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,
  • 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.

NKE chart.


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