BEIJING — It has taken a full seven years for Adidas to get back on track in China.
In 2008, the Chinese market share of Adidas was just one percentage point behind American giant Nike. But just when the top spot in China seemed within the grasp of the German company, sales suddenly plummeted, and by 2010 it had fallen to fourth.
Colin Currie, the Adidas chief for Greater China, is now proud to declare that it is back neck-and-neck with Nike, and back ahead of the top two local brands Li Ning and Anta. In 2011, Currie — who was the third CEO for Adidas China between 2008 and 2010, came up with a five-year plan called “Gateway 2015” that is credited with the company's turnaround. Sales in 2014 totaled 1.8 billion euros in China, a 10% increase over the previous year.
To some degree, the Adidas turnaround is simply a recovery from the 2008 Beijing Olympics. The German brand invested between $80 and $100 million to win the sponsorship of the Beijing Olympics. The deal included Adidas providing more than 100,000 uniforms for the Games’ staff, volunteer workers, and the Chinese Olympics team, as well as exclusive rights throughout China to sell licensed Olympic products to the public.
Adidas ad in Beijing — Photo: Damon Garrett
But the sponsorship backfired, requiring a huge capital investment during the run-up to the Games, leaving the company overstocked and with disappointing sales figures and serious cash flow pressure.
Meanwhile, Nike focused on sponsoring single sports and individual athletes. As Charles Denson, Nike’s former CEO put it, “Whether from the point of view of supporting sport or from the commercial and marketing point of view, this policy was more effective and was the best use of our resources.”
The contrasting strategies offer a lesson for the sector, but also had a lasting effect on Adidas' overall performance in the Chinese market, as its share fell by 4% and was eventually surpassed by the local brands.
Learning from the experience, the German group changed the way it sets targets. “Instead of attaching greater importance to the wholesale chain and to increasing our orders, we are now focusing on raising the proportion of goods the retailers actually sell,” says Currie.
Better studies of the chain stores’ sales data, such as the buyers' gender, the goods bought and the price range, the brand now provides much more accurate supply data to its distribution chain.
Data analysis has helped Adidas’ continuous growth over the past five years. “All our dealers used to receive the same catalog and they selected their own orders, whereas now we cooperate with them and help them in choosing their orders in accordance with their regions’ characteristics of climate and population,” says Currie.
In 2014, Nike's overall revenues in Greater China was $2.6 billion, still comfortably ahead of Adidas, but the German company is now back to second overall in the market and losing no new ground to the American rival.
Adidas HQ in Beijing — Photo: James Whatley
Beyond its proven sponsorship success over the years with the likes of Michael Jordan, Nike's excellence has been fueled by its ability to innovate and offer a broad range of products that satisfy specific market segments.
Currie has been applying some of these same practices, putting more stress on offering a richer portfolio of products that are better targeted with the help of the company's growing use of market surveys.
His first task was to raise market share by combining bolder categories of different product lines. Though 70% of the German group's sales are in sportswear, it needed to develop further in leisure and lifestyle products. The brand's retail outlets also needed to be organized differently to address different categories of the population, as well as different preferences such as specialty stores for women, and specialty stores for outdoor activities, football and basketball, and so on.
Currie's second task was to explore China's small to middle-sized cities. They will be the fastest growing places for sales in 2015," he said. "We call them the Future cities." By the end of 2014, Adidas had opened 8000-plus outlets in more than 1000 Chinese cities, of which these emerging centers make up a half.
Finally, Adidas has also made it a priority in China to seize the women's market. A 2010 Adidas market survey showed that more and more women consider doing physical exercise not just a sport and fitness opportunity, but also as a prime social activity. In 2013, Adidas launched a special marketing program for women. It was the first time a sportswear brand had done so in the Chinese market.
By the end of last year alone Adidas had opened three new outlets in China specializing in female apparel. As Zhang Qing, a sports marketing expert, noted "Even if this is not going to raise Adidas’ sales much, it is nonetheless very effective in gaining women's awareness of the brand."
The Chinese market is particularly important to the German manufacturer, even if at present its sales represent only one-tenth of the Adidas' global total. “To achieve global success we have to reinforce our investment in China," says Currie. "We are already imagining what China will be like in 2020.”
Welcome to Monday, where the UK pays homage to slain MP David Amess, Myanmar frees thousands of prisoners, and Facebook gets ready to build its "metaverse." Please fasten your seatbelts: Worldcrunch also takes stock of the long-lasting effects — good and bad — the pandemic has had on the air travel industry.
[*Azeri - Azerbaijan]
🌎 7 THINGS TO KNOW RIGHT NOW
• Myanmar to free political prisoners: Myanmar's junta chief Min Aung Hlaing has announced the release of 5,636 prisoners who had been jailed for protesting the coup that ousted the civilian government in February 2021.
• Powerful Haiti gang behind the kidnapping of U.S. missionaries: The notorious 400 Mawozo gang is believed to be behind the kidnapping in Haiti of a group of Christian missionaries, including 16 U.S. citizens and one Canadian. The brazen kidnapping on Saturday comes as crime is spiking since the killing of President Jovenel Moise in July.
• UK to pay tribute to David Amess: British lawmakers will pay homage in parliament to colleague David Amess, who was stabbed to death Friday in what was described by the police as a "terrorist incident." Officers arrested a 25-year-old suspect whose father, Harbi Ali Kullane, worked as a media adviser to a former prime minister of Somalia.
• COVID update: Russia has registered more than 34,000 cases of new infections in the past 24 hours, a new record since the start of the pandemic. Meanwhile, police in the northeast Italian city of Trieste used water cannons to clear striking dockworkers protesting Italy's new requirements that all employees be vaccinated.
• At least 26 killed in floods in India: Torrential rain has triggered floods and landslides in India's southern coastal state of Kerala, killing at least 26 people.
• Facebook to hire 10,000 in EU to develop "metaverse": The U.S. social media giant plans to hire 10,000 workers in the European Union over the next five years to build a "metaverse," a virtual reality version of the internet that the company touts as the future.
• Punishing parents for children's bad behavior: After limiting gaming hours for minors, China is now considering legislation to reprimand parents if their children exhibit "very bad behavior" or commit crimes.
🗞️ FRONT PAGE
Colombian daily El Espectador dedicates its front page to Alex Saab, "owner of the secrets" of Venezuelan President Nicolas Maduro. The Colombian businessman, wanted by U.S. authorities for allegedly laundering money on behalf of Venezuela's government, has been extradited from Cape Verde to the U.S. where he is scheduled to appear in court today.
#️⃣ BY THE NUMBERS
China's economy registered its slowest pace in a year as the country faces a looming energy crisis with power shortages and increasing pressure on its property sector. Gross Domestic Product (GDP) for the period between July-September rose 4.9%, the weakest numbers since the third quarter of 2020 and significantly lower than forecasts. The world's second-largest economy faces a debt crisis linked to the China Evergrande Group debt crisis, while energy shortfalls have dropped factory output to its weakest since early 2020, when heavy COVID-19 curbs were in place.
📰 STORY OF THE DAY
7 ways the pandemic may change the airline industry for good
Will flying be greener? More comfortable? Less frequent? As the world eyes a post-COVID reality, we look at ways the airline industry has been changing through a pandemic that has devastated air travel.
⛽ Cleaner aviation fuel: With air travel responsible for roughly 12% of all CO2 emissions from transport, and stricter international regulation on the horizon, the industry is increasingly seeking sustainable alternatives to petroleum-based fuel. In Germany, state broadcaster Deutsche Welle reports that the world's first factory producing CO2-neutral kerosene recently started operations in the town of Wertle, in Lower Saxony. The plant, for which Lufthansa is set to become the pilot customer, will produce CO2-neutral kerosene through a circular production cycle incorporating sustainable and green energy sources and raw materials
.🛃 Smoother check-in: The pandemic has also accelerated the shift towards contactless traveling, with more airports harnessing the power of biometrics — such as facial recognition or fever screening — to reduce touchpoints and human contact. Similar technology can also be used to more efficiently scan physical objects, such as explosive detection. Ultimately, passengers will be able to "check-in" and go through a security screening anywhere at the airports, removing queues and bottlenecks.
✈️ The billion-dollar question: Will we fly less? At the end of the day, even with all these (mostly positive) changes that we've seen take shape over the past 18 months, the industry faces major uncertainty about whether air travel will ever return to the pre-COVID levels. Not only are people wary about being in crowded and closed airplanes, but the worth of long-distance business travel, in particular, is being questioned as many have seen that meetings can function remotely, via Zoom and other online apps.
➡️ Read more on Worldcrunch.com
"The crimes committed that night are unforgivable for the Republic."
— Emmanuel Macron became the first French president to commemorate the killing of as many as 200 Algerian independence protesters by Parisian police in 1961. For 40 years, French officials ignored the massacre, which took place a year before Algeria gained its independence from France after an eight-year war. In 2012, French President François Hollande acknowledged the killings for the first time on a visit to Algeria, and Macron took it further by attending Sunday's commemoration at the site where the events happened in the French capital. Still, many had hoped the French President would go further and take responsibility for a "state massacre," for a crime many historians consider the most violent repression of a peaceful demonstration in post-War Europe.
📈💥 IN OTHER NEWS
Low trust, high risk: The global rise of violence targeting politicians
The deadly stabbing of British Parliament Member David Amess confirms an ongoing study on trust and governance in democracies around the world: It's bad. In The Conversation, James Weinberg — the study's author and a lecturer in Political Behavior at the University of Sheffield — writes:
⏪ The assassination of Amess, who was stabbed to death in his constituency on Friday, is a tragic moment for democracy. What makes it even more devastating is that such a catastrophic failure is not without precedent or predictability. Labour MP Jo Cox was shot at her constituency surgery in 2016. Before her, another Labour MP, Stephen Timms, survived a stabbing in 2010. And Andrew Pennington, a Gloucestershire county councilor, died in a frenzied attack in 2001 while trying to protect local Liberal Democrat MP Nigel Jones.
☝️ Beyond these critical junctures in the public debate about politicians' safety, elected representatives must live with an increasingly insidious level of popular cynicism that threatens violence on an almost daily basis.
🇬🇧🇳🇿🇿🇦 Not only are these experiences of abuse or threats of physical violence felt across both sides of the political aisle in the UK — they also appear to be growing more common in other democratic contexts where the climate of politics has been presumed to be both calmer and more volatile, from New Zealand to South Africa.
Read the full piece from The Conversation, now on Worldcrunch.com
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