Nike China's sales, marketing and retail strategy (NKE)

by: Ezra Marbach

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,
    Guangzhou).
  • 50 cities with 3+ doors.
  • Pushing into second tier
    cities.
  • 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.

NKE chart.

Nke628_1

Not subscribed to The China Stock Blog? You can get updated headlines for free by adding The China Stock Blog to your My Yahoo page. Just log into your My Yahoo
page, then go to The China Stock Blog and click on the "+ My Yahoo"
button on the top right of your screen. You can do the same for other sites, such as The Internet Stock Blog, ETF Investor, and Sound Money Tips.