Olympian effort

For Chinese, the Beijing Olympics was a proud and glorious event presented to the world.

However, for Herbert Hainer, chairman and CEO of adidas Group, it was not only the most memorable of his four Olympics, but also the turning point for his company becoming the sportswear market leader.

On the same day Hainer raised the flame as a torchbearer for the Olympics opening day, he announced that in terms of market share, adidas was the No 1 sports brand in China for the first time.

"The adidas Group has excelled in the first half of 2008, achieving double-digit top- and bottom-line growth. Our business in China was a big contributor to this growth," says Hainer.

"As we went into the Olympic Games, we achieved market leadership in China. As a group, our tremendous sales performance in China in the first six months of this year, underlines our position as the fastest-growing sporting goods company in this dynamic market."

Adidas' role as the official sportswear partner of the Beijing 2008 Olympic Games, the dynamic expansion of distribution for adidas and Reebok, as well as the positive development of TaylorMade-adidas Golf have been the primary growth drivers in China.

In the first half of 2008, adidas Group's sales in China increased over 60 percent on a currency-neutral basis. Based on this growth, China will become the second-largest revenue market for adidas after the US by the end of this year.

"We are well on track to reach our sales target of more than 1 billion euros for the adidas Group in China by 2010," says Hainer. "I fully expect our success story in China to continue because the visibility and excitement we generated for our brands during the Olympic Games will create a halo effect sustaining the momentum of our group in this market well into the future."

Jump from Olympics

Since adidas' founder Adolf Adi Dassler promoted his hand-made sports shoes at the Amsterdam Olympics 80 year ago, the connection between Olympics and the brand has been a near constant.

Its presence in the Olympic Games was a great coup until 1972 when two Americans - Phil Knight and Bill Bowerman established a new brand, Nike, which gradually replaced adidas as the world's top sportswear group.

Now, in sponsoring Beijing Olympics, an "unprecedented event", according to Hainer, adidas has begun to reoccupy its lost territory, starting in China.

The company is aiming to be the overall Asian leader by 2010.

"The Beijing Olympic Games were a huge success for adidas - both in China and around the world," says Erich Stamminger, president of the adidas brand.

"We were clearly the leading brand in terms of visibility across all sports during the Games. We provided first-class service and exciting products that were especially made for Beijing. We also made our mark in communications with our campaign 'Together in 2008 - Impossible is Nothing' that won the first ever Golden Lion for China at the Cannes Festival. So the Olympic Games in Beijing brought us another giant step closer to our mission to be the leading sports brand in the world."

Adidas supplied more than 3 million products to federations, volunteers, officials and others.

By outfitting 16 National Olympic Committees, including the most successful nation, China, plus three other top six ranked Olympic Teams, Great Britain, Germany and Australia, adidas underlined its position as the major Olympic brand.

In total, more than 3,000 athletes competed in adidas products and adidas provided products for 27 out of the 28 Olympic sports.

"We do believe through the Beijing Olympics, adidas will keep double-digit growth in the next five years," adds Hainer.

According to recent research conducted by Mediaedge:cia, a leading media agency, adidas is estimated to have spent close to $250 million on its Olympics sponsorship and advertising package.

In April, adidas and Nike achieved similar levels of brand awareness, with 16 percent and 11 percent respectively, despite Nike not being an official sponsor. However, by August, adidas had built 38 percent awareness of its brand, whereas Nike only raised its awareness to 18 percent.

"Adidas' success was a result of on-screen presence through branded clothing and consistent Olympics-related advertising in the six months prior to the Games," says the research.

"This Olympics is the one we invested the most in our history," says Hainer. "Not only just in the 17 Olympic days, we also had conversations with our customers in China all through the past four years. It provides adidas with a steady platform to further develop in this market."

"These successful Olympic Games in Beijing will leave a legacy for sport in China and for all brands of our Group. Therefore, I am convinced that we will continue to achieve dynamic growth in this market for the years to come."

Shanghai-based sports consultancy ZOU Marketing predicts that as a result of the Olympics, China's sports apparel market in 2009 will jump 90 percent to $7.2 billion from $3.8 billion in 2006.

Ambitious targets

At the end of 2007, the adidas Group operated 4,800 stores in China. It plans to take that number to 5,900 stores in 2008.

Adidas will operate approximately 5,000 stores, 1,000 more than that in 2007 and Reebok will have about 900 stores by the end of this year.

By 2010 this number is expected to increase to approximately 7,200 stores for adidas Group, with 6,100 stores for adidas and 1,100 for Reebok.

This July, adidas opened its world's largest store - the four-floor 3,170 sq m Adidas Brand Center in Beijing.

"Now adidas is entering sixth-tier cites in China. We are truly distributed across China," says Hainer.

He says 60 percent of the sports brand's revenue is contributed by the first-tier to third-tier cities, while the other 40 percent comes from fourth-tier to sixth-tier cities.

Hainer also expects growth from Rebook and TaylorMade-adidas Golf.

"Basketball has been the favorite sports of young Chinese. With Yao Ming representing our brand Reebok, I see more growth for this brand in China," says Hainer. "If golf becomes more popular in China, I am afraid some day China will surpass the US to be our top market," he adds.

For adidas Group, the US market is still twice as large as China by revenue. However, 50 percent of the revenue adidas gains there is contributed by its brand TaylorMade-adidas Golf because the US is one of the biggest golf markets in the world.

(China Daily 10/06/2008 page7)