Equipment maker DHS gets Olympics boost

Business, public interest soar as Chinese athletes dominate Games

After the Chinese table tennis team swept the gold medals in the London Olympic Games, Guan Yasong knew that his company had won some gold of its own.

As fans celebrate the 17-day Games, DHS, an official sports-equipment provider, also has embraced the winning spirit as business soars after sponsoring the ping pong and weightlifting events.

This year is not the first that the Olympics have boosted DHS' bottom line, however. It was the 2000 Olympic Games that turned around the enterprise that was once firmly in the grip of a financial crisis, said Guan, DHS' marketing chief.

About 16 years ago, Shanghai-based DHS was grappling with capital restructuring at a time when community gyms were still a rarity in China and "working out" had yet to become the latest trend.

The firm had just merged with three State-owned sports equipment manufacturers that had failed to come up with a viable business model and was faced with a supply glut and weak demand.

But the 2000 Games in Sydney were a game changer. For the first time, a Chinese supplier was chosen to sponsor table tennis equipment in a major sports event.

"We barely made a profit before Sydney. But the Olympics were such an amazing advertisement for our brand, Double Happiness, that we saw new orders flowing in months after the Games," Guan recalled.

DHS has grown alongside China's Olympic endeavors.

Since the founding of the new China, the government has adopted the strategy that the Olympic Games should get the highest priority. As a result, China has become a universally acknowledged major player.

After legendary table tennis player Rong Guotuan won the first world championship for China in 1959, he suggested that China should use homegrown equipment in world events. The result was DHS, China's first national table tennis brand.

The company name was given by then-Premier Zhou Enlai, to commemorate the first world champion and the 10th anniversary of the new China.

As the country focused on elite sports, record-breaking achievements not only won China palpable national pride, but opportunities in critical sports settings.

Right after the Sydney games, the International Table Tennis Federation decided to enlarge the diameter of the table tennis ball from 38 mm to 40 mm.

While most producers were reluctant to make the change due to the huge cost, DHS stepped up its innovation and worked closely with the ITTF by sponsoring national and international tournaments at all levels.

"We sought feedback from coaches, players, and officials from the ITTF, and made the changes accordingly," Guan said. DHS helped push the ball-size change while dramatically changing its balance sheet.

The company saw double-digit growth in net income the following year, and grabbed 60 percent of global market share.

"We were able to set a price based on market demand, rather than cost", a crucial ability that has continued to increase the company's revenue by 10 percent annually since the new millennium, Guan said.

Other groundbreaking endeavors, such as the rainbow table with a balancing design style that originates from the traditional Chinese arch bridge, helped DHS enhance its position over the past decade as the market leader.

"The position strengthens our bargaining power, and brings in bigger profits," Guan said.