Nike to invest in China 'very aggressively'
Updated: 2011-10-11 17:36
SHANGHAI -- Nike brand President Charlie Denson said on Tuesday that the company will continue to invest heavily in the world's most populous country, as the world's top sportswear maker plans to double sales in China by 2015.
Although the world economy -- notably in the United States and Europe -- risks a double-dip recession, Nike doesn't worry about its business expansion, which will focus more on emerging markets such as China, Denson said in an exclusive interview with Xinhua.
"We certainly will continue to invest in China, and very aggressively. We are very excited about the growth opportunities here," he said.
This year marks the 30th anniversary of Nike's operation in China. It took the Portland-based company 26 years to make $1 billion of revenue in China, but only four years to double it at the end of the last fiscal year in May. China has become Nike's biggest market outside the United States.
With more than 7,000 retail stores in China, Nike now plans to expand distribution to second and third-tier cities, as Denson put it, "We will move west."
"I think the great thing about sports is that it doesn't matter if you live in Shanghai or Beijing or Wuhan, or wherever, I think you're still looking for the best and the most innovative products available, and that is what gives us such confidence," he said. "We will continue to grow as we move into the lower tier cities -- athletes still want the same products."
Denson didn't confirm the market talk that Nike will build a new campus in Shanghai, but stressed the company will certainly increase its presence there by recruiting more and developing more locations.
In its latest fiscal quarter ended Aug 31, Nike posted a profit of $645 million, up 15 percent year-on-year. Revenue increased 18 percent from a year ago to $6.08 billion.
During the most recent fiscal year, the United States generated revenue of $7.58 billion as the largest market by country. It is followed by China with $2.06 billion in revenue.
Despite the increase in sales, Nike also comes under pressure from rising labor and material costs.
"Certainly the spiral cotton prices affect every area, and that was a seasonal situation, I think it will ease over time," Denson said.
Despite China's rising labor costs, which could hurt the company's manufacturing margin, Denson said China still represents a very big part of its manufacturing strategy.
"I think when you look at the overall trade and labor markets around the world, China continues to be a very viable resource, and we continue to manufacture a lot of our products in China," he said.
To maintain the company's flexibility of dealing with the changing economic and trade environment, Nike has continuously looked for a diverse portfolio of manufacturing countries, he added.
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