Archive for August 31st, 2010

• Chinese School – Companies change marketing strategy

  Date: 2010.08.31 | Category: Chinese Mandarin, Chinese Online Class, Chinese School, Chinese Tutor, Chinese language, Learn Chinese Class, Uncategorized, learn Chinese, learn Chinese online, learn Mandarin online, learn mandarin | Response: 0

  Leading sportswear makers are readjusting the marketing strategies of their brands in China with two of the top sellers moving into lower-tier cities in order to be more competitive.

  Nike Inc, the best-selling global sports brand, which is expecting record sales growth in China this year, is launching a range of low-priced products across the country rather than just focusing on high-end buyers.

  A similar drive is also being undertaken by Adidas AG, another major overseas sportswear brand in China. Managing Director Christophe Bezu said the company’s strategy was to maintain its strong position and spread its influence throughout new areas of the country.

  “We are planning to introduce low-priced products in the second-tier, third-tier and even fourth-tier cities in China to appeal to more Chinese consumers,” said Charlie Denson, president of Nike, during a teleconference.

  Denson also said the Chinese market was Nike’s fastest growing and the brand’s largest market outside the United States. He gave no further details about the new low-price collections or the timeframe for their release.

  Bezu said: “In the near future, we want to bring our innovative products and the Adidas experience to more Chinese consumers. This is why we are planning to widen our product offering in lower-tiered Chinese cities. Even though we are a premium sports brand, we plan to offer competitively priced products to different segments of the market,” he added, without going into specifics.

  Liang Yuchang, an analyst with UBS Securities, said: “The launch of low-priced products (by Nike) is surprisingly fast but it confirmed our conclusion that the US brand will compete with domestic brands in low-end markets.”

  Liang predicted that the first batch of Nike’s low-priced products would be sports shoes retailing at 300 yuan a pair, significantly lower than its normal prices in China.

  According to UBS Securities, sports shoes priced between 170 and 250 yuan are best sellers in China’s second- and third-tier cities.

  Nike’s China branch declined to comment on prices of the proposed collection.

  Currently, most Nike sports shoes cost between 500 and 1,500 yuan in China. They sell to mid- to high-end consumers in large cities. For an ordinary white-collar employee in Beijing, one pair of Nike shoes costing 1,500 yuan would account for nearly half of his monthly wages.

  In Europe, Nike shoes cost the equivalent of between 400 and 600 yuan, making them more accessible to ordinary consumers as a leisure brand.

  Guo Nan, a 26-year-old Chinese student studying in London, said: “We have many options here such as Nike, Adidas and Vans and their prices are almost all at the same level.”

  Liang of UBS Securities added: “If Nike insists on maintaining the high price strategy in China, it will definitely yield the fast growing market to its domestic rivals Li Ning and ANTA.”

  Lured by the vast potential of the sports goods market in China, Nike is trying to get closer to more Chinese consumers, aiming to conquer China’s second- and third-tier markets.

  Denson of Nike said that acquisition of other brands was under consideration when developing second- and third-tier markets in China.

  By the end of this year, China’s sports shoes market will be worth 69 billion yuan and by 2020 the market value will be 297 billion yuan, analysts said.

  According to Nike’s five-year program, the company is expecting a 10 percent increase in year-on-year in sales in the Chinese market, which now accounts for nine percent of Nike’s worldwide market share.

  “Nike’s low-priced products would have a serious impact on domestic brands such as Li-Ning and ANTA,” said Liang of UBS Securities.

  At present, Chinese brands including Li-Ning, the majority of whose sports shoes sell for 300 yuan, are dominating China’s rural markets because of the lower price.

  Li Ning, Nike’s largest domestic rival, rebranded itself and changed its slogan to “Make the Change” from “Anything is Possible” to attract more young consumers earlier this year.

  According to Fang Shiwei, chief marketing officer at Li Ning, the brand overtook Adidas in sales last year to become the second-largest sportswear brand in China after Nike.

  “To catch up with our rivals, Li Ning is increasing its strength in second- and third-tier cities and also changing tack and spreading its focus in top-tier cities,” said Fang.

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