The latest financial report of Adidas shows that the net benefit of the first half year is decreased by 95% compared to the same time last year, to 12million EURO; sales income has decreased by 2%, to 5billion EURO. Analyst believes that if Lining can keep to its growth rate while Adidas sales is still down like this, its sales income will surpass Adidas this year, and the market situation of China sporting goods might be changed.

Nike: restriction of sales channel

“Not just for the reduction on orders, Nike started to cut off its distributors whose sales reports were not satisfying last year since early this year”, some insider said. So in the following years, Nike will have a big move on the management of channel sales, the scattered distribution pattern of the past will be abandoned and the business will go to the distributors whose scale is larger.
 
It is said that during the first stage when Nike entered into China market, they employed multi-level agencies system in order to snatch the market as soon as possible, which means the first level dealer has regional dealers under him. In the channel concept of Nike, they hope that each region has several competitive distributors to form a competitive business situation and meanwhile it can maintain its brand image, but in the contrary, it makes the market overloaded. “It’s hard to believe that lot Nike distributors come to us, hoping that we can have all their stocks and the price is unbelievable low.” Xuhui, brand business sales’ experience can show the embarrassing situation of Nike distributors.
 
Nike hopes that there will be some changes in China market. It is known that currently except BELLE and BAOSHENG, the two nationwide distributors, Shanghai Rayli, Guangzhou TopSports and Chengdu Jinlang Sports all have formed a regional influence. A Shanghai Nike distributor said that “since early this year, some distributors have been eliminated due to too much stocks and difficulty in funds flow, Nike also encourages big distributors’ merger and acquisition of smaller ones”.
 
This February, Nike started to build the largest logistic center in Asia—Nike China Logistic Center, after the construction, Nike will have 15% reduction in delivery time; in March, Nike claimed that they closed 4 factories, including the only exclusively-invested shoe manufactory in mainland. Meanwhile, Nike also simplifies on order. During March to July 2009, their total 6.5billion order has decreased by 10% compared to the same period last year.
 
Adidas: Getting back its brand
 
During the past half year, Adidas was tripped in almost every region worldwide. Besides the exchange rate, sales in European market has reduced by 8% compared to the same period last year, 10% in North America Market and 9% in Asia market which focus on China and Japan, only in Latin America Market the sales has increased by 24%, 443million Euro which cannot do any help on the overall situation.
 
“Since the third season last year, Adidas has worked on the stocks.” According to the insider, due to overstocked, they can only update the products once every two weeks which was once a week before, which brought the limitation to the sales. The financial report shows that the value of its stocks has reached to 2 billion Euros, increased by 13% and 8% if the exchange rate is excluded.
 
After 8 continuous year’s high rate growth on net profit, Adidas now starts to review the market. It seems that Adidas is more likely to put emphasis on marketing and the building of sales channels. In 2008, the number of regular chains in china has reached to 1,332, which contributed 18% of the total sales in China market while this number was 1,003 and 17% in 2007.
 
As a matter of fact, Adidas has started to get the power back over Adidas Original since Beijing Olympics in 2008. According to its internal plan, Adidas Original will be back into regular chains by 2009. Besides, it also works on the cost reduction. And now it is reported that Dong Guan Hu Men Guan He sports equipment, the largest OEM of Adidas worldwide will realize the internal migration of production line by the end of 2009.
 
While the downsizing of Nike and Adidas is processing, Mizuno, the largest sporting goods brand in Japan, declared last month that they will close 200 retail stores in China.
 
Lining: expansion on international markets
 
According to its plan, Lining will open up to 100 stores in SEA in 2009, which will be opened in Singapore, Malaysia and Indonesia; mostly there will be badminton products which meet the market needs.
 
Back to 1999, Lining has already brought “brand internationalization” onto the table; it changed its structure and started to explore the oversea market.
 
Except the declaration on SEA market, Lining says they will gradually set up the business in Europe and America market, which might form a direct competition with Nike and Adidas.
 
In domestic market, Lining will have the strong expansion as always. According to its annual report, there are 6,917 Lining stores in mainland china by the end of 2008 compared to 1,241 in 2007; on the sales channel part, Lining put more emphasis on second and third tier cities which has the most potential and also Lining expects to have 7,700 stores nationwide in 2010