Nike Greater China Faces New Challenges In Revenue Decline

< p > Nike CEO Mark Parker sees China and North America as the two largest "story" of the company. But in the 2013 fiscal year just ended, these are two completely different stories.

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In the fiscal year P, 2013, the income of Nike Greater China decreased by 5% compared to the same period last year, while the income of Nike in North America increased by 18%.

In fact, in the sales area announced by Nike's earnings report, only the Greater China region has slipped and other regions are growing.

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In a meeting of investors, P Parker said that Nike's failure in the Chinese market was due to a slowdown in the overall growth rate of China's economy.

But such a contrast can hardly be explained by the economic slowdown that China is experiencing now. Nike has achieved growth in the similarly depressed economies of Japan, Western Europe, Eastern Europe and central Europe.

And Adidas, the main competitor, grew by 15% in China last year.

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Too much P can not be an excuse.

In the 2013 fiscal year, Nike Greater China earned $2 billion 450 million, while North America earned $10 billion 380 million.

Nike's chief financial officer, Don Blair, warned that greater China's revenue will also decline in the next half fiscal year.

It's not just fiscal year 2013.

Since the 2008 Beijing Olympic Games, Nike has been in a series of troubles.

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< p > inventory. The problem of over optimism in 2008 is still the most direct trouble for Nike.

Blair said China is still the focus of inventory management and is striving to reduce inventories.

In order to strictly control the number of new products flowing into the Chinese market, Nike actively cancelled orders and reduced the number of futures.

The digestion of such large inventories in the current channels and the restriction on the number of new products will undoubtedly affect the growth of sales.

It is said that in order to clear inventory, Nike will open 40 to 50 self run factory stores this year.

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< p > China's consumer demand, but inventory is not Nike's core problem in China.

Nike's strategy in China, like the whole world, relies on new products with high technology and large scale marketing. However, Chinese consumers have little demand for Nike's pure sports product strategy.

In recent two years, Adidas has been very clear about fashion and has achieved better market results.

This strategy that caters to the needs of Chinese consumers in the long run may not always be right, but as Chinese consumers are becoming increasingly picky and demand changing faster and faster, Nike lacks targeted strategies for the change of Chinese consumers.

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Nike has not invested enough in the Chinese market to implement the global strategy under P.

Susquehanna Financial Group analyst Christopher Svezia estimates that China (10% of total revenue) contributed 25% pre tax profits to Nike, which even exceeded the pre tax profit of North America (40% of total revenue).

This shows that Nike is doing things at a very low cost in the Chinese market.

This is an unsustainable model for any business.

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For P, Nike, which has been in China for 30 years, is still an undisputed leader in the sporting goods market.

There is also enough resources to increase investment in the Chinese market.

Parker said that this summer will bring Nike and Jordan brand spokesmen to China to promote brands, including Lebron James and Kirby Brian.

With changes in the economic environment, consumer demand and competition, Nike and other sporting goods companies need to face a different situation, not just increase investment.

Nike has done a very good job in the North American market.

For example, in order to cater for the new generation of consumers, although the total marketing budget of Nike has increased over the past few years, Nike's spending on American television and print advertising has dropped by more than 40%.

In addition, Nike Nike+ has more than 18 million users.

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< p > but in the Chinese market, these changes of Nike have just begun.

As a large enough single market, China deserves Nike's deeper understanding of the needs of consumers, providing a more localized brand experience, rather than attracting consumers through the global brand strategy.

China is a good market, and it is relatively easy to win the market by marketing and selling skills.

For China's local companies, lack of product innovation is the bottleneck of development. For multinational companies, it is also an urgent problem to improve services and innovation.

When channel growth is weak, product innovation becomes king, and business is like this.

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