Tuesday , 21 May 2024
Home Global Economy Adidas and the flagging China business
Global Economy

Adidas and the flagging China business

Adidas has always been able to rely on China. The three stripes brand was one of the most popular western brands in China. In 2008, Adidas opened what was then the world's largest flagship store in Beijing. Since then, many more openings have followed in China's million metropolises.

But since the government's tough zero-Covid-Line, it has been temporarily impossible for Chinese fashion lovers and sports fans to go shopping in stores. Chinese customers are now also shopping a lot on the Internet. The sporting goods manufacturer from Herzogenaurach is also feeling the effects. At the end of July, Adidas even had to lower its annual forecast.

The reason is the "slower than expected recovery of business in China". In the second quarter, sales in China fell by 35 percent. Adidas even expects it to fall by double digits throughout the rest of the year due to the ongoing extensive Covid-19 restrictions.

leeway for Chinese competitors

But it's not just the lockdown measures that are troubling Adidas. In an interview with the "Handelsblatt", Adidas boss Kasper Rorsted also admitted his own mistakes in China. The Dane told the newspaper: "We weren't good enough at understanding consumers. So we opened up the space for Chinese competitors who did it better." Now the products would be tailored more to local tastes. Earlier this year, Adidas even changed its China boss. Adrian Su is to realign the business.

Chinese brands increasingly popular

The fact that China is no longer the growth engine of the industry has other reasons besides zero Covid. At the beginning of last year, the youth organization of the Communist Party and the Chinese army called for a boycott of Western brands, including Adidas. The background was a critical statement on human rights conditions in cotton production in a Chinese province.

The "Guochao" phenomenon is also playing an increasingly important role in marketing – in other words, interest in Chinese culture, tradition and brands. Younger Chinese customers in particular are increasingly buying products that are made in China or have Chinese characteristics. Domestic sporting goods manufacturers such as Anta and Lining, who are surpassing the once undisputedly popular brands Adidas and Nike, are benefiting from this in particular.

Adidas boss: China will come back

Adidas boss Rorsted was still optimistic. He does not believe that the giant empire will finally turn its back on Western brands. "Then all companies in the world would have a problem. But I don't think that's realistic. China will come back and then there will be a lot of leverage." The Chinese watched basketball from the USA and soccer from Europe on TV. "They always come across Adidas."

Experts also attest to Adidas' home-grown problems. Adidas has relied too much on physical stores in China, while the online presence is rather small compared to Chinese brands. Adidas has already recognized this vulnerability and announced billions in investments in the Internet business.

Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Articles

Global Economy

Spotlight on 2023: S&P 500 and the Significance of the 4400 Level

In our past exploration of the financial landscape of 2023, we delved...

Global Economy

AI and Data Analytics Drive Efficiency in Money Laundering Detection

BIS Innovation Hub Turns to Tech for Money Laundering Detection The BIS...

Global Economy

Russell 2000 Gains Momentum as Tech Stocks Outperform Value

Tech stocks have dominated the equity markets in recent months, surpassing value...

Global Economy

Crypto Exchange Bybit Announces Exit from Canadian Market Amid Regulatory Changes

Regulatory Shifts Prompt Bybit's Strategic Withdrawal from Canadian Crypto Market