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SBD Global/June 25, 2013/Finance

China Moves Toward Consumerism As Sports Brands Expand Into The Country's Mainland

For more than a decade, Mao Zedong "lived in a cave in the remote mountain town of Yan’an, central China, giving birth to Chinese communism," according to Patti Waldmeir of the FINANCIAL TIMES. Now, more than 60 years later, the town "is at the centre of a revolution in Chinese consumerism." Just minutes away from Mao’s cave, Zhang Peng, 36, "is responding to the modern party’s call to consumption." He "has paired a lime green striped T-shirt with grey sweatpants and blue sneakers at the town’s newly opened adidas store" -- an ensemble that would set him back Rmb1,250 ($200), more than a month’s rent. The German sportswear brand "is banking on shoppers like him" -- and cities such as Yan’an -- "to deliver the growth that is so elusive in Europe and in first-tier Chinese cities that are becoming saturated with foreign brands." With his Gucci watch and rapidly expanding paunch, Zhang "needs gear to help him work off the extra weight" -- but also to show off to his friends, which "he openly admits is one reason he is devoted to famous brands." Zhang said, "If I am out playing badminton with my friends, and I am wearing adidas while others are wearing Nike or Anta [a Chinese sportswear brand], then the one wearing Anta will lose face." Adidas China Managing Dir Colin Currie explained why towns such as Yan'an "are so important." He said, "Two-thirds of the growth in China will come from lower tier cities." Half of the 800 Chinese stores that adidas opened last year "were in smaller cities, and the company’s goal is to expand from 900 mainland cities currently to 1,400 in 2015." To do that, the German group "will have to go where no foreign sportswear brand has been before in China: to fifth and sixth-tier cities where even existing adidas franchisees lack the local contacts they need to get prime retail sites and butter up the local bureaucracy" (FT, 6/21).
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