Are Nike and Adidas losing their charm in China?

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People walk past Nike and Adidas stores at Hopson One shopping mall in Beijing, China on July 30, 2022. /CFP

People walk past Nike and Adidas stores at Hopson One shopping mall in Beijing, China on July 30, 2022. /CFP

The way Chinese consumers perceive foreign brands has changed over time, and the traditional strength of foreign giants is being tested, as the latest sales figures from sportswear companies Nike and Adidas show.

Adidas announced a 35% drop in sales in the Chinese market during its last fiscal quarter. By comparison, Nike saw a 19% decline as young shoppers disapproved of their perceived indifference to the world’s biggest consumer market.

In an interview this month, Adidas CEO Kasper Rorsted candidly said they made a mistake in China and they should understand local consumers better.

The two sportswear brands took a stand against Xinjiang cotton last year after allegations of “forced labor” in the region were proven to be baseless.

“When we hear that foreign brands are boycotting Xinjiang cotton, we feel very uncomfortable and believe that these foreign brands are abusing situations,” Dao Bochen, a 24-year-old buyer, told CGTN.

They have taken the Chinese market for granted and want to fend off controversies, but people remember these things, Dao added.

Rorsted also announced he was leaving Adidas last week after struggling in the Chinese market. At the same time, the pressure was compounded by a build-up of inventory, a lack of new products and problems in the supply chain.

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China’s Anta Sports took 16.2% of China’s market share in 2021 and overtook Adidas’ 14.8% for the first time, according to data from market research firm Euromonitor. . Nike’s market share fell to 25.2%, while Li Ning, ranked No. 4, increased its share to 8.2%.

The trend continued this year. Anta’s revenue in the first half of the year hit a record high of 25.9 billion yuan ($3.75 billion) and topped two of Nike China’s last fiscal quarter revenues by 3, $72 billion.

Nike China’s third and fourth fiscal quarters spanned from December 2021 to the end of May 2022.

Consumer preference for international brands seems to be fading. Meanwhile, “China chic” adds another layer of uniqueness to national brands, said Wang Sirius, CEO of Kantar Marketplace China.

“China chic” refers to designs that exemplify Chinese culture which generally combines tradition and modernity.

“The old concept of shopping involved a bit of foreign worship, or at least these foreign things represented social status. When people realize that there is not much difference in quality, they will start to choose Chinese brands,” another consumer told CGTN. .

An Anta store in Shanghai, China, on Feb. 3, 2022. /CFP

An Anta store in Shanghai, China, on Feb. 3, 2022. /CFP

Meanwhile, many domestic brands can quickly detect emerging trends and play a part in them, while foreign brands struggle to catch up. They are increasingly adjusting their management teams to facilitate quick decisions by meeting consumer needs, but they should speed up the process, Wang added.

However, Wang said the poor performance of some brands is not a trend among foreign companies in China, although it may look like it.

“In our latest Chinese consumer tracker, 17 out of 43 overseas brands have increased their market share in China over the past year in the fast-moving consumer goods category,” he said.

“None of our overseas customers showed any temptation to abandon the Chinese market,” Wang said, adding that China retains massive market size, complete supply chain and innovation power. dynamic enough.

Embodiment of globalization, in more than 40 years of establishing foreign companies in China, the relationship between China and these international giants has evolved from a clear buying and selling to a more complex integration involving the whole of the industrial chain.

Nike and Adidas manufacture their products in China. Both sportswear giants view China as a long-term growth market and are committed to continued investment.

As a connector of the dual circulation, foreign enterprises may increasingly integrate into the Chinese market in the future. In the meantime, they may have to look for new ways to rekindle their charm with young Chinese consumers.

Read more: Mercedes-Benz CEO: China remains largest market and growing tech hub

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