Nike Adjusts Its Strategy In China And Enters The Two Or Three Line Market At A Low Price.

If Nike You can buy shoes at a price of 300 yuan. Lining "Recently, Nike headquarters has released the wind, or will launch low-priced shoes in the Chinese market, for the March. Two or three line Market 。

The capital market expressed concern. At the beginning of July, when the news of Nike's push for cheap shoes in the mainland came out, the share price of several domestic sports brand enterprises listed in Hong Kong fell. UBS Securities lowered the rating of mainland sporting goods shares, and lowered the ratings of XTEP, Anta and Lining from "buying" to "neutral".

Analysts say Nike is rushing to adjust its strategy in China, including lowering the price to grab the market share of domestic brands. For Lining and Anta, the real skirmish will start.

300 yuan Nike shoes?

The news that Nike plans to push shoes at low prices in the mainland is groundless.

In June 23, 2010, at Nike's 2010 fiscal year conference call, Citigroup analyst threw the problem to Nike brand President Charlie Denson (Charlie Denson). The latter responded that the company did plan to enter the second, three or even four line cities in China, and would consider buying or introducing some other shoe brands at the same time of launching NIKE series of low and medium priced products at different prices.

Just before the conference call, Nike just announced a "Five Year Plan" in May. It is estimated that the annual income of the Greater China region will grow by more than 10%. Analyst Ma Gang saw the plan for the first time and felt surprised. From February 2009 to February 2010, the income of Nike Greater China was 1 billion 277 million US dollars, and it also decreased by 4% compared with the same period last year. "It is absolutely a radical plan to propose an annual increase of 10%." Ma Gang said.

At that time, he thought that Nike would surely have some new initiatives to launch. He wrote in his blog that Nike, for example, will launch low-cost products for the second and three line markets and grab market share from domestic brands. "This is a terrible thing for Lining and Anta and all sporting goods manufacturers."

"If Nike insists on its current pricing strategy, it will give the world one of the fastest growing markets of sports apparel to Anta and Lining." Liang Yuchang, an analyst at UBS Securities, told the China Daily newspaper that the remarks made by Nike executives at the conference call confirmed his previous judgment that the listing of low price Nike shoes might be faster than they expected.

He even calculated the price of Nike's low price shoes by 300 yuan / pairs through detailed cost accounting, which is 25% lower than the current price.

According to the "300 yuan plan model" provided by the UBS team, the supplier will reduce the operating cost by 9% and the production cost by 26%. Nike and its dealers will also have to reduce the operating cost by 20% and 36% respectively. Liang Yuchang believes that for these purposes, Nike may shift more factories to inland China and reduce costs in product design and procurement.

Liang Yuchang said that although Nike played " Cheap card "It will reduce the profit of its suppliers and their suppliers by about 21%, but the rapid growth of sales volume is expected to offset the decline in profits of all parties.