Companies

Adidas to push and price aggressively in China

(Agencies)
Updated: 2010-11-16 16:51

SHANGHAI - 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.

Adidas Chief Executive Herbet Hainer said a new brand tailored to the youth market, Neo, will be rolled out aggressively in the lower tier cities.

The company said earlier this month it aims to overall grow sales to 17 billion euros ($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 Greater 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.

"In the lower tier cities we may be offering a wider selection of lower price points but we are not going to be cutting the actual price," said Colin Currie, a senior vice president for sales and marketing at the firm.

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Adidas 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 United States, Russia and China to constitute half of its business eventually.

American retailer Gap Inc and US steakhouse Morton's Restaurant Group Inc opened their first stores in China just 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 ecommerce. 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.

China is the world's biggest Internet market with 420 million users.