beginning of this year, there were 61 outlets in mainland China, 28 in Malaysia and 26 in Taiwan; with a combined total of 22 listed as ‘Concept’ stores. By any measure, not nearly as prolific as Attaque’s marketing suggested.

When asked by Cycling iQ about his understanding of Attaque’s retail network size, Shandon replied in an email, “I have not asked them how big their store network is, so can’t answer that question sorry.”

Admitting that the agreement with Attaque Team Gusto was finalized “quite late”, there was clearly little time, or perhaps even appetite, for due diligence.

Secondly, nowhere was the sale of Health.com.au’s parent company (NIA Health) to Geelong-based Health Insurer GMHBA Limited mentioned. In May 2015, the Australian Financial Review reported the “online health insurance start-up health.com.au has put itself up for sale after it failed to refinance $46 million in debt that it owes to comparison website iSelect.”

“Health.com.au chose not to pursue the sponsorship of the team for 2016 prior to them being sold,” wrote ATG spokesperson Kylie Shandon in an email. “Having already sponsored the team for 3 years, they felt they had achieved their objective of establishing (their) brand.”

Whether or not search2retain could have existed after the important cash sponsor pulled its funding is a question that won’t be answered, but some within the cycling community have their doubts. “From what I have heard, they had to (merge with ATG) to survive,” said one NRS team official, speaking on the condition of anonymity.

 

SLOW START TO 2016

At time of writing, Attaque Team Gusto’s 2016 season is barely two months old. After a quick trip to Shanghai in late January for the official team launch, ATG premiered at the UCI 1.HC Cadel Evans Great Ocean Road Race.

The 2.1 Herald Sun Tour was the first stage race for the ostensibly ‘local’ team: of the six squad members on the start list, five were Australian and one – Lu Shao Hsuan – came from Taiwan. After that, things slowed down.

Though it was “expected” that the team’s Asia Tour program would be full, ATG raced once in the Philippines but was snubbed by the 2.1 Tour de Taiwan in March (effectively its ‘home’ race) and will instead head to Europe for almost two months in early April. How this activates the sponsor’s strategy, if indeed there is one, is anyone’s guess.

Meanwhile, Shandon’s business has also transformed; initially, from executive search and recruitment into RPO (recruitment process outsourcing). After selling its RPO contracts in December 2014, search2retain re-branded to ‘search2retain Talent Management’ – Shandon had “become more interested in sport and in particular the sport of cycling”. He qualified as a UCI-certified rider’s agent in July 2014.

In January 2015, Shandon took up Australian distribution of Marcello Bergamo custom clothing, which he hopes to expand into Asia. ‘CyclEd’, a suite of cycling training and education programs was also launched, and search2etain Talent Management is responsible for running the ATG team as a commercial venture. Cycle tourism is next.

 

DIFFERENT REGION, SAME PROBLEMS?

The authoritative guidebook for how teams should fund their existence is yet to be written, but some teams will no doubt be monitoring this quasi-Australian squad to see if they should tread a similar path to Asia and particularly China. Most are treading carefully, taking time to properly analyse the opportunity before leaping in head-first as STR appears to have done.

For their part, better-financed WorldTeams remain relatively cautious, preferring to sign individual riders from East Asia instead. It’s a slow process though: ORICA-GreenEDGE’s recruitment of Hong Kong cyclist Cheung King Lok in March this year was only the fifth signing of an Asian rider by a WorldTeam in the last five years.

“What we have to do in this sport first of all is create sustainability,” says OGE General Manager Shayne Bannan, when asked if more teams should be focusing on Asia. “At the moment, the average lifespan of a WorldTour team is maybe 5-6 years. We first have to create a better business model for cycling teams, which hopefully means teams can be around for 15, 20, 25 years. Once we get to that level, then we can start talking about various other aspects, but the focus now is on making the business model better.”

Bannan’s sentiment is shared by Trek – Segafredo General Manager Luca Guercilena, whose team employs Japanese rider Fumiyuki Beppu

“If you talk about investment in the sport business in China, it’s always done with the idea of revenue,” says Guercilena, who has been following the Asian market with interest for several years now. “Investment made in football or some other professional sport that you can put in some money and get revenue back is really a business model. We know in cycling this is not yet possible; it’s just a matter of image.”

For now, Wei Hung-fan, described by one former cycling team manager in Asia as “an inexperienced and boastful young man whose ears are always filled with honeyed words”, seems content to continue investing millions to carve out his own image. Will he, like Oleg Tinkoff, eventually exit if a return never transpires? Or is Wei more of an Andy Rihs figure; in the game seemingly for an enduring love of the sport?

For now, only one thing is clear: Asia might be a different market, but pro cycling’s sponsorship problem is global.

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