Nike, Adidas see golden opportunity in China

updated 1:47 p.m. ET Oct. 3, 2007

The Beijing Olympics are less than a year away and one of the hottest races shaping up is not among the athletes, but the companies that outfit them.

China is one of the largest emerging markets and a top focus for shoemakers fighting for market share. And as the 2008 Beijing Olympics approach, the intensity is reaching a new high.

"The Beijing 2008 Games are set to be the greatest sporting event in modern Chinese history," said Paul Pi, head of marketing for Adidas in greater China.

Adidas is an official sponsor of the Olympics. In addition to paying a reported $80 million for the sponsorship position, the company has coordinated a marketing blitz that includes opening an average of two stores a day in the country.

The German company has declared the event will help put it in the No. 1 position in China by 2008, a coveted spot now held by shoe giant Nike.

Nike says China is poised to become its second-largest market in the world by 2009 after the U.S. The company has seen tremendous gains there; its first-quarter earnings reported in September show sales in China jumped 50 percent. And Nike executives say the company is widening its lead there.

"The Chinese marketplace is the most exciting marketplace in the world," said Nike Brand President Charlie Denson.

Nike declined to discuss its Olympics marketing plan but says the Olympics is less about advertising than about supporting the athlete.

The company is sponsoring 22 of the 28 competing Chinese federations. And it has one of China's hottest athletes, hurdler Liu Xiang, wearing the swoosh.

Both companies may hit $1 billion annually in sales in China by the Olympics, said Terry Rhoades, managing director of Zou Marketing, a sports consultant company in Shanghai.

In third is Chinese company Li Ning — a premium local brand but a fraction of the size of its international competitors. Analysts say Li Ning has a different strength, with its base in the smaller and less urban markets where brands like Adidas and Nike have not spread.

Li Ning, founded by a former Chinese gymnast, has also ramped up its design team and is sponsoring several Chinese teams slated to be strong contenders in the games.

But shoemakers say the race isn't over when the medals are handed out.

Denson says the years following the Olympics may be even more exciting than this growth period.

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