How Nike Figured Out China

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Good evening ladies and gentlemen. It’s a great pleasure for me to be here today. My name is Frank Pan and I’m the Nike’s director of sports marketing in China. When I received the invitation to speak at this conference I felt honoured and exited about the opportunity to speak about the possibilities and challenges of the Chinese market. First I’ll account for our goals entering the Chinese market. Second I’ll speak about some of the difficulties and failures we have experienced. Third I’ll tell you how we, in spite of these problems, have succeeded on the Chinese market and the reasons for the success of our strategy. Finally I’ll point out important cultural differences between the American and the Chinese culture, and discuss the important necessary tools to achieve success in China. Nike is a big part of Chinese sports clothes market. Nikes is a quality-conscious company with focus on design. The main goal for Nike is to reach out to the new middle class, which seeks western culture. We are on the right road as we can see on a very positive development. The sales rose 66% last year, to an estimated $300 million, and Nike is opening an average of 1.5 new stores a day in China. Another goal is to migrate inland from China’s richer east-coast towns. Success aside, we have had our difficulties and failures. In 1997 we ramped up a production just before the Asian banking crisis killed demand, then flooded the market with cheap shoes, undercutting our own retailers and driving many into the arms of Adidas. Two years later, we created a $15 Swoosh-bearing canvas sneaker designed for poor Chinese. The “World Shoe” flopped so badly, that we killed it ourselves. We also had some production problems, which resulted in grey sneakers instead of white. Entering the market of China we have had a big problem with corruption both inside and outside the company. We believe that it’s necessary to look out and check up on your employees. In spite these problems we have...
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