Behind The Different Prices Of Nike In The US And China

stay Nike On the official shopping website of the United States, the five generation of Kobe is one of the best selling basketball shoes at a price of 130 dollars. However, the same pair of Kobe five generation men's sneakers are priced at RMB 1298 yuan at Nike store, Middle Road, Tibet, Shanghai. If the renminbi is used as the unit of valuation, the difference between them will be close to 400 yuan.

The average purchasing power of Americans is much higher than that of China. Why? Nike Is the price of products cheaper in China than in China? Is Nike's market discrimination?

An insider familiar with Nike told reporters: "for example, Nike has a pair of $100 sports shoes, the cost of manufacturing enterprises is only about $10, Nike's price to retailers is half off, about 50 dollars, retailers are selling at a price of 100 dollars, the whole process eliminates all kinds of costs, Nike's gross margin is about 40%, quite high."

High prices and high profit margins can be said to be twin brothers. The high profit margins of Nike products in the Chinese market are even at the top of Nike's global market. The fourth quarter financial report released by Nike in June shows that as of May 31st this year, the Greater China region has earned 464 million US dollars, and the pre tax profit (EBIT, profit before interest deduction and income tax) was $187 million, and the pre tax profit rate reached 40.3%. Compared with that, the pre tax profit rate of Nike in the North American market was 24.2%, the Western European market was 20.2%, the Eastern European and central European markets were 25.3%, the Japanese market was 23.4%, the emerging market was 20.5%, and compared with second of the Eastern European and central European markets, the Greater China area was more than 25.3% percentage points.

A Nike shoe manufacturer in China told reporters recently that the price difference has something to do with Chinese taxes, business environment and consumption habits. In addition to sales staff salaries, other related expenses in China's retail industry are no less than those in developed countries or regions.

Huang Xiangyan, the newly appointed Nike China spokesman, also blamed the higher tariffs and logistics costs. She said: "Nike sells a lot of products in China, including shoes, clothing, accessories, etc., and some products are higher than those in the United States, and some are not."

Huang Xiangyan said that tariffs in China have a greater impact on product pricing. Nike pursued light asset strategy. In addition to R & D and sales, it does not produce itself, and its products are produced by foundries all over the world. In the 2009 fiscal year, the total number of Nike's global foundry enterprises was 618, and as of June 1, 2009, Nike had 136 foundries in China. Huang Xiangyan said that Nike had no domestic sales rights in China's foundries. The products produced in China must be exported to third places and then returned to China in the form of imports. Tariffs, especially import tariffs, have increased the cost of Nike products.

Another industry insider said that in the United States, Nike It belongs to a functional product, mainly to meet the sports needs of consumers, so its pricing is not high. However, the Chinese market is different. Chinese consumers regard Nike products as a fashion. Nike is a synonym for high-end and luxury goods, even if the price is high, it is the social foundation for Nike's high pricing strategy to be based in China.