Nike (ticker: NKE) VP Roland Wolfram outlined his company's China growth strategy at Tuesday's annual investor meeting. Here are some key points:
Nike sees a large and growing market for its products in China. China has:
- 20% of the world’s population.
- 50 million middle class households.
- 430 million youth under the age of 20 (5X the number of youth in the US).
- 50 million middle class households –- which will grow to 150 million in next 10 years.
- 65% of its youth involved in sports.
- A consumer market that embraces brands -- particularly Western brands.
- 300 million people expected to move from rural areas to the cities in the next 10 years.
Nike's positioning in China
- Nike China is dominant -- #1 brand, #1 market share.
- It tripled revenue in the last two years.
- 2000 points of sale.
- 400 doors in top 3 cities (Beijing, Shanghai,
- 50 cities with 3+ doors.
- Pushing into second tier
- Competitors Reebok and Adidas are in 4th and 5th places respectively in China.
Nike's overall China strategy
- Building brand awareness.
- Developing new and Innovative products specific to the Chinese market.
- Selling same products in China that sell in the West.
- Helping youths express themselves.
- Stressing core categories – basketball, soccer, women, sport culture.
- Marketing both local (Chinese Olympic champ) and foreign (LeBron James) athletes.
- Positioning for Beijing Olympics in 2008 -- sponsoring Chinese sports federations.
- Sponsoring sports fields.
- Donating products to charity.
Nike's retail strategy
- Selling through retailers.
- 10 customers generate 60% of revenues.
- Foreign companies can now apply for direct retail licenses –- but Nike has no plans to set-up retail shops at this time.
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