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Reebok Pulling Back In China After Heavy Olympics Spend
Published August 17, 2010
|Reebok Trying To Figure
Out Chinese Market
After looking to the '08 Beijing Games as a "way to tap into the Chinese fervor and showcase" its brands, Reebok is now "pulling back from the world's most coveted market and figuring out how to cope with the challenges in China," according to Jenn Abelson of the BOSTON GLOBE. Reebok for years had "neglected the market and allowed licensed distributors to run unprofitable and dingy shops that marketed Reebok as more of a discount shoe." But Reebok turned to endorser Rockets C Yao Ming to "position itself as a popular premium brand." The company leading up to the Olympics "began opening a store every two days." The business plan "called for more than 1,300 shops over the following four years, and Reebok was dedicating about 14 percent of its revenue to marketing in China, above the 10 percent industry average." However, Abelson noted now Reebok's presence in the country has "shrunk," and "instead of rapidly opening stores, the brand is closing shops and trying to stem the bleeding." Efforts to "boost demand for more expensive sneakers from a brand that's still trying to repair its reputation floundered," and as the recession "took hold, and consumer spending softened, the footwear industry suffered mightily from a glut of inventory." Susquehanna Int'l Group athletic footwear analyst Christopher Svezia said China "just slowed because of the economy and indigestion -- it was swallowing too many shoes at one time." Svezia: "There was a marked slowdown in the business. And Reebok opened too many doors. The market wasn't ready for the brand." adidas Chair & CEO Herbert Hainer: "We don't want to continue with stores which are not profitable. Maybe there is an effect that we opened stores a little bit too fast in 2007 and 2008 and this is what we are correcting now." Abelson noted Reebok is "attempting to clear excess inventory with a factory outlet network selling shoes at a discount and closing several hundred unproductive shops" (BOSTON GLOBE, 8/15).