The stock crisis in 2009 was not yet over. The German company could not wait to perform major surgery on the Chinese market. In addition to the coaching changes, he also included an unprecedented adventure: the Reebok brand, the second-largest sports brand acquired by the United States after four years of high-profile acquisition, was created as a brand specifically designed for China. The dealer was a Chinese-based distributor, Pou Sheng International.

Adidas seems to be tangled between the rights of dealers and their rights.

The stock crisis in 2009 was not yet over. The German company could not wait to perform major surgery on the Chinese market. In addition to the coaching changes, he also included an unprecedented adventure: the Reebok brand, the second-largest sports brand acquired by the United States after four years of high-profile acquisition, was created as a brand specifically designed for China. The dealer was a Chinese-based distributor, Pou Sheng International.

This seems to be the opposite of 2009: this year, Adidas negotiated with his agent Daphne to break up and recovered most of the agency rights.

Decentralization

For the newly appointed Adidas Greater China Managing Director and the pragmatic Frenchman, Du Berry, whether or not he is better than his predecessor depends on whether he can bring the company back to the profit track. Behind this is the new competitive landscape that Adidas has to face.

At the beginning of January, Adidas Group announced that it will jointly design and produce the high-profile Reebok brand and Pou Sheng International. It will be implemented after April 1, 2010. The future of Reebok will be "China-centered."

Pou Sheng International is one of the major retailers of Adidas's Reebok and Nike's Converse and other sporting goods. As of September 30, 2009, Baosheng Group had 2,377 and 2913 direct retail stores and franchise stores in China respectively. Family.

After the stock crisis in 2008, Adidas’ mainstream agents all suffered from “unsatisfactory performance” in China. However, their choices are different. Pou Sheng International also failed to avoid the pressure of loss. The annual report published on January 20 showed that in fiscal year 2009, turnover increased by 19.1% year-on-year, but net loss for the year was US$6.3 million. Cai Naifeng, chairman of Pou Sheng International, said that inventory accumulation is the main cause of poor performance.

For the Reebok brand that Pou Sheng International took over, its positioning made a 180-degree turn. In the Zaojunmiao Falla Sports Mall in Beijing, Reebok brand shoes and apparel are sold at a discount of 30% to 50%. The cheapest, even as low as 133 yuan, is already lower than the domestic Jinjiang sports brand. Defining it as tailor-made for China means that the direct opponents of Reebok will be Jinjiang sports brands, those with higher cost performance.

The past of Reebok represents the high end. The brand was acquired by Adidas Group for US$3.8 billion in 2005. It was called “the largest merger in the history of the sports goods industry. When acquired, Reebok was already the second largest brand in the United States, especially in basketball. Yao Ming's lifetime sponsorship.

Adidas believes that since Baosheng and its regional joint ventures operate 9,952 retail stores in China. With this retail network and the new local design and local production model, it can bring faster response speed to Reebok.

Prior to this, Reebok speeded up a product shipment by 12 months. While the Chinese market needs short-term products, Peak's pair of shoes is one month old. Adidas hopes that since then, Reebok will have its cargo speed reduced to 6 to 9 weeks.

Adidas Group Chairman Haina said: "We cooperate with Reebok and we hope to tailor it for Chinese consumers, manufacture in China and distribute in China. It will bring 3 advantages: faster, more refined and more efficient."

A regional manager of a certain brand of sporting goods company in China told reporters: “Adidas is right to do this. It is very difficult to compete with domestic enterprises by its own strength. It is as if KAPPA had allowed the Chinese to buy out brand management. Can do better, why not do it?"

In the first half of 2009, adidas China market revenue was approximately RMB 3.45 billion to RMB 3.95 billion. In the same period, Li Ning’s revenue has reached RMB 4.05 billion. Adidas has been unable to disregard Chinese opponents.

Receive rights

Adidas does not blindly hand over power to dealers. It does not want to see the situation in which dealers are ultimately controlled by two or more channels, and it does not want to hurt the market due to excessive reforms.

As the sportswear market continues to “destock”, in 2009 this market continued the downturn in the second half of 2008. At the same time, Adidas encouraged dealers to close down inefficient stores in 2009. “Closed the store, reached a consensus with Belle and other dealers to determine whether some stores did not meet expectations and had to close to support new store operations and ensure the sustainable development of dealers and companies.” Hainer said .

Hainer believes that "the survival of the fittest, if there are better locations, newer stores, we will certainly ensure that the new stores will be supported by resources. Some stores that are not very productive in productivity must be closed."

This led to the secret game between adidas and channel agents. Stores that are closed to increase efficiency will cause distributors to be dissatisfied. A dealer in Shanghai told reporters: "Adidas has done a good job, it has been slow to open stores, and stores are fast. How can this be accepted? Adidas has to wait a month for a store to be approved, and a domestic brand is enough for a few days."

In addition, Adidas has strict controls on prices. It is understood that the general suburbs or second-tier cities are not allowed to do discount stores, dealers want to be able to get rid of inventory pressure, including discount sales of inventory products. However, Adidas does not recognize the above behavior of distributors from the perspective of stable brand prices. Second-tier wholesalers have to take 60% off the price of goods, and there are a number of discount stores around the city, and 50 percent of goods are everywhere. This undoubtedly puts pressure on wholesalers.

Adidas, as the first-line brand, needs to maintain the price system and maintain the brand premium policy. As dealers, they need to rush to get rid of inventory burdens. Larger distributors have increased their power to speak as private brands grow and agency brands increase. Three reasons led to the stalemate in the negotiations between Adidas and dealers.

When Adidas broke into China, it took advantage of its status as a super-giant, through the manipulation of agents, to enable agents to rapidly expand through competition. At that time Adidas and other negotiating capabilities were stronger, and now bargaining powers such as Belle, Daphne, and Pou Sheng began to rise. A regional manager of a domestic sporting goods company told reporters that Adidas needed to think about how to weaken its dependence on several large channels.

It is understood that Daphne had negotiated with Adidas and hoped to bring down the number of goods. Adidas stated that it may withdraw some of its dealerships, including even some of Belle’s distributorships.

According to the 2009 semi-annual performance report released by Belle, Belle's Nike and Adidas increased 2.5% year-on-year. However, the performance of second-line sportswear brands such as Converse and Adidas, which are sub-brands of Nike and Adidas, did not increase. In order to curb the declining performance of the agency sports brand, Belle made the decision to close the store.

Daphne International last year also said that it will withdraw from Nike, Adidas two brand apparel agency business. It is understood that as of June 30, 2009, there were 21 closed within half a year. There were only 107 Adidas sales points represented by Daphne.

At this time, the 2008 Olympic inventory crisis has not yet passed. "We will further reduce our inventory before June 2010. We hope that the second quarter of 2010 will ensure that the inventory level will become normal," said Heiner. "This is also an experience worth learning."