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Monday, December 5, 2022

ADIDAS ON THE BACK FOOT#371

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Mr Graham Perry
Graham Perry
Experienced Arbitration Lawyer | China & Chinese Business Affairs | Public Speaker/Lecturer.

GOOD MORNING FROM LONDON

An update on an ongoing issue – the Chinese consumer’s backlash against Western brands that joined the boycott against Xinjiang cotton over human rights issues. Adidas announced yesterday – 8 March 2022 – that they had replaced the Head of its Greater China Operations, Jason Thomas, following a fall in sales in China of 15% in two consecutive quarters in 2021.

The management rejig, says the FT, comes as Adidas and other foreign brands are struggling to balance a corporate commitment to respect [its understanding] of human rights with an ambition to increase sales in China. The importance of the China fashion market is underlined by McKinsey research which overtook the US to become the world’s biggest spender on fashion in 2019.

Chinese consumers switched from Western brands – including Adidas – to local Chinese sportswear groups  Anta Sports and Li-Ning who both announced that they would continue to use Xinjiang cotton. Anta’s revenue rose more than 50% in the first half of 2021 to $3.6bn as it snapped up more of the rapidly expanding Chinese market for sportswear. Greater China revenue at Adidas was 2.4bn for the same period.

Adidas say they will “show Chinese consumers our appreciation + respect to earn their loyalty and complement our global brand strength with a strong local angle and understanding”. Fine words but do they add up?

The Chinese consumers do not leave their political views on the pavement when they walk in to do their shopping. They like quality + value for money but they also like China and if they conclude that the company trying to sell their goods is anti-China that company’s sales will fall. This is not an issue of a Party Directive but consumer preference. It is worrying for the foreign company who wants more of the China market and, at the same time, more to say on Xinjiang + the Uighurs. The Chinese consumer knows how to make their political priorities heard.

TOMORROW – 10 MARCH – CHINA POST

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