Following the sharp decline in Nike’s revenue in China in the second quarter of fiscal 2022, Adidas’ 2021 financial report showed that its sales in China fell by 24% in the fourth quarter.

As an important strategic market, what measures have they taken?

In the context of the prevailing national tide, what trend will the performance of international sports giants in China show?

In China, the performance is in a growth dilemma, and Adidas has negative sales growth for three consecutive quarters

  Adidas recently announced its 2021 financial results.

Despite the continued impact of the epidemic and the challenges of supply chain shortages in some markets, Adidas' revenue during the period still increased by 15% year-on-year to 21.234 billion euros, but while revenue in the European and North American markets maintained double-digit growth, Adidas' revenue Another important market, the Chinese market, saw a revenue growth rate of only 3%.

  In fact, in the past year, except for the triple-digit sales growth in the first quarter, the performance of Adidas in the Chinese market in the other three quarters was relatively sluggish. Among them, the sales in the second and third quarters fell by 16% year-on-year respectively. , 15%, and sales fell sharply by 24% in the fourth quarter.

  Coincidentally, Nike’s results for the second quarter of fiscal year 2022 showed that in the three months ended November 30, 2021, its performance in the Chinese market fell sharply, with revenue plummeting 20% ​​year-on-year to $1.844 billion, and pre-tax profits. It fell 36% year-on-year to $569 million.

  The performance of the Chinese market went from dazzling to fading in almost the same period of time. The two major international sports brands did not explain much in their financial reports. Most of the reasons were attributed to the impact of the epidemic and supply shortages.

Yang Dajun, a strategy expert in China's apparel industry, believes that there are two reasons for the decline of Adidas and Nike's performance in China.

On the one hand, although the market demand for sporting goods in China has rebounded to a certain extent after the outbreak of the epidemic, from the overall performance of the past two years, the market demand tends to be saturated. Specifically, the brand performance, that is, the original growth and market share. The growth trends of Nike and Adidas, which account for a higher proportion, are declining.

  On the other hand, it is influenced by the rise of domestic sports brands in the Chinese consumer market.

He pointed out that with the improvement of the design ability, level and brand promotion ability of Chinese local enterprises to drive their performance growth, the advantages accumulated by Nike and Adidas have been gradually compressed.

  Judging from the operating performance disclosed by Anta Sports and Xtep International, during the same period when Nike and Adidas’ performance in China declined, the retail sales of Anta brand products recorded a positive growth of 10%-20% year-on-year in the fourth quarter of 2021. Xtep brand retail sales increased by 20%-25% year-on-year.

The Chinese market "changes the coach", can the return of the veteran restore the decline?

  Adidas, which lists the Chinese market as one of the three strategic key markets, is not reconciled to the loss of its advantages accumulated over the past two decades.

According to foreign media reports, on the eve of the release of the 2021 financial report, Adidas appointed Xiao Jiale as the new head of the Chinese market, replacing Jason Thomas, who took office in 2019, who will be transferred to the senior vice president of global franchising.

  For Adidas, the newly appointed Xiao Jiale is a familiar face.

Xiao Jiale, 51, joined the Adidas Hong Kong branch in 2002 as the general manager.

After being promoted to Senior Vice President of Adidas China Market Commercial, Xiao Jiale is responsible for all Adidas business in China.

According to reports, under his leadership, Adidas' revenue and profit in China have recorded considerable growth every year.

In 2019, after Xiao Jiale left Adidas, he served as the CEO of the underwear brand Urban Beauty.

At the end of November 2021, Xiao Jiale left Urban Beauty, but did not disclose his whereabouts.

  From April this year, Xiao Jiale will officially serve as the managing director of Adidas China market.

Adidas did not disclose the reasons for the above personnel changes.

In Yang Dajun's view, this is just a routine action of a listed company under unsatisfactory performance, "to change what it considers to be 'Chinese people who understand the Chinese market better' or 'people who can change the status quo of the Chinese market' to a new Chinese The head of the market is a means for Adidas to solve the current situation of the Chinese market."

  As for whether the veteran can lead Adidas' performance in China out of the trough, it will take time to verify.

Market competition will intensify, and the comprehensive strength of Chinese local brands is improving

  In addition to management changes, Adidas also recently said that it plans to increase the number of products specifically for the Chinese market and strengthen local marketing.

However, Yang Dajun believes that, in general, Adidas' business strategy and development plan in China's online and offline markets are not much wrong.

Even if the marketing and promotion efforts are increased, it can only slow down its decline in the Chinese market, and the overall downward trend is inevitable.

"From a macro perspective, it's not that they don't work hard, but that their opponents work too hard."

  Yang Dajun told the Beijing News Shell Finance reporter that in addition to the above methods, international sports brands need to objectively understand the current situation of China's consumer market.

"For these international sports brands with their own halo, with the rise of Chinese local companies, the influence accumulated by international brands is being eroded. Nike and Adidas should face up to the fact that their Chinese market share will further shrink in the future, and deal with it seriously. Competition from local Chinese brands such as Anta and Li Ning.”

  The analysis report released by Guoyuan Securities pointed out that domestic brands such as Li Ning, Anta, and Xtep have completed the initial pursuit of international brands in the cutting-edge technology of midsole, which is reflected in high-end mainstream shoe materials (such as the shoe material PEBA of Nike Zoom X midsole). In terms of breakthroughs in mass production applications and improvement of shoe performance, the successful price hike of domestic high-end sports shoes reflects consumers' recognition of the improvement of the technological strength of local brands in the midsole.

In general, local sports brands currently have the strength to compete with international brands in terms of product power, head marketing resource control, and channel management capabilities.

At the same time, Guoyuan Securities also pointed out that compared with Nike, which has a mature and systematic product matrix, and focuses on product professional performance and story creation, Adidas’ product matrix series is relatively insufficient, and it is catching up with the gradually shortened midsole technology of domestic local brands. Compared with time, the main technology of Adidas is still the Boost platform launched in 2013, and the recognition of the latest technology 4D midsole and Lightstrike midsole is weak.

  Yang Dayun believes that the competition for China's sporting goods market share will enter a white-hot stage.

As the comprehensive strength of Chinese local brands (including product R&D, design and marketing capabilities) continues to strengthen, the gap between them and international brands will become smaller and smaller, and eventually the share of Chinese local brands in China's sporting goods market will also increase. bigger.

(Beijing News Shell Finance reporter Wang Zhenzhen)

Keywords: