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Nike Are succeeding In China

After an indifferent start, Nike are starting to have success

2Oct

Nike has the US trainer market almost entirely sewn up, with recent figures showing that its share has now risen to 60%.

As a consequence, Adidas - Nike’s long term rival - has conceded much of its slice of the US footwear market, with the emergence of brands like Under Armour and New Balance making inroads in a market which was once dominated by the two sportswear giants.

Barring footwear, Adidas is still the world’s No.1 sports apparel brand by market share. But Nike is hot on its tail, and the company has targeted success in China as a means to get back to the top. After a tough start, Nike has been exceeding expectations in the country, and their latest quarterly results - which shows growth of 17% in the nation - represents real progress.

When Nike initially entered China its expectations weren’t synced with reality. In 2012, the company claimed that by 2014 it would double its current revenue total in the country to $4 billion. This graph shows that from 2012 to 2014 growth was actually fairly static.

It’s only this year that we’ve seen any noteworthy growth, and that’s only in footwear where revenues rose from 1.6 billion to just over 2 billion. While this is promising, it means that across all three of their business units - footwear, apparel and equipment - Nike’s total revenue so far this year adds up to around $3 billion - a whole $1 billion short of where it had wanted to be a year ago.

China is one of the most profitable markets for footwear and apparel, and gaining a foothold in it early on has allowed Nike to become the leading brand in both markets. A big part of this has been an increase in the Chinese population’s disposable income and the interest in Western culture.

Before Nike started to turn its fortunes around in China, it had been guilty of committing a number of cultural blunders. The company was convinced that using iconic sports stars to promote their products was the way forward, in the process failing to recognize that Chinese parents focus on academia, and not sports. According to Forbes, Nike was also ‘beset by the accumulation of unsold inventory and an indifferent response to new product launches’ to begin with.

Despite Nike being a success story in China, the North American market remains their main hunting ground. In the US they are still the market leader in baseball and running attire, and the company’s brand is worth $15 billion - making it the most valuable in the sports industry. 

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