Adidas aims to be first at finish line

09:25, November 17, 2010      

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 German sports goods company Adidas AG plans to open more than 2,500 stores in smaller Chinese cities by 2015, banking on rising incomes to turnaround its fortunes in the country.

  Adidas, the world's second-largest sporting goods maker after Nike, struggled in China after swamping the market with goods for the Beijing Olympics in 2008 and only returned to growth there in the third quarter.

  Adidas, currently behind local sporting goods maker Li Ning and Nike, the top producer of sporting goods in China, said it will look to unseat Li Ning next year as it aggressively pushes into lower-tiered cities with specific products tailored to the lifestyle needs and disposable incomes of those cities.

  "I'm pretty confident we will take back our original No.2 position next year, there is absolutely no doubt and we've built a plan in the years to come to become number one in the market," said Adidas Chief Executive Herbet Hainer at a press conference in Shanghai.

  Hainer said a new brand tailored to the youth market, Neo, will be rolled out aggressively in the lower-tiered cities.

  The company said earlier this month it aims to overall grow sales to $17 billion by 2015, up two thirds on 2009 levels, as it strives to overtake Nike.

  Adidas will also price its entry level products at 15 percent lower than usual in those cities, said Christophe Bezu, Adidas managing director for China.

  Chinese brands Li Ning and Anta have strongholds in lower-tiered cities where smaller incomes means lower price points.

  Nike and Adidas have largely catered to the upmarket first and second-tiered cities like Shanghai and Beijing where city dwellers have higher incomes and are more brand conscious.

  However, China's immense economic growth is making even the much smaller, tier 6 and 7 cities look attractive to Adidas.

  The firm plans to grow at a double-digit rate in China over the next five years and expand coverage to 1,400 cities from 550 currently. The firm expects the US, Russia and China to constitute half of its business eventually.

  American retailer Gap Inc and US steakhouse Morton's Restaurant Group Inc opened stores in China last week.

  With rising incomes and brand consciousness in big cities, foreign companies are flocking to China to boost sales in the hope of offsetting soft demand at home.

  Adidas also hopes to catch online shoppers with e-commerce. It plans to build a website for Chinese shoppers by 2012 and is currently available online through China's largest e-commerce consumer website Taobao.

Source: Global Times


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