Adidas Sports Local Flavor in China
By Tom Ryan
Readying for the 2008 Beijing Olympics, Adidas is taking localization in China to another level.
At the extreme, Adidas is running a contest asking Chinese consumers to come up with the uniforms that China’s athletes will wear during medal ceremonies.
“We are trying to involve the nation,” Paul Pi, vice president of marketing for Adidas in greater China, told Forbes in its July issue. “We wanted the design to be from a passionate fan of the Olympics, as well as to challenge ideas about creativity here.”
The contest is part of an overall effort by the global brand to adapt as much as possible to domestic tastes. Eighteen months ago Adidas opened a design center in Shanghai and this year more than 20 percent of Adidas’ products for China will be designed specifically for Chinese consumers. “This center shows that we are listening to their needs, not just imposing our sizes and standards,” said Mark Colin-Thome, the center’s director.
Adidas’ strategy comes as Chinese consumers are looking for more products specifically tailored for them. Conventional wisdom held that Chinese consumers were starving for international brands and wanted all the global touches. But due to an influx of products and marketing, Chinese consumers have become more sophisticated and their expectations are higher.
“There is a need to adapt global fashion to Chinese tastes and be more nimble in the market because China is now big enough to justify it,” said Francis Claro, senior portfolio manager for Evergreen Investments.
Adidas found that designing for Asian bodies and tastes goes well beyond European and American size takedowns. For instance, Chinese male consumers want edgier looks to stand out in the crowd.
Still, Adidas isn’t shunning globalization. One store format in the region offers products adapted for China alongside popular overseas designs such as Stella McCartney’s line for women and NBA star Tracy McGrady’s basketball sneakers. Its other format focuses heavily on its 87-year heritage with retro shoe styles and stocks more fashionable sportswear. This type of store “is more expensive, it’s more global, it’s more like fashion,” Mr. Pi said.
Tom Doctoroff, chief executive for greater China at J. Walter Thompson, believes there’s a danger in being too domestic. “I would never put on the product that it was designed for the Chinese,” he said. “It’s important to make products relevant, but you shouldn’t shout about it.”
Discussion Questions: Do you think more of a localized strategy is now required of brands marketing to China or here in the U.S. for that matter? It is possible to become more localized without losing the benefit of being a global brand?
Somewhat coincidentally, I happened to work in Shanghai on a project not too long ago and was with some executives from Adidas during my time in China. Adidas has identified China as a huge market and is working to do a better job at meeting the needs of the shopper, but they are currently failing miserably at it (the executive’s perspective, not my own). The go to market system has Adidas selling to distributors who in turn sell to retailers. The distributors are FORCED to take items from corporate and sell them, and they in turn CRAM items down to retailers (so for example, everyone gets skiwear, even if the retailer is not serving a skiing shopper, and basketball shoes/sneakers/shorts/etc. are clamored for, but not always in stock.). The crux of the question is a good one, but Adidas as the example of “good business practice” strikes me as odd given that their own executives asked me to assist them in fixing the very problem this article lauds them for perfecting.
David Zahn describes Adidas’ approach as a push strategy. Successful companies in the developed world are using a pull or consumer centered strategy. Companies that realize Chinese consumers are increasing in sophistication and also demand customization and personalization will find that a push strategy using products designed for other markets is not very successful in the long run.
Whether or not companies need to localize products or strategies, it is critical for them to conduct research to determine whether or not it is important for them to localize! Global consumers demanding customization will be a challenge for everyone.
If Adidas didn’t create products specifically for China, they wouldn’t be doing their job and their market share would be laughably low. To state the obvious, China’s potential market is enormous, yet the discretionary spending profile is nothing like the US or western Europe. And China isn’t one market anyway, since incomes and styles in Shanghai won’t match incomes and styles in the rural areas.