Creative Education
2012. Vol.3, Supplement, 47-50
Published Online December 2012 in SciRes (http://www.SciRP.org/journal/ce) DOI:10.4236/ce.2012.37B011
47
A Research on Competitive Power of Sports Industry in Henan
Province Based on the Diamond Model
Maozhang Gao, Xiaoling Wu
Physical Education College, Henan University of Science and Technology, Luoyang , Henan, China
Received 2012
Based on Porter’s Diamond Model, the thesis analyzes the influential factors involving competitive power
of sports industry in Henan Province in terms of productive factors, demanding situation, relevant sup-
porting industries, strategies and organization as well as competitors of enterprises, governmental factors,
and opportunities; then it explores strategic measures to improve competitive power of sports industry for
the purpose to promote healthy and speedy development of sports industry in Henan Province.
Keywords: Sports Industry; Competitive Power of Sports Industry; Diamond Model; Henan Province
Introduction
Sports industry in Henan province has developed step by step
since 1980s. Although it is late in beginning time, sports indus-
try in Henan province develops very fast, with its field con-
stantly expanding, its scale constantly enlarging, its quality
improving, and its benefit obviously increase. Comparing to the
sports industry in developed provinces, however, its competi-
tive power is weaker, with the following problems: small scale,
imperfect structure and system and low degree of market of
sports industry. Based on Porter’s Diamond Model, the thesis
try to analyze the factors influencing the development of sports
industry in Henan province, and discuss the strategic measure
to promote the competitive power of Henan’s sports industry.
Analysis on Factors Influencing Competitive
Power of Henan’s Sports Industry
Diamond Model is suggested by the famous strategic man-
agement Michael Porter, who comes from Harvard Business
School of the U.S. Porter believes that there are four factors
which decide industrial competitive power of certain kind:
productive factors, demanding situation, relevant supporting
industries, strategies and organization as well as competitors of
enterprises and the performance of competitors. These four
factors have bidirectional effect to form into diamond system.
(See the following chart) Besides, there are other two affecting
factors: government and opportunities [1]. Opportunities cannot
be controlled, while the governmental policy cannot be ignored.
Therefore, this thesis analyzes the factors influencing the com-
petitive power of Henan’s sports industry and the correlations,
so that we could know the current situation of sports industry in
Henan province.
Diamond System Influencing the Industrial
Competitive P ower of Henan’s Sports Industry
Productive Factors
The necessary productive factors for industrial development
fall into two kinds: one is primary factor of production, that is
natural resources, climate, geographic position, unskilled or
half-skilled labors of our province in sports industry; the other
is advanced factor of production, including the needed commu-
nication system, modern transportation, higher educational
human resources and academic researches of all schools and so
on. [1] Our province is abundant of labor resources, unique
natural resources and distinguishing national and traditional
sports culture, which form the favorable primary factor of pro-
duction for the solid competitive power of Henan’s sports in-
dustry. However, what matters in enhancing the industrial
competitive power is the advanced factor of production, and our
province is weak at that. At the view of the development of
industrial competitive power, the impact of primary factor of
production on the advantages of industrial competitive power is
weaker and weaker; vice versa, the advanced factor of produc-
tion is more and more important. Therefore, one enterprise can
only rely on advanced factor of production so that they could
have the high level competitive advantages of unique products
and product technology and so on. However, the improvement
of advanced factor of production is in need of longer time on
labor force, abundant and continues investment. From the cur-
rent status of the development of Henan’ economy, at the
present stage the development of Henan’s sports industry still
relies on primary factor of production. Porter believes that,
competitive advantages built on primary factor of production
are always weak, while those based on advanced factor of pro-
duction can long last. Meanwhile, only with continuous crea-
tion, the advantages of elements could last. [1] The essence of
competitive power of modern sports industry is the completion
of science and technology. To gain advantages of the interna-
tional competitive power, Henan province must enhance high
quality of sports industry. Therefore, Henan’s sports industry
could not be confined in primary factor of production such as
labor resources and natural resources, but we could have the aid
of advanced factor of production such as modern communica-
tion, higher education human resources and all academic re-
searches and so on.
Demanding Situation

M. Z. GAO, X. L. WU
48
Demanding situation is the character required by the domes-
tic market on sports industry. In Porter’s Diamond Model, he
points out that home market is the driving force for the indus-
trial development, which coul d encourage the improvement a nd
innovation of one enterprise. [1] He also believes that if the
scale of domestic market is sizable, the traits and organization
of domestic market would affect the understanding of one en-
terprise and the reflection on the demand of consumers. Ac-
cording to data of investigation, the following is the existing
feature of home demand in our province: great market capacity.
But in the progress of cultivating advanced market, the demand
in lower market is large with the competition in price, and lack
of differences. What’s more, consumers do not usually find
fault with products. Their taste and idea of products are in-
creasing, but the supply of sports industry often lags behind
their demand. What we also should pay attention to is that,
because of the uneven consumption ideas of urban and rural
residents, the total level of sports consumer is general low,
which haven’t formed into creative force for enterprises of
sports products. So far, the sports material and service products
in Henan province takes outcomes of low science and technol-
ogy content and low additional value as principal thing. And
their industrial competitive power mainly reflects in labor-
extensive production and management, which is one of the
factors that leads the barren competitive power of Henan’s
sports industry.
Relevant and Supporting Industries
According to Porter’s diamond theory, relevant and support-
ing industries and advantageous industries shares weal and woe,
and one advantageous enterprise is not alone, which develops
with the domestic relevant mighty industries. Therefore, the
main industry develops only when its relevant upstream or
downstream industries develop. This truth could also apply in
sports industry. The definition of sports industry is one set with
many organizations and departments that provide the produc-
tions and service on sports productions, so as to satisfy people’s
demand on sports event, performing activities and participating
in body-building. [4] The competitive power of sports industry
could also separate from the supports forming by the relevant
and supporting industries. In recent years, with the steady de-
velopment of pillar industries in sports industry, relevant indus-
tries such as sports tourism, sports insurance, and sports bro-
kerage industry and so on also develop and boom step by step,
but facing with great pressure and challenges as well. Take
sports tourism for example, with the rich sports tourism re-
sources; Henan province has successfully developed two
unique activities of sports tourism: National Shaolin Wu Shu
Festival in Zheng Zhou,China and National Annual Meeting on
Shadowboxing in Jiao Zuo, China, Shi Ren Mountain all have
gained great economic benefit and band effect. Many tourism
departments see the tremendous business opportunities behind
sports tourism. Other provinces cultivate and develop their
sports tourism as well, and because of the high substitutability
of resources, which shock the infant sports tourism in Henan
province. Thus it can be seen that is one of the factors that de-
ters competitive power of Henan’s sports industry.
Strategies and Organization and Competitive
Patterns of Enterprises
According to Porter’s diamond theory, the structure and
management pattern of one enterprise can adapt to the competi-
tion of market, only if its strategies could satisfy the need of
different customs. The sports enterprises are the core of sports
industry, and the competitive ability of sports enterprises di-
rectly affects the comprehensive competitive power of sports
industry. That we could say that the strategic competitive power
of enterprises is the core competitive power of sports industry.
[6] With large population, Henan province has a tremendous
market of sports products, but we do not have self-owned brand.
What’s even worse, we do not have one national famous enter-
prise, and Henan’s products haven’t been seen at the sports
Expo. The clothes of famous Henan player Deng Yaping have
been produced by other provinces. Therefore, the urgent prob-
lems of Henan’s sports products are: how to make full use of
the intangible assets, and how to develop famous products with
market potential. Henan’s sports industry is weak in enterprise
strategies, organization and competitive pattern: small scale of
enterprises, the low market operation, and shortage in high
level elites of management, poor products creative ability, hard
skill creation and poor anti-risk ability and so on.
In Porter’s diamond model, there are two variable factors:
opportunities and government except the four basic factors.
Having joined in the WTO, and successfully having held the
2008 Olympic, gives the sports industry and market in our
province sever challenges and developmental opportunities: 1)
beneficial to furthering opening up, which makes Henan’s
economy adapt to the economic globalization; 2) beneficial to
capital importing and improvement of capital structure of sports
industry; 3) beneficial to promoting the adjustment and optim-
ize of inner structures of sports industry; 4) beneficial to en-
hancing all kinds of sports enterprises; 5) beneficial to increas-
ing citizens’ sports consumption.
The government factor is the last variable one in diamond
model. Porter believes that government cannot create one com-
petitive industry without foundation, and they could only lead
and manage base on other factors in diamond model. [1] The
role of government falls on the rational and on-time policy of
sports industry, completion of laws and rules, their supports on
sports industry and standardization of sports market and so on.
Porter’s competitive theory holds that the role of government is
aiding factor, and we could not weaken government’s role ac-
cording to the situation and economic status in our province. In
the contrary, government plays a indispensable part in the
process of enhancing the competitive power of sports industry.
From the previous analysis, in a short time span, Henan
province would maintain the advantages of its primary factor of
production characterized in labor resources and natural re-
sources, but we are lack of the advanced factor of production
which has the competitive advantage. Though the potential
market need of sports industry is large, our sports products and
service products is still mainly low scientific contain and low
adding value. They industrial competitive power has an expres-
sion in labor-extensive production and management, which
makes the supply, fall behind the need. Besides, the weak of
relevant and supporting industries has badly affected the en-
hancement of the competitive power of sports industry. Gov-
ernment plays an important role in the development of sports
industry. Furthermore, sports industry faces both opportunities
and challenges in front of WTO and 2008 Olympic.
The Strategic Mea sures that Enhance the
Competitive P ower of Henan’s Sports Industry

M. Z. GAO, X. L. WU
49
To implement Personal-training Str ate gies, and to
Build a Team of Excellent Entrep reneurs
Talents are the keys to the development of sports industry.
And the shortage of managing talents has restrained the devel-
opment of sports industry in Henan province. Therefore, all
levels of governmental sports administrative departments
should find and cultivate managing talents in all channels and
forms, in specific; they could organize on-the-job training and
further education for the managing departments. Also, they
could recruit managing talents to work in sports operating de-
partment, and set up operating management majors in the sports
academies or work with Finance and Economics Colleges to set
up relevant majors to cultivate comprehensive managing talents
in sports. So that, we could build a team with high quality, well
business and familiar with international sports transaction,
which could provide sufficient talents and mental support to
Henan’s sports industry and the development of sports market.
To Implement Consumption-pushing Stra t egi es , an d
to Promote the Development of Sports Industry
Fundamentally speaking, the cultivation and development of
sports industry depends on the capacity and structure of sports
consumption, that is, without the enhancement of the level of
sports consumption, there is no development and booming of
sports industry, and no to talk about the competitive power of
industry. The driving force of the development of sports indus-
try is the popular and persistent need of sports consumption. In
21 century, citizens in urban parts and some advanced rural
parts of Henan province, have the ability of sports consumption,
whether it could convert into actual consumption depends on
the national sports ideas and consumption habits. There are
several things we should do to implement consumption-pushing
strategies. First, we should grasp the opportunities of 2008
Olympic, and lose no time to inspire the intentions of sports
consumption and transform their consumption idea. Once we
have the heat spots in sports consumption, the development
sports industry of Henan would speed up. Second, we should
adopt kinds of ways to increase the level of citizens’ sports
consumption that is, we should set up diversified sports service
system, lead and guarantee they participate in various fitness
activities, and expand the community sports to draw more
people to participate so that we could expand the sports market.
Third, we should give great impetus to the hypostatization of
associations, and hold kinds of sports activities with the help of
associations- increasing members, expanding teams and active
the sports market. Further, we should mating up contains of the
teaching reforms in high schools and colleges, which add the
proportion of entertainment sports projects, and the skills in
sports consumption.
To Perfect Policies of Sports Industry and to Provide
Necessary Policy Support
The governmental industrial policies play an important role
in pushing the development of industry. In recent years, sports
administrative department have made efforts on the policies of
setting up sports industry, and they have gained primary result.
However, there are still shortages of policy support in several
areas of sports industry, which restrains the development of
sports industry. Therefore, government could make the base
point of policies at leading sports fitness, which needs whole
set policies with enough investment, constructions of invest-
ment in capital, society equity financing, taxation, sports lottery,
and also sports funds, and to form multilevel system of poli-
cies and good atmosphere for the development of sports indus-
try.
Fixed Position and to Forulate Feasible Development
Plan
Body building is the major function of sports, and spending
money on health is the common concept. So providing fitness
fields and sales of fitness production is one profitable market.
[8] With large population, the sports consumption idea and
standard in Henan province has increased, so that the situation
of fitness recreation industry of sports develops well. Compar-
ing to the seaside developed city, Henan province do not have
high-quality and professional Gyms and can hardly carry on
some famous sports events. Even some provincial level sports
events usually have limited influence. That is to say, consump-
tion level is decided by economic level, and in consumption
structure of Henan’s sports industry, the appreciating consump-
tion falls behind participating consumption. As improvement of
hard condition needs mass capital and no fundamental effect in
short time, the development of athletic show industry of sports
should go steady and step by step. Under these situations, He-
nan province should emphasis fitness and entertainment market,
and makes the athletic show market of sports the leading force,
which advocates scientific and healthy concept of fitness and
adjust their consumption structure. Besides, Henan province
should also cultivate sports production market- to complete and
expand the sports lottery market, to push forward the sports
human resources market and to form the sports consultant mar-
ket. To set up a well structured and functional sports market
system is the necessary step to optimize the structure of sports
industry, and also the basic of the development of sports indus-
try.
Take Strong Precedence to the Development of Wu
Shu Industry
Henan is the original places of two big sorts of Quan- Shao
Lin Quan and Tai Ji Quan. It is well known that Shao Lin Kong
Fu stands out throughout the world, and Shao Lin Kong Fu
spreads all over the world. Here in Henan, we have strong at-
mosphere of Kong Fu and world-famous Chinese Kong Fu,
which draw the attention of many Kong Fu fans to take part in
Wu Shu competitions. The improvement of Wu Shu athletics
pushes the development of athletic competitions and tourism
economy forward. So far, Shao Lin Wu Shu of Songshan has
set up a transnational culture and show media company, which
performs hundreds of show abroad. Henan province also holds
an arena contest named Wu Lin Feng, which has upheld the
spirit of Shao Lin Wu Shu, and created great economic benefit.
[5] Therefore, we should give full play to the advantages and
resources of Wu Shu industry in Henan province, and develop
tourism and training on “Shao Lin Kong Fu”. Furthermore, we
should explore relevant markets of sports industry, so as to
realize its society and economic value in commodity economy
society. Around Deng Feng city and Wen County in Jiao Zuo
city, we draft shows and training of Wu Shu athletic competi-
tion and lay down the production and sales of Wu Shu produc-
tion, and the developing measures of Wu Shu tourism. Last, we
should advance the international competitive power of Henan’s

M. Z. GAO, X. L. WU
50
sports industry at the breakthrough point of Wu Shu industry.
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