Japanese companies caught in trouble by the Olympics

In 1964, the world watched the Tokyo Olympics through the world’s first satellite broadcast with a former giant developed by NEC. A la Tokyo Olympics from this July, NEC will again deploy new technology.

The company’s facial recognition system will be installed in stadiums to identify athletes and staff as the government moves forward with what it has promised will be a “safe and secure” game despite the Covid-19 pandemic.

But there will likely be little promotion by NEC or other Olympic sponsors of the technology used at this summer’s Games, whether it’s autonomous Toyota vehicles or safety robots developed by Secom.

As one sponsor acknowledged, silence is the best marketing strategy for navigating a toxic environment where any association with the event could potentially be detrimental to the corporate brand.

Another chief executive quietly withdrew from a comment he made a few months ago on FT that he loved sports and wanted the Olympics to continue, saying what would have been a harmless comment in any other context was inadequate in the light of persistent public opposition to the Games.

In another sign of the danger of the current situation, NEC was unexpectedly caught in a scandal that reveals how much the Olympics have increased the stakes for both the Japanese government and companies.

Since Friday Takuya Hirai, the country digital minister, there has been talk of Japanese television programs after a filtered recording obtained by the Asahi newspaper. In it he hears his subordinates listening to use “threats” against the NEC president. Of particular note is a comment from the April online conference: “If they complain too much about these Olympics, we will completely put them aside.”

At the heart of the incident is a $ 66 million contract (which appears unrelated to Olympic sponsorship) signed between the government and a consortium including NEC to develop a smartphone app to track. the health of foreign spectators and other staff members associated with the Games. . With the decision to ban viewers abroad, the government has asked to cancel its contract with NEC.

Hirai has since admitted that his comments were inappropriate, but denied that they were made directly against NEC. He also advocated the use of his language as a reflection of his “firm decision” to reduce costs. NEC has declined to comment beyond confirming that it has accepted a contract change.

The incident may be just a ministerial gaffe, but for NEC and the other 46 Japanese companies that collectively paid more than $ 3 billion to support the Games, there are serious questions about whether the partnership with the Games Olympics is worth your money.

The games are ready to be the most sponsored sporting event in history, but even before it was postponed due to the pandemic, some chief executives had privately expressed doubts about the returns on their investment.

Although the decision to participate in what was initially considered a national project seemed low-risk, the companies accepted non-exclusive contracts, creating a situation in which direct rivals such as Japan Airlines and ANA Holdings were sponsors.

When Tokyo last hosted the Games in 1964, no official and exclusive corporate sponsorships had yet been established, and the companies that participated in postwar Japan to demonstrate their resurrection from defeat seemed almost natural. But that same patriotic spirit will no longer be enough to justify its sponsorship this year.

Of course, public sentiment may change when the Games are held as the vaccination program accelerates, and companies may even be able, albeit belatedly, to reap the marketing benefits they had hoped for.

But even if they manage to safely navigate these games, there is another minefield left for global Olympic sponsors like Toyota and Panasonic. The Beijing 2022 Winter Olympics are just around the corner and companies are likely to do just that. subject to activist pressure take a stand against China’s human rights abuses in Xinjiang.

For too long, Japanese companies had simply viewed sport as something they should support, but greater sophistication will be required as Olympic sponsorship becomes even more political and controversial.

kana.inagaki@ft.com