What China can learn from US soccer

China, aspiring to be champions of the beautiful game, can learn from another country with the same goal: America.

Mainland clubs are spending top dollar to secure foreign talent as China seeks to become the world's leading sports economy by 2025 but if Beijing truly wants to create a healthy soccer market, it needs to focus on popularizing the game instead. And that's exactly what the U.S. is currently doing, explained Mark Thomas, group managing director of sports marketing agency S2M.

Burak Yilmaz of Beijing Guo in action during a China Super League match between Hebei China Fortune FC and Beijing Guo at Qinhuangdao Olympic Sports Center Stadium on July 16, 2016 in Qinhuangdao, China.
Stringer / Anadolu Agency / Getty Images

Historically, neither heavyweight nation is known for its soccer prowess. Stateside, the sport simply isn't as popular as basketball or baseball while in China, a higher priority on education over sports among children and a poor infrastructure of networks are to blame—a problem shared by India.

"The North American Soccer League went through a very similar situation as we're seeing now in China with huge spend from teams, like the New York Cosmos, in bringing the best players—Pele, Beckham—to the American game," Thomas told CNBC on Monday.

Once that boom-and-bust ended, the American model then switched to fundamentals, i.e. getting kids to start playing at a young age, Thomas continued. "Now, when you look at the re-establishment of the Major League Soccer (MSL), there's grassroots strength across all demographics. I'm not saying the [U.S.] model is perfect, but you've got to build a foundation before you start signing major deals."

In the mainland, clubs are busy importing expensive players at a record pace to drive national interest in the sport and curry favor with the government.

Over the weekend, Chelsea midfielder John Obi Mikel signed with Chinese Super League (CSL) club Tianjin Teda, becoming the latest high-profile player to join the CSL. The details of the deal were undisclosed but it's fair to assume the transaction was in the millions, judging by recent moves in the industry. Mikel's former Chelsea teammate Oscar was bought over by Shanghai SIPG for an estimated $63 million on Dec. 23, while Argentine striker Carlos Tevez signed with Shanghai Shenhua on Dec. 26 for an alleged 84 million euros.

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Chinese President Xi Jinping wants his country to qualify for another FIFA World Cup—it has only done so once in 2002—and eventually win the tournament someday, so he's attempting to make sports another pillar of the economy. The government's push has sparked a flood of new activity in soccer; new tournaments are being created, such as the 2017 China Cup that begins Tuesday, while investors are snapping up clubs and digital streaming assets.

However, the nation's top sports body, the General Administration of Sport, has lashed out against football's high-profile transactions, calling them "a grave phenomenon," Reuters reported last week. Beijing can be sensitive to extravagant displays of wealth as Xi's administration cracks down on conspicuous consumption among government officials in a bid to stamp out corruption.

A business-first approach simply isn't the right solution for a nascent soccer market such as China, warned Thomas.

"If you're a spending a lot of money and there's not enough money coming into the business, it's not sustainable....Participation in sports at a young age is essential to building a healthy consumer market, it will breathe financial life into the sport."

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