Adidas ousts China chief as sales suffer after consumer boycott, losing market share to local rivals after nationalist backlash

[beijingwalker]

Adidas ousts China chief as sales suffer after consumer boycott, losing market share to local rivals after nationalist backlash​

Eleanor Olcott in London and Olaf Storbeck in Frankfurt

March. 7 2022

Adidas has shaken up the top management at its China business after the sportswear giant lost market share to upstart domestic brands following a consumer boycott over its stance on Xinjiang cotton.

The German sportswear group has replaced Jason Thomas, head of its Greater China operations, the company told the Financial Times. The move follows a fall in sales in the region of roughly 15 per cent for two consecutive quarters last year.

Thomas’s departure comes a year after Adidas became embroiled in a fierce consumer backlash against western brands that shunned Xinjiang cotton over human rights concerns. Adrian Siu, who previously served as the company’s Hong Kong chief, will take Thomas’s place in April. Siu is rejoining the world’s second-largest sportswear brand after two years as chief executive of Chinese underwear group Cosmo Lady.

The management rejig comes as Adidas and other foreign brands are struggling to balance a corporate commitment to respect human rights with an ambition to increase sales in China, which according to McKinsey research, overtook the US to become the world’s biggest spender on fashion in 2019.

Alongside Nike and fashion retailer H&M, Adidas has been hit by a Chinese boycott beginning last year after western companies sought to distance themselves from “forced labour” in Xinjiang, the western province home to the Muslim Uyghur minority, which supplies more than 80 per cent of China’s cotton.

Adidas said that it had never manufactured goods in Xinjiang and has no suppliers in the province. It pointed to a statement from 2019, in which the company said that it had “explicitly required our fabric suppliers not to source any yarn from the Xinjiang region” after learning of allegations of forced labour there.

As consumers ditched western brands, local Chinese sportswear groups Anta Sports and Li-Ning seized on the turn in sentiment by announcing that they would continue to use Xinjiang cotton.

Anta’s revenue rose more than 50 per cent in the first half of 2021 to Rmb22.8bn ($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.

Allison Malmsten, sportswear analyst at China-focused consultancy Daxue Consulting, said that since the boycott, Nike and Adidas have ceded their top position on ecommerce apps such as Alibaba’s Tmall. In their place, local online retailers have promoted Li-Ning and Anta, making the “competition a lot stiffer”.

Jonathan Cummings, Asia-Pacific president of brand consultancy Landor and Fitch, said that after years of market dominance, Adidas and Nike were being challenged by “cheaper domestic brands that have become stronger”.

Adidas generated nearly a quarter of its sales in the Greater China region in the first half of last year, the bulk of which came from mainland China.

Thomas, who has worked at Adidas for nearly two decades, will move to Adidas in Dubai, as senior vice-president of global franchise.
The management overhaul is part of a wide revamp of its China operations, long its most important growth market. Adidas recently said that it plans to increase the number of products specialised for the China market and to ramp up local marketing.

Chief executive Kasper Rorsted said in November that the key to tackling the boycott was to “show consumers our appreciation and respect, to earn their loyalty and complement our global brand strength with a strong local angle and understanding”.

“Adidas still has a strong brand reputation in China,” said Cummings, adding that sales could “bounce back if it hones in what the Chinese consumer wants”.

Adidas replaces China chief as sales suffer after consumer boycott over Xinjiang

Sportswear brand loses market share to local rivals after nationalist backlash

www.ft.com

 

[hunter_hunted]

Damn these brands are expensive , just three days back i went to mall and i entered the sports wear shop and i like one complete trouser set and when i looked at the price of this adidas set it was around 700sar, fortunately i was wearing brown pant

 

[beijingwalker]

Adidas generated nearly a quarter of its sales in the Greater China region in the first half of last year, the bulk of which came from mainland China.

They should know the consequences when messing with China and Chinese customers. Huge Chinese market can make or break any brands.

 

[Zsari]

Adidas ousts China chief as sales suffer after consumer boycott, losing market share to local rivals after nationalist backlash​

Eleanor Olcott in London and Olaf Storbeck in Frankfurt

March. 7 2022

Adidas has shaken up the top management at its China business after the sportswear giant lost market share to upstart domestic brands following a consumer boycott over its stance on Xinjiang cotton.

The German sportswear group has replaced Jason Thomas, head of its Greater China operations, the company told the Financial Times. The move follows a fall in sales in the region of roughly 15 per cent for two consecutive quarters last year.

Thomas’s departure comes a year after Adidas became embroiled in a fierce consumer backlash against western brands that shunned Xinjiang cotton over human rights concerns. Adrian Siu, who previously served as the company’s Hong Kong chief, will take Thomas’s place in April. Siu is rejoining the world’s second-largest sportswear brand after two years as chief executive of Chinese underwear group Cosmo Lady.

The management rejig comes as Adidas and other foreign brands are struggling to balance a corporate commitment to respect human rights with an ambition to increase sales in China, which according to McKinsey research, overtook the US to become the world’s biggest spender on fashion in 2019.

Alongside Nike and fashion retailer H&M, Adidas has been hit by a Chinese boycott beginning last year after western companies sought to distance themselves from “forced labour” in Xinjiang, the western province home to the Muslim Uyghur minority, which supplies more than 80 per cent of China’s cotton.

Adidas said that it had never manufactured goods in Xinjiang and has no suppliers in the province. It pointed to a statement from 2019, in which the company said that it had “explicitly required our fabric suppliers not to source any yarn from the Xinjiang region” after learning of allegations of forced labour there.

As consumers ditched western brands, local Chinese sportswear groups Anta Sports and Li-Ning seized on the turn in sentiment by announcing that they would continue to use Xinjiang cotton.

Anta’s revenue rose more than 50 per cent in the first half of 2021 to Rmb22.8bn ($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.

Allison Malmsten, sportswear analyst at China-focused consultancy Daxue Consulting, said that since the boycott, Nike and Adidas have ceded their top position on ecommerce apps such as Alibaba’s Tmall. In their place, local online retailers have promoted Li-Ning and Anta, making the “competition a lot stiffer”.

Jonathan Cummings, Asia-Pacific president of brand consultancy Landor and Fitch, said that after years of market dominance, Adidas and Nike were being challenged by “cheaper domestic brands that have become stronger”.

Adidas generated nearly a quarter of its sales in the Greater China region in the first half of last year, the bulk of which came from mainland China.

Thomas, who has worked at Adidas for nearly two decades, will move to Adidas in Dubai, as senior vice-president of global franchise.
The management overhaul is part of a wide revamp of its China operations, long its most important growth market. Adidas recently said that it plans to increase the number of products specialised for the China market and to ramp up local marketing.

Chief executive Kasper Rorsted said in November that the key to tackling the boycott was to “show consumers our appreciation and respect, to earn their loyalty and complement our global brand strength with a strong local angle and understanding”.

“Adidas still has a strong brand reputation in China,” said Cummings, adding that sales could “bounce back if it hones in what the Chinese consumer wants”.

Adidas replaces China chief as sales suffer after consumer boycott over Xinjiang

Sportswear brand loses market share to local rivals after nationalist backlash

www.ft.com

Self inflicted wounds. The west thought they could pressure their companies into damaging the Chinese economy as they have done to many countries in the past. But this time it backfired badly on them, hurting their own while helping the Chinese companies.

 

[beijingwalker]

China never sanctioned these brands, Chinese customers voluntary actions alone can deal a heavy blow to any foreign brands.

 

[S.Y.A]

Damn these brands are expensive , just three days back i went to mall and i entered the sports wear shop and i like one complete trouser set and when i looked at the price of this adidas set it was around 700sar, fortunately i was wearing brown pant

I once went to a nike store in Pakistan, in about 2015, everything was on sale, and after sale the cost of shoes was around 15k rupees.

 

[Foinikas]

Adidas has been making a lot of ads lately about "diversity"...have you seen them?