Adidas Market Positioning Clearly Aspires to “Go to China”

"China will continue to be the most important production base for Adidas." On November 14, Adidas again emphasized to reporters. In contrast, Adidas has become more reliant on the Chinese market. Adidas' third-quarter 2008 financial report shows that in the bad times when the global economy was sluggish and North American market revenue fell by 17%, Addi’s sales in the Asian market grew by 16% to 1.875 billion euros in the first three quarters. It surpassed North America to become second only to Europe. The second largest market.

In the Asian market, China plays a decisive role. For Adidas, China is gradually moving from manufacturing factories to strategic markets.

Made in China moved

Rumors about the transfer of Adidas's foundry are long-standing.

On July 28th, France’s “Le Figaro” reported that Herbert Heiner, Adidas’s global CEO, told German “Economic Weekly” that in China, “the wage standard set by the government has gradually become too high”, the company hopes to Withdraw from China and move to areas where labor is cheaper. The report said that Hainer also explained that Adidas "has already opened its first factory in India" and that "a country like Laos, Cambodia, and Vietnam" is also considered a better choice.

Later, on August 8, Hainer clarified in China: “Adidas has no plans to withdraw any of China's production lines, but will increase production in China.” On October 17th, Adidas Greater China Vice President of Marketing Bi Baoyuan accepted the report. In an interview with the reporter, he also said that Adidas currently produces about 55% of its products in China. “In the future, this proportion may fluctuate, but the change will not be too great.”

It is understood that, for cost reasons, Adidas outsourced more than 95% of its production to independent third-party factories. Its 1,070 foundries are located in 67 countries around the world, and most of them are concentrated in China, India, Indonesia, Thailand, Turkey and Vietnam. Adi currently has 264 foundries in China, involving a total of 300,000 employees. In 2007, Adidas purchased 201 million pairs of shoes in the Chinese market, accounting for 49% of its global purchases; 252 million sets of clothing, accounting for 32% of the total; and 39 million sets of accessories, which accounted for 65% of the total.

The importance of Made in China to Adidas is self-evident. Will these Chinese-made foundries evacuated today?

Guo Weiwen, a spokeswoman for Wanbang Shoes Co., a factory in Qingyuan, Guangdong, told the reporter that Wanbang’s order has not been transferred and its Qingyuan factory still maintains 1.1 million to 1.2 million pairs of shoes per month. It is understood that since 1996, Wanbang has started to build an enterprise for Adidas. "In doing so, there are risks but also opportunities," Guo Weiwen said frankly. For more than a decade, with the increase in sales of Adidas, IMC’s capacity has also been increasing.

In an interview with Adidas who has been working with Adidas for nearly 30 years and the spokesperson of Taiwan's Baocheng Group, the world's largest sports shoe manufacturer, in an interview with reporters, Baocheng’s production capacity in the mainland is still increasing. “We do have factories in Vietnam and Indonesia, but all of them were built more than 10 years ago. There is no clear plan to build a new factory.” According to Chen, Bao Cheng’s production ratio in mainland China exceeds 50%. Currently, he will not consider reducing production. However, some of the new production lines will be invested in inland provinces such as Jiangxi and Anhui, and Southeast Asia and other places will also be considered.

This also confirms the interpretation of Adidas Global CEO Haina. Hainer acknowledged in anecdotal rumors that Addi is facing rising costs in China: increasing energy costs, strict environmental policies, no longer favorable tax policies, lack of skilled workers, and strong renminbi against the US dollar. Therefore, "China's share of the world's total production capacity will be reduced," but "the absolute number must increase."

New incremental capacity transfer

The rise of manufacturing in Southeast Asia is not easy.

According to sources in the industry, the company’s factory in India lost more than 8 million U.S. dollars last year due to high production costs and inefficient production due to lower production and management. In addition, a South Korea's Adidas factory in Qingdao had moved to Vietnam, but also recently moved back to Inner Mongolia, China. "Adi wants to go, but the reality can't go any further."

In response, Li Peng, secretary general of the Asian Footwear Association, explained to reporters. He said that since China's footwear industry has developed into the current scale after years of accumulation, its production technology, quality of workers, and supporting facilities are far stronger than those of Southeast Asian countries such as Vietnam and Indonesia. Therefore, many foundry factories in Southeast Asia enjoy far-reaching benefits. Not comparable to China. "At present, the foundry's establishment of a plant in Southeast Asia is mainly to meet the needs of customers in the global layout, and there is an evasion of anti-dumping duties."

However, these failures may be just an episode on the path of the foundry. According to the latest estimates from the Asian Footwear Association, between 2007 and June 2010, China’s Hong Kong-Taiwan shoe-making industry in the mainland will expand or shift from 10% to 15% in Southeast Asia. The Adidas foundry also includes it.

This is not the first factory migration that Adidas faced. In the past few decades, Adidas' global procurement strategy pursued cost advantages. Consistent with the world's shoemaking industry's transfer path, in the 1970s, Adidas's production base moved from Japan and the United States to Japan and South Korea. In the 1980s, it entered the Chinese Taiwan region. In the 1990s, it began to report to China because of the appreciation of the Taiwan dollar and rising labor costs. Mainland transfer.