Olympic-sized opportunity for Adidas
The Beijing 2008 Olympics is as much an economic opportunity as it is a global sporting event. Adidas Asia-Pacific Head of Corporate Public Relations Sabrina Cheung tells Amy Cheung of The China Perspective how the global sportswear brand has localized to score heavily on the mainland sports fields
The China Perspective: Adidas has launched a “grassroot” program to promote sports in Beijing schools. Can you tell us more about this campaign, how it is going to be expanded and what Adidas wants to achieve?
Sabrina Cheung: The Adidas China School Football Grassroots Program, also called the Green Development Project, aims to provide opportunities for Chinese kids to have access to organized football activities, and to make football part of their lives and build the long-term culture of football in China. It is a comprehensive program including several tiers and coaching elements to bridge the gap between mass participation and elite football, ranging from, but not limited to, youth coach education and organized training to organized competition. The program began in Shanghai, Guangzhou and Beijing in 2005, and will expand to more than 18 cities by the end of 2008.
TCP: As an official partner of the Beijing Olympics, how do the Games serve as an avenue to crack the mainland market?
SC: Our partnership agreement tells the story of our deep involvement: Adidas will be the Official Sportswear Partner of the Beijing 2008 Olympic Games and the Chinese Olympic Committee. Along with the partnership agreement with BOCOG, Adidas is the only branded sportswear licensee for the Beijing Olympic Games.
The Olympic partnership will not only drive sales around the world, but also increase the brand’s equity in China and give it a significant advantage over the competition. It’s about commitment to the China market, and our strength and leadership as a global brand.
TCP: How do you characterize Adidas’ Olympic marketing and advertising? How will you utilize the event to appeal to consumers and raise brand awareness?
SC: We, at Adidas, believe that the truly memorable Olympic moments, the ones that remain fresh in the public consciousness long after the Games finish, are the moments that transcend mere competition, the moments when an athlete pushes the limits of performance and delivers something really inspirational. Adidas’s Olympic campaign will inspire impossibles in China, supporting top Chinese athletes and teams. In the spirit of “impossible is nothing” the people in China have already set a target of making the 2008 the best Olympic Games ever. And Adidas – the Olympic brand – will do everything we can to help China achieve that goal.
TCP: What is your expansion plan in China in terms of geography, retail size and product offerings?
SC: We will expand our retail business to 5,000 brand only stores by the end of 2010, covering 500 cities. We have already established a basic operations network with our major franchisees and will expand into more remote/smaller cities (T5 and T6). Our retail operations tools, support and coaching is very developed, ensuring productivity once implemented.
We have employ two main retail models in China after the country opened its retail sector. The first model is the single-branded-store approach, which gives the consumer a strong Adidas experience and is a great opportunity for them to touch and experience the brand. We are also pioneering new forms of retail with the “Sports Performance Center”, which showcase our high-end “sports performance” line. This is a global concept that we are having great success with in China.
TCP: Adidas sources 50% of its goods from China. What is the sourcing scope and is it going to change in the near future? How does China sourcing contribute to your global business?
SC: Sourcing from China will not change in the foreseeable future. China represents the largest source country for footwear.
TCP: What is your forecast for Adidas’ China performance this year and next? How will China contribute to your business?
SC: We do see huge potential due to the following reasons. First, the 2008 Beijing Olympics will serve as a platform for Adidas to become the leading brand in China. Second, in terms of retail expansion, we will have 5,000 Adidas branded stores by the end of 2010, covering 500 cities. This means that there will be 500-600 new openings in 2007. Moreover, our partnership with the NBA will have further impact on the Chinese market.
We do not break down the numbers for each market. However, we can tell you that by 2010, China will be the second largest market after the US. Adidas is targeting 1 billion euros in sales by 2010.
TCP: What are the differences in the sports market in China compared to other Asian or western countries? How does Adidas localize to score on China’s sport fields?
SC: As consumers become more sophisticated, Adidas has adapted their designs to meet the tastes of local consumers. This could be reflected in the brighter colors or styles that are more adventurous than in the global designs. Apart from design, attention has also been given to make apparel fit better as well. It's a misconception that Asian sizes are simply a take-down of an American or European size.
TCP: Do you consider counterfeit goods a problem to your business development in China?
SC: Yes it can be, but we do have a good system in place to minimize the risk of counterfeit products by using extensive legal protection. We continuously strive to reduce the loss of sales and the potential damage of reputation resulting from inferior-quality products sold under our brand name.