Mon, Jan 31, 2005 - Page 10 News List

Athletic shoe companies race for Chinese market

NY TIMES NEWS SERVICE , BEIJING

China is better known for making most of the world's sports shoes rather than wearing them, but the world's biggest athletic shoe brands are in a race to change that.

Adidas-Salomon announced last Monday that it would be a major sponsor of the Olympic Games in Beijing in 2008. Chinese athletes will wear the Adidas brand shoes and sportswear throughout the Games.

The announcement was part of Adidas' ambitious hopes for China. The company, based in Germany, intends to increase its stores in China to 4,000 by 2008 from 1,300 now, and to expand its China revenues to more than US$1.3 billion by the end of the decade.

"We foresee by 2008 China could be the No. 3, or with some push No. 2, market in the world," Christophe Bezu, Adidas senior vice president for the Asia Pacific region, said at a news conference. "China clearly is the driver." Annual revenue from China currently stood at well over US$130 million, he said.

Rival sportswear brands like Reebok and Nike and other multinational corporations also have their eyes on China's increasingly affluent and image-conscious young consumers. They have recruited sports stars like Yao Ming (姚明), the Shanghai-born center of the Houston Rockets, and Liu Xiang (劉翔), China's gold-medalist hurdler, as icons of a confident, sports-loving nation.

Nike's sales in China rose two-thirds in 2003 to US$300 million. Chinese consumers now spend about US$5 billion a year on sports merchandise and events, a sliver of the US$200 billion or more spent in the US every year, said Terry Rhoads, a former Nike marketing executive who is general manager of Zou Marketing, a Shanghai company that advises on sports management and promotion.

"Perhaps there's more hype than opportunities," Rhoads said, "but there's no doubt there's a pent-up demand for sports in China."

Chinese city governments have also spotted that opportunity, and many have spent heavily on new sports centers. Apart from Beijing's preparations for the 2008 Olympics, Shanghai has spent heavily on Formula One racetracks and tennis courts for international meets.

But more than income and budgets stand in the way of turning China into a major sports market, experts say. As in many other areas of the economy, multinational companies hoping to profit from China's growth must contend with bureaucracies that want to profit from their involvement but show only flickering awareness of customers and market competition.

"Sports in China are still greatly controlled by the government," Rhoads said. "The toughest thing the government is grappling with is that sports are entertainment."

Sports executives said that making China's sports administration more responsive to fans and consumers might be a long and troublesome process.

"It's the shenanigans around the sports that cause fans to lose interest," Rhoads said.

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