Even as the likes of McDonald's (MCD), Adidas, and Coca-Cola (KO) spend millions of dollars trumpeting their affiliation with the Beijing Olympics, a different group of multinationals is less eager for the spotlight. China is spending some $6.5 billion on security for the Games, and much of that has gone to foreigners. But given the sensitive nature of those contracts—and a skittishness over being perceived as supporting China's authoritarian government—these companies are often reluctant to discuss what they're doing or how much they're making. "We want to avoid answering sensitive questions," says a staffer in the Beijing office of Panasonic (MC), which has sold surveillance cameras for use at the Games.
That doesn't mean these companies haven't been aggressive in courting business. General Electric (GE), IBM (IBM), Honeywell (HON), Siemens (SI), Panasonic, and LG have all won major contracts providing security technology for the Olympics—one of the biggest security-business opportunities ever, and a shot at lots of ongoing business for those that get in early. The Chinese are laying out more than four times the $1.5 billion that Athens spent on security in 2004, says the Security Industry Assn., a Washington trade group.
The hefty increase is due in part to the immense size of the 2008 Games. Beijing alone has 31 Olympic venues; six other cities—the most ever for an Olympics—will play host to soccer, equestrian events, and sailing. In attendance will be 10,000 athletes, 30,000 journalists, and more than 80 heads of state, including George W. Bush and France's Nicolas Sarkozy. "Hosting the Games is, in the context of the U.S., like having two Super Bowls every day for 16 days," says Harvey W. Schiller, chairman of New York risk consultant GlobalOptions Group (GLOI) and a former executive director of the U.S. Olympic Committee.
Olympics Terrorism FearsBeijing's legitimate concerns about terrorism also are behind the big spending. On Aug. 4 two men attacked a group of policemen (BusinessWeek.com, 7/28/08) in western China, killing 16 of them. So China has deployed 34,000 People's Liberation Army soldiers and more than 75,000 other security personnel to keep an eye on the Games. Anti-aircraft missiles are in place around the "Bird's Nest" stadium, the centerpiece of the Olympics. And Beijing's airport was scheduled to shut down during the Aug. 8 opening ceremonies in the stadium. "Safety is our top concern here," Vice-President Xi Jinping said while touring Olympic venues on July 21.
Foreign companies are a big part of the safety equation. Nearly 90% of the security equipment used directly in Olympic venues will be supplied by foreigners, the Security Industry Assn. estimates. Honeywell Security has sold intrusion detectors and surveillance cameras for use at more than 10 Olympic venues, including a $20 million contract for the Bird's Nest. Panasonic has provided some 2,000 surveillance cameras for the National Convention Center, site of the fencing competitions and the press center. Siemens sold more than $7 million worth of building-automation and security-control systems for the National Aquatics Center. And an IBM product called Smart Surveillance System, or S3, helps authorities keep track of images from some of the 300,000 video cameras watching for potential troublemakers on the streets of the capital, IDG News Service reported in December. IBM declined to comment.
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