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Peak strives to reach top of US market

(China Daily)

13:50, January 17, 2013

At the crossroads of Melrose and Harper avenues in Los Angeles, it's hard not to notice the distinctive bright red logo shining brightly.

The sign is above the new flagship store of Peak Sport Products Co Ltd, which represents the latest effort by the Chinese sportswear brand to raise its visibility and profile in the United States.

Occupying 250 square meters, the outlet sells the full range of the company's sports products including running and training wear, and of course basketball shoes, its core product.

Su Jia, CEO of Peak Sports USA, said the new LA store is a key part in the company's overall retail strategy in the US.

Others strands to that strategy include taking space within large US retail outlets, e-retail and franchises.

Last year, Peak opened an outlet in California's Westfield Culver City mall, and Su said the company is now negotiating with Footlocker, the US national sportswear retailer, to become one of its main suppliers.

Founded in 1989 in Quanzhou, Fujian province, Peak Sports has grown into one of China's leading footwear manufacturers.

However, its US business is still a relatively new development, started in 2010, about five years after it first decided to launch its "going global" strategy.

The company has established strategic partnerships with a number of high profile NBA teams such as the Houston Rockets and the Miami Heat over the years.

That started in 2006, when Peak signed its first personal deal with NBA star Shane Battier after he left the Memphis Grizzlies for the Houston Rockets, to become the first top player from the NBA to sign with a Chinese company.

Since then, Peak has signed with 19 leading NBA players, including Tony Parker of the San Antonio Spurs, making it the biggest Chinese corporate sponsor of the NBA, after Nike and adidas, according to officials, and it plans to expand its roster in the next year.

In November last year, Peak also announced a partnership with the Canadian NBA team Raptors in Toronto - a four-season partnership which marked the first time a professional Canadian sports team has been sponsored by a Chinese company.

"Wherever you try and sell the products, everyone wants to know who in the NBA is wearing your shoes," Su explained. Maintaining the company's relationships with these top players remains one of his major jobs in the US.

So far, Peak is reported to have spent tens of millions of dollars on its player sponsorship deals.

Kenny Carroll, the brand director of Peak Sports USA, said: "Marketing is everything to US consumers. You have to make sure US consumers know how strong your products are."

Carroll is one of 23 local employees hired by Peak in the US. Before working for the company, he had owned his own footwear store, before working for Nike for 13 years.

Having been in the industry for two decades, he knew the business and said one of the mistakes companies often make is trying to reach too many people.

"Research shows it takes a US consumer a minimum of 20 minutes to start recognizing a logo before they start to remember it.

"You have to make sure your message is consistent, otherwise consumers forget very quickly everything that you have thrown at them previously," Carroll said.

Peak produces and manufactures goods in a variety of sports, but it's the branding of its basketball products that remains paramount.

"What we want to say is: 'Hey, no matter who you are, no matter what your skill level is, when you are with Peak, you can play'," Carroll added.

To better publicize its "can play" slogan, Peak has sponsored the Drew League, a teenage basketball league based in southern Los Angeles, with the aim of encouraging local teenagers to live a healthy life, free of drugs and violence.

Peak is not the first Chinese sports brand to tackle the highly competitive US sportswear market.

In 2005, Li Ning, another major Chinese sports firm, became the NBA's first Chinese official partner.

Peak's development in the US has had various similarities to Li Ning's: both set up a separate US company, signed NBA stars, and even entered the same sports retailer, Footlocker.

In October, Li Ning signed Dwyane Tyrone Wade, a star with the Miami Heat, in a 10-year contract reported to be worth $100 million, a figure that surprised many industry insiders.

"But domestically, Li Ning has had to face a tough headwind in the apparel industry, and it's also been caught in an embarrassing position, where it has largely failed to become an international high-end brand, after attempting to deviate from its traditional medium and low-end market position," said Tan Ke, an industry analyst with Dongxing Securities Co Ltd.

With falling profits and a series of leadership changes, Li Ning has gradually reduced its investment in the US market, offering Peak a good opportunity to establish itself as the premier Chinese global sportswear brand, Tan added.

"Peak has put its emphasis firmly on the international market, and the US is its focus," Tan said.

Su Jia, Peak's US CEO, said the US market is proving a tough nut to crack.

The company has even had to protect its brand name Peak, taking out a lawsuit in the past to secure the name.

"It wasn't until we came to the US that we realized the 'Peak' trademark had been registered by more than 100 entities," Su said.

"At first, we thought we could sell the same shoes in the US as in China, because NBA players we signed up said they liked our shoes," Su recalled.

"But we later found that we had to adjust our products for US customers. What NBA players like may not necessarily be what US customers like."

Now Peak has its own design teams making products for the US market.

"Chinese companies are good at making things but not always that good at selling things," said Zhang Canrong, an expert in branding.

Kenny Carroll has just initiated an ad campaign named "awaken the dragon".

He knows that in US culture, the dragon image is right for the brand - it's ferocious, it can sometimes be dangerous, and that's just the image he wants for Peak Sports.

"Most US kids understand the dragon. They understand a dragon is strong, fast, powerful and ferocious.

"That's what sports kids want to be. When they step onto the field, they want people to fear them," Carroll said.

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