The manager knows the Chinese market and is now returning to Adidas in a managerial capacity there.
(Photo: Adidas)
Munich, Beijing Loud music blasts from the third floor of the Adidas flagship store on Beijing’s Tai Koo Li shopping street. Coach Chang Chao directs a dozen athletes. Adidas regularly offers free courses here, from strength training such as Mi Power Hit to yoga.
Faced with declining sales in China, Adidas is doing a lot to lure consumers into the stores and charge the brand emotionally. But the number of customers last Saturday afternoon in the flagship store is manageable.
The sales declines of the major suppliers in China are not only due to the boycott of Western brands. In addition, many Chinese now shop directly on the Internet. A fact that international sporting goods manufacturers like Adidas have long underestimated. In addition, the product range was not optimal for the new times.
At Adidas, a new China boss is now to turn the tide. The previous country boss Jason Thomas is going back to Dubai, where he was active for Adidas until 2017. His successor is Adrian Siu. The 51-year-old will become Managing Director for Greater China with immediate effect, the group said.
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Siu, which is important for business in China these days, knows both sides: Adidas and the country itself. He joined Adidas Hong Kong in 2002 as Sales Director. He continued to climb and was active in Shanghai, among other places. For the past two years he has stintd as CEO at Chinese apparel brand Cosmo Lady and is now returning to Adidas. This confirmed a report by the Financial Times.
China has long been the industry’s major growth engine
The mission will not be easy. For years, China was the industry’s major growth engine. However, Western manufacturers suffered from calls for a boycott by state media and social media users.
The industry association Better Cotton Initiative, which focuses on sustainability, had previously announced that it no longer wanted to source cotton from the western Chinese province of Xinjiang due to the human rights situation. As a result, sales of members of the initiative such as Adidas and Puma collapsed in the Chinese market. China officials deny forced labor exists in Xinjiang.
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At Puma, sales in the region fell by six percent last year. When will China pick up again? “I can’t promise growth for 2022, but I hope so,” said Puma CEO Björn Gulden.
Adidas also had big growth plans in China. The region should make a significant contribution to the annual growth of eight to ten percent promised as part of the “Own the Game” strategy. But in the second and third quarters of last year, sales in China fell. From July to September alone, sales fell by a comparable 15 percent. Adidas CEO Kasper Rorsted will present the figures for the full year on Wednesday.
There are many reasons why China is no longer the industry’s growth engine. Regardless of the call for a boycott, national pride is increasingly becoming an important sales factor in the People’s Republic. Chinese customers are increasingly buying products that are made in China or have Chinese characteristics. The phenomenon is called Guochao.
Adidas has set up a task force
Domestic sporting goods manufacturers such as Anta and Lining in particular benefit from this. Both use large letters in their shop windows and shops to indicate that they are Chinese brands. The Chinese sporting goods companies used the Olympic Games in Beijing to gain market share.
Rorsted has initiated a number of measures and set up a task force. A third of the new products are to be developed in China for China. Adidas now offers, for example, shirts with a stand-up collar and sweaters with typical Chinese symbols. However, these do not seem to go down particularly well, at least with customers in Beijing’s shopping mile – they are 50 percent reduced.
According to market observers, Adidas also suffers from self-inflicted problems in China. The poor performance is also related to the wrong sales strategy of international brands in China, Cheng Weixiong, managing director of Shanghai Liangqi Brand Management, told the Chinese magazine “China News Weekly” after the sales slump last fall.
They rely too much on physical stores while their online presence is rather small compared to Chinese brands. Adidas has already recognized this vulnerability and announced billions in investments in the Internet business.
However, these do not seem to be taking hold yet. At the big online sales event Single’s Day in November last year, Adidas slipped to fourth place in the sales ranking behind Anta, Nike and Lining. Last year, Nike and Adidas were still the two most popular sports brands.
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