We feel the same way about working on a Sunday, sister.
Only in China is a vacation not really a vacation. Case in point: The preposterous and unholy government-mandated holiday schedule for Mid-Autumn Festival, which officially started on Thursday. After getting two days off from work, the vast majority of China’s workforce will go into their job tomorrow on Sunday, work until Friday, rest on Saturday, work again on Sunday and go into work on the following Monday before getting seven straight days off from October 1st to the 8th. But even then, working weekends doesn’t end as everyone has to go back to work on Saturday 12th.
At NiuBBall, we are vehemently against mandatory working weekend, because weekends are for weekends; not for working. But to stand in solidarity with our working brothers and sisters, we’re dedicating this weeks’ batch of links to everyone whose goint into the office tomorrow… and the following Sunday… and the Saturday two weeks after.
(And if you want to throw eggs at the people who are responsible for making this mess of a holiday schedule, please look up the address this guys‘ house… you know, if you’re into throwing eggs at people’s houses.)
Beijing’s Lee Hsueh-lin has been one of 12 players to be fined by the league for not wearing Li-Ning shoes during games. The fine comes as a result of the CBA’s new sponsorship deal with the Chinese shoe brand.
It’s been an exciting start to the season, to say the least. Amidst all the ongoing stories, however, the most important to the league long-term are the new deals that the CBA has signed this past summer. After inking a five-year contract with Infront Sports and Media, now the official marketing partner of the CBA, the league scored 23 new sponsorships, headlined by Li-Ning’s massive CNY 4 billion (US $721 million) commitment.
With these contracts comes an unprecedented windfall for the league’s 17 teams. Having previously received a comparatively measly CNY 2 million from the association, each of the league’s 17 teams will now have around CNY 10 million to spend on salaries, stadium improvements (heating comes to mind), and anything team higher-ups decide on. You don’t need us to tell you this is a boon for the league: money means better imports, more experienced coaches, nicer facilities, and by extension, elevated quality of play and a more refined basketball product for all.
Of course, all this good news does not come without its complications. More sponsors means more advertisements, from CCTV-5 broadcasts to on-court exposure. Whether it be the new Li-Ning apparel, advertising boards, or even the Tsingtao Beer cheerleading squads, you can be sure that these sponsors will make their presence known. Taking on these sponsors also means less autonomy for individual clubs, as teams are now left with only two sections near the courtside audience seats of ad space for sale. Apart from ticketing revenue and individual sponsorships like those on some team’s uniforms, all of the CBA is now dependent on the league to cover their operating costs, a questionable practice at best. Another problem is that of rising costs: even with this injection, with some of their revenue producing avenues cut off, teams may still find it hard to produce a profit.
With an extra link thrown in, China’s favorite street breakfast is back and more delicious than ever!
Kevin Garnett visits China, unveils the new Anta KGIII. Official press release and photos here.
According to Adrian Wojnarowski at Yahoo! Sports, Tracy McGrady might consider a move to China if he can’t get onto an NBA team this season. With all import spots basically filled right now, it’d be tough for T-Mac to just simply walk into the CBA. Although if word hit that he’d really come here to play, I’d bet a few teams would be willing to re-think their foreign plans…
SlamBall has officially hit China! The trampoline-centered sport debuted its first game ever in the mainland in Hangzhou, Zhejiang province last week and according to this report in China Daily, its just the start of SB’s plan to grow the sport, which includes setting up “training centers around the nation, foster more talent and organize a series of pro games from next year.”
Li-Ning will be the new official outfitter of the Chinese Basketball Association starting in 2012-13,
Li-Ning will become the official outfitter of the Chinese Basketball Association starting in the 2012-13 season after agreeing to pay the league CNY 2 billion (roughly US $314 million) over the next five years, according to a report by NetEase. NetEase also reports that Li-Ning outbid rivals Nike, adidas and Anta, the latter of whom had held exclusive apparel rights since 2004.
Anta’s contract with the CBA ended after this past season.
If the deal, which has not been officially announced by Li-Ning, is consistent with previous agreements, the sportswear company will make all in-game uniforms and apparel, shoes and fan merchandise. The CNY 2 billion price tag represents the largest sports apparel sponsorship fee ever paid in Chinese professional sports.
Once seen as an emerging global shoe power, Li-Ning has been on a steady downward plane over the last few years. Shortly after the 2008 Beijing Olympics, Li-Ning opened up a United States office in Portland, Oregon with the intention of becoming a global company. But, their ambitious plan, which included a failed partnership with Champs Sports and the construction of several retail stores in the United States, flopped as the company failed to get a hold on American consumers. Net profit dropped 65% in 2011, causing Li-Ning to ultimately close its Portland office in February among other big shakeups.
Yet, Li-Ning still remains committed to growth — both inside and outside of China. Though the price paid to become the CBA’s official outfitter seems high, it could be a solid investment if trends in years past continue. According to NetEase, the previous outfitter, Anta, experienced increases in turnover every year beginning in 2004. In Anta’s initial year sponsoring the league, the company experienced a turnover of CNY 310 million, a number that rose dramatically over eight years to the tune of CNY 8.9 billion in 2011. And with the league coming off record stadium attendance and television rating numbers, a heavy investment in Chinese basketball may reap rewards down the line.
In America, Li-Ning is moving to put Portland behind them. Their new division headquarters are now based in Chicago, where they’ve partnered up with digital marketing company Acquity Group to launch a strategy that will move away retail stores in favor of online e-commerce.
As somebody who’s worn some CBA stuff over the last couple of years — including the much famed super comfortable generic grey sweatpants — I have to say that Anta did a surprisingly good job with their clothing. Their shoes, a totally other story. But, their apparel was good quality and nice to wear.
The problem though: There wasn’t anywhere for fans to actually buy the stuff. Maybe this will change in Beijing post-championship, but in my almost four years living in the city, I’ve never seen an Anta store where you can walk in and have a lot of choices in CBA gear. You might see some generic CBA-branded gear, but you don’t see anything for specific teams or players. That may just be a regional thing, however because when I was in DongGuan both for the 2011 CBA Finals and the 2011 Nike All-Asia Camp, I walked into an Anta store and saw a lot of Guangdong and DongGuan gear.
So right off the bat, I think Li-Ning — if they want — can do a better job on that front than their predecessors. Their desire to do that will depend on demand however, which still remains relatively low nationwide. Whereas there is an established culture in the West of representing your favorite team, the same cannot be said in China. It’s changing in Beijing, where you’re bound to see a few people in green Beijing Guo’an garb on almost any walk inside fourth ring road, but generally China has a way to go in that regard.
On the business end, time will tell if this is indeed a sound investment for Li-Ning. In the short-term, lets just hope their sweatpants are up to par.
361 Degrees is just the latest Chinese sports apparel company to hop aboard the country’s domestic basketball market.
The bus. The 公交车. For some, it is a staple of everyday transportation that allows one to get from Point A to Point B with a balanced combination of efficiency and thrif. For others, throwing down one kuai (or 40 fen if you have a Beijing transportation card) to ride a bus is a nightmare straight from the depths of hell. Because in China, nowhere epitomizes the phenomenon of “ren tai duo” (there are too many people) better than the country’s huge network of public buses that are packed shoulder to shoulder and chest to chest with people of all ages, heights and smells.
In China, too many people equals about 1.3 billion; a number that is roughly four times the population of the United States. Quick to point out this unavoidable fact of life, ren tai duo is a common statement that often precedes and/or ends most conversations about various issues in Chinese society.
Why do Chinese students study six to eight hours a day for four years straight in high school? Ren tai duo, there’s too much competition to get into college. Why does it take an hour to get from northeast fourth ring road to Guo Mao at 4pm on a Tuesday? Ren tai duo, too many people, too many cars. Why is there a one-child policy? In the eyes of the government, ren tai duo. (Interestingly, the problem afflicting the Chinese National Basketball Team is ren tai shao, not enough people.)
Ren tai duo has an obvious flipside though when you substitute ren (people) for xiaofeizhe (customers), which in turn is why almost every single industry in the world is trying to get a piece of the Chinese pie.
Sports apparel is one of those industries. Foreign companies like Nike and adidas have poured in heavy investments into the Middle Kingdom with the intention of putting their sneakers on the feet of China’s rapidly growing numbers of internationally aware, upper-class customers. Not content to let foreigners come into their country and corner their own market, Chinese companies like Li Ning, Anta, PEAK and more have emerged over the years in the hopes of selling their shoes at a lower cost to China’s many middle and lower tiered customers.
So far, the results have been mixed. For foreign companies, Nike chugs along virtually unimpeded as China’s top seller as it continues to pump out impressive numbers. adidas, who experienced a post-Olympics slowdown, has rebounded somewhat in 2011. For a while, Li Ning had been on the up as well, at one point even passing adidas as China’s second largest seller in 2009. Feeding off of the already high demand from the scores of people who live in China’s second and third tier cities, Anta and PEAK were on similar trajectories as well.
Enter Nike. Perhaps spurred by the decline of Li Ning and other Chinese brands, the Portland-based giant is set on doubling its China sales by 2015“to reach a target of $4 billion annually,” according to Don Blair, chief financial officer and vice president, in an interview with the Wall Street Journal online.
As author Laurie Burkitt writes, that won’t be easy given that most Chinese are merely observers of sport and not participants. Creating a sports culture similar to ones in the West, where people play individual and team sports as part of their everyday routines, will be a challenge. But, Blair says that the brand will build off its already dominant hold Chinese basketball fans by pushing recreational sports like running and snowboarding to consumers.
Blair says Nike also plans to “take its gear into China’s smaller cities to sell sneakers and sweatbands to consumers who are just learning about the brand” as one way to boost sales.
Still, with the shadow of Nike hovering over dipping Chinese brands, Chinese shoe companies continue to try to get a piece of the action. Allured by the motto of ren tai duo, Fujian-based 361 Degrees is making a splash in the lucrative basketball sneaker market after having signed former PEAK endorser, Minnesota Timberwolves forward Kevin Love, to a shoe contract this summer. It’s the company’s first NBA endorser, joining the ranks of Li Ning, Anta, Lu You and the aforementioned PEAK as Chinese brands with NBA players on its roster.
361 Degrees delve into the world of basketball kicks serves as a reminder to the current realities of the Chinese market. The first of which is there’s still a ton of people in China who want to buy shoes. As Anil K. Gupta and Haiyan Wang write for Bloomsberg BusinessWeek, there’s still room for growth in China’s multi-segmented “large and very diverse customer base.” Even if companies like 361, Anta and PEAK are never able to appeal to China’s wealthiest customers, which only make up 2% of the population, there’s still a lot of potential with the other 98%.
However, that still doesn’t change the fact that there are a lot of companies trying to get into that 98%. The increased competition between domestic shoe brands has lead to confused customers who are finding it difficult to decipher each company’s target audience. The result is a consumer perceived blob of indistinguishable companies that are tough to separate from one another.
Our take: Nike’s success is going to depend largely on its success in changing the recreational sports culture of China. And seeing how one is almost non-existent in China right now (seriously, when have you ever seen a serious Chinese runner in Beijing or Shanghai), we think that’s going to be tough to do in four years. Still, Nike’s goal to double their sales is probably more bad than good for the Li Ning’s of the world. Up until now, Nike has been content to sell $200 shoes to China’s rich upper-class. If they can get affordable products into China’s smaller cities, consumers will be likely to choose the internationally known and highly reputable Nike over their generic Chinese counterparts.
In the meantime though, the bus that is sports apparel continues to get more and more crowded.
If you’re interested in seeing Love’s new kicks, 361 Degrees just released images of his new debut shoe, the Kevin Love 1. And if you’re interested in reading a review of that shoe, you’re going to want to click on over to Deadspin, who goes the extra one degree in delving into the brand’s overall slogan.
Showing you that jianbing can be enjoyed 24 hours a day while keeping your day going with China’s favorite and most versatile street snack and a batch of links.
An easy tip for people who want to learn more about Chinese basketball: Read anything that Brook Larmer writes. Keeping that creed in mind, go over right now and read his take on the Georgetown- Bayi brawl he wrote for the Washington Post.
Amazing, but true: Thursday’s fight might not have been the worst on-court incident in China this summer. As we mentioned in yesterday’s post about all of the different factors that led up to both benches clearing, the National Basketball League, China’s second tier professional league, witnessed a scene where an American player, Justin Gray of Guangzhou FM, chucked a chair into the stands at a fan after the fan hurled two full water bottles at Gray’s girlfriend seated courtside during an on-court scuffle between his American teammate, Jartavious Henderson, and an opposing Chinese player.
Keane Shum, writing for SLAMonline, eschews making grand-scale sweeping conclusions about the fight to talk about the social consequences in both China and America: “But here’s what the historians and the experts don’t know about sports: they don’t know that the next time I want to go play some pickup ball in Beijing, I’m going to think twice about wearing the Hoyas t-shirt I bought the day I graduated from Georgetown, and that if I’m ever back in a Georgetown gym, I’m probably not going to wear some of the China gear I picked up at the Beijing Olympics. They don’t know that Chinese national basketball teams have in recent years gotten disturbingly thuggish; they have literally pulled some of the same chair-throwing and kick-em-while-they’re-down tactics against Puerto Rico, Brazil, and now Georgetown. And that in this day and age, Georgetown fans and American basketball players everywhere are going to point to the incontrovertible YouTube evidence of this and assume that most Chinese basketball players are cheap and dirty.”
Duke guard Andre Dawkins talks to ESPN.com about Duke’s three-game exhibition tour in China, which ended last night in Beijing with a win against the Chinese U-23 team. Interesting that he says the team came with the understanding that Chinese basketball is physical, but definitely not surprising — after all, Coach K played against China in the 2008 Olympics and is thus very familiar with the playing style here. Just wish he had given that memo to Georgetown…
“Over-expanding” in an effort to compete inside of a crowded Chinese shoe market has resulted in a sharp overall downturn for China’s athletic apparel industry.
The expansion of Chinese athletic apparel brands has been an easy trend to spot for basketball fans both in the United States and in China. Over the last few summers, there have been a number of high-profile NBA players who have signed lucrative endorsement deals with China-based companies in order to directly tap into the world’s second biggest basketball market. Li Ning has Evan Turner and Baron Davis; Anta has Kevin Garnett and Luis Scola; Peak features Jason Kidd, Shane Battier and JaVale McGee, all of whom have signature shoe lines and television spots.
Adding players, which in turn add credibility, is key for these ambitious brands: With 2.6 billion Chinese feet that can potentially be fitted for sneakers, and an economy that sees consumer spending power rise steadily each year, there’s a lot of money to potentially be made. Competition between Chinese shoe companies is thus quite fierce and to gain an edge, brands have expanded aggressively. In China, companies have been opening hosts of new retail locations and filling them to the brim with merchandise. In the United States, Li Ning opened its first store outside Asia in Portland, Oregon in 2010, and quickly tripled in size after an encouraging start. Peak has a U.S.-based headquarters in Los Angeles, and has an online shop for American customers to buy their products.
But, instead of one company separating itself from the rest, it appears as if the entire industry is headed for a bust due to over-spending and over-stretching its means. According to a report published yesterday by MarketWatch, experts are seeing a rocky future for Li Ning, Anta and Peak, as well as a host of other smaller companies, whose rapid expansion “is beginning to cause cannibalization of sales and [a] price war,” according to UOB KayHian analyst Ken Lee.
Lee goes on to explain what went wrong:
The problem, Lee said, can be traced back to the initial-public-offering boom in Hong Kong during recent years, when mainland Chinese consumer-related themes were able to raise funds easily to fuel ambitious growth plans.
For example, Peak Sport Products Co. HK:1968 +1.54%PSPRF +5.46% — which signed U.S. basketball star Jason Kidd and other top athletes to represent its line of apparel — was able to raise $224 million in a September 2009 listing, pledging to use the funds for product development and to expand its retail sales network in China.
Likewise, apparel group 361 Degrees International HK:1361 -1.84%TSIOF -1.85% was able to raise $231 million as part of its offer, which debuted in June 2009. Promoters said the company would benefit from sportswear spending, expected to rise at a 30% annualized rate for years.
But what followed, says Lee, was a retailing arms race that outpaced consumer spending power.
In our humble (and rather basic, we don’t pretend to be market experts) opinion though, there is still some optimism for Chinese sneakers. According to the report, Chinese spending power has increased 30% for the last several years. That’s an important aspect to keep in mind here: spending power will keep going up, which means the potential market is only going to get bigger and bigger. As a high up American shoe company executive once told me, the race for Chinese feet is being set-up to be won five years from now. This could be a permanent thing, but it could also just be capitalistic Darwinism – a survival of the fittest that is to be eventually won later this decade.
Though the news short-term may not be so rosy for companies, there is good news for consumers — huge, huge sales.
A recent visit to some of these stores revealed product markdowns of 50% to 90%, or even two-for-one promotions on summer wear.
“We have never seen such deep and prevalent discounting,” said Lee, whose retail survey in June took him to six cities around the Chinese mainland.
If it weren’t for our size 13 feet, we’d be all over it. Maybe in five years, one of these brands will get some bigger shoes in their Beijing stores.
We’d say Wang’s facial expression pretty much wraps up our feelings on All-Star Weekend.
Two and a half years ago, I stood up on my first day of teaching a Nanjing University oral English class, eager to start on my eight class journey aimed at turning a bunch of shy English speakers into confident, seasoned orators. By my side, a nicely organized six-lesson unit on debates that would start with the basics and conclude with an actual judged debate. Since Chinese students have been programmed at a young age not to pipe up in class, I figured this would be a great way to get my kids passionately talking at each other about stimulating and interesting topic matter, while also learning how to think about all sides of potential issues.
This debate is going to be awesome, I repeated out loud to my students over and over again on the first day of class, making sure to add extra emphasis on the word awesome to really drive in the profound awesomeness I truly felt the unit was going to exude. Judging by their wide-eyed expressions and attentiveness, I guess I was being pretty persuasive. This was definitely going to be awesome.
But, as my students and I quickly found out after the first unit, “Introduction to Debates,” learning how to debate isn’t awesome at all. In fact, its quite boring. Trying to get people excited about how to add support to your reasons and how structure rebuttals effectively, no matter how awesome I kept telling my students this was all going to be, only led a good portion of my class to put their foreheads on the front of their desk, the preferred sleeping position of Chinese students everywhere. No matter what I did to try and get my class back to that first day, my weary students zoned in a semi-catatonic state as I implored them to be enthusiastic about the definition of the word “resolution.”
What I learned was twofold: First, that I probably wasn’t cut out to be an English teacher and two, no matter what you say or do, you can’t get people amped up for too long on stuff that sucks. Like learning about debates.
As I sat in the MasterCard Arena (formerly Wukesong Arena) during the CBA All-Star Game this past Sunday night, I couldn’t help but think back to that same hyped up six-lesson unit that ultimately bored my class to sleep. Except instead of falling asleep after realizing the game was permanently stale, fans at the arena just got up and left in the second half. When you’re not forced to sit through a three hour oral English class, it’s way more comfortable to go home and sleep in your own bed.
The connection from the game to my class in Nanjing was easy to make, since both suffered from the same basic problem: Despite being dressed up on the outside as the best thing ever, both the game and my lesson plan were exposed as completely unengaging and dull.
And like the 40 or so students who sat eager and wide-eyed at the repeated emphasis on the word awesome on that first day of class at Nanjing University, I believe that fans at Wukesong were honestly on board with the All-Star experience at the beginning. The crowd got into it from the start after a cool video on the jumbotron morphed into a pretty slick on-court dance/acrobatic routine, complete with dynamic lighting and sound effects.
That was followed by what was to me the unquestioned highlight of the weekend and possibly the entire season: Guo Ailun, China’s young 17 year-old point guard who played on the Senior National Team last summer in Turkey for the FIBA World Championship, taking the floor with mic in hand to sing (very seriously, I might add) Rong Yao, “Glory,” in front of an almost full stadium of basketball fans.
To an outsider, having a 17 year-old professional basketball player perform a song during a nationally televised All-Star Game would seem quite strange, ridiculous even. But in China, where the local population’s unbridled love for karaoke extends all the way to pre All-Star Game entertainment, giving it your all to sing a song called “Glory” is not only acceptable, its flat out niu bi, even if he did lip-sync it (which he most definitely did).
After a pretty solid performance by female pop star, Zhang Liangying, the lead up to the game continued to entertain. For the player introductions, it was genuinely charming to see the league embrace more of its “Chinese-ness” by having the starters come out onto the court with their families, instead of trying to copy the NBA by having crazy set-ups and backgrounds like the CBA usually does. Like many others, Bayi’s Mo Ke came out with his mother and father by his side, and DongGuan’s Zhang Kai emerged from the tunnel with his pregnant wife standing next to him. Stephon Marbury, whose family was unable to attend, carried a little Chinese girl onto the floor. Quincy Douby came out with his translator.
(Fast forward to around 9:30 for the player introductions)
Though the pre-game entertainment was generally entertaining, that’s not to say there weren’t awkward moments. Zhang Qingpeng’s courtside proposal to his girlfriend was weird and seemed staged. During the pre-game starting five introduction ceremony in a hope to lather up the crowd for Wang Zhizhi’s introduction, two lines of scantily dressed cheerleaders banging huge drums hanging from their neck failed miserably (with an assist from the night’s MC, CCTV-5′s Yu Jia) to get a “Wang Zhizhi!” chant from the crowd before the big guy came out of the tunnel. The situation already soaked with awkwardness, Big Wang took it to another level by grabbing the mic and yelling ni men jiu shi wo de rong yao. In English, that would literally translate into “you [fans] are my glory,” but I think it’s actually closer to “it’s an honor to have you as my fans.” The reaction from the crowd was minimal and I don’t blame them. After all, would you get excited about a waaaaay past his prime 34 year-old who’s only moves at this point are a stepback jumper and a herky-jerky shot-fake step through making his umpteenth appearance in the All-Star Game?
Once the actual game started, it became pretty evident rather quickly that a: no, you wouldn’t excited about watching a waaaaay past his prime 34 year-old do his thing and b: the pre-game fluff was nothing more than a crappy cover up for the league’s unexciting on-court product. Like in almost every other CBA game over the years, the night broke down into a one-on-one scoring battle between the two opposing imports, which in this case turned out to be Quincy Douby and Stephon Marbury. The Chinese players, who looked like they were just going through the motions, seemed content to just sit back and watch and contributed very little to the overall flow of the game as a result.
By the game’s end, Douby and the North edged out 115-114 over the South, Douby finishing with an All-Star Game record 44 points. But like I said, hardly anybody was there to see it. Despite being close in the last five minutes, a good portion of the stadium had already made its way out of the stadium, driven out by sheer boredom and an overall disconnect from the game.
Besides the apathetic nature of the game, which unlike the NBA All-Star Game comes without the periodic crowd pleasing alley-oops and breakaway slams, halftime probably contributed to the exodus, too. After a predictably nondescript Skills Competition and Three-Point Shootout ended, the Slam Dunk Contest fell victim to several botched dunk attempts and a poorly executed Blake Griffin knockoff dunk by Fujian SBS’s Zhao Tailong, who dunked not over, but around a huge Anta shoe to bring home the title. Needless to say, Chinese fans, who are quite aware of Griffin’s car dunk, weren’t impressed. Tired of it all, many just got up and left.
So what can we take away from all this? Like trying to convince college freshman that learning about debates is awesome, acting like the CBA All-Star Game is this amazing thing only fools people for so long (two quarters, to be exact). If the CBA is ever going to be a sustainable and legitimate entertainment option for fans around China, it’s going to have to figure out a way to create a bond with its fans. 16 years into the league, people shouldn’t have to be saying that. But, until the league comes up with a way to make the quality of their game better, fans are going to continue to be largely indifferent to Chinese professional basketball, which is a shame; unlike English students and debates, the Chinese have a profound passion for roundball.
Is Orien Greene’s move to one of the biggest markets on the planet a smart long-term move? It can’t hurt I suppose, but about “if he wins” thing… there’s simply no way that Beijing is beating Xinjiang in the first round because simply, there is no parity in CBA basketball. Xinjiang went virtually unchallenged the whole year, going 31-1 in the regular season, and is 99.999% guaranteed to sweep Beijing. If he puts up some big numbers and contains Quincy Douby, then he’ll possibly get some interest from CBA teams for next season, but being that he’s going to be back in the United States by April 1st, expecting any added off-court opportunities would be far-fetched.
Man man lai. It’s a common saying among China’s practical and long-term thinking population says when talking about various processes, from practical stuff, like learning how to cook, to academics, like learning a language. It’s used for more serious stuff too, like finding a husband/wife, and is even said when discussing the things that may matter the most to everyone: China becoming the world’s next potential superpower.
Apparently it’s used in athletic apparel company strategy, as well.
True to their slogan, “Make the Change,” the already domestically successful Chinese athletic apparel brand, Li Ning, is making slow, but steady moves in an effort to get more people educated about their brand, change general negative perceptions, and eventually challenge Nike and adidas for the crown of most popular shoes. Not just in China. In the world.
Though the last part of the previous sentence seems ridiculous — maybe rightly so — at the moment, dreams of Li Ning becoming a force in the American sneaker market is being treated as a realistic long-term goal for the company by executives: Besides taking small steps such as placing their products in Champs Sports stores and Eastbay.com, the company is investing a modest $10 million U.S. this year in order to expand their American based operations. And when you read a quote by man who the company is named after, Li Ning, a Chinese gold medal winning gymnast in the 80s, comparing his company to Mitsubishi and Samsung, two Asian companies that eventually etched out large market shares in the States after they conquered their industries domestically, you begin to realize that these people aren’t joking around at all. Nike and adidas are among those who have already realized Li Ning’s ambitions.
When it comes to basketball and shoes, Sonny Vaccaro doesn’t joke around either. Which makes his apparent interest in turning Li Ning into a force in the lucrative and controversial amateur summertime basketball circuit as a seriously newsworthy item. The so called “Godfather of Grassroots Basketball,” who has been employed by Nike, adidas and Reebok at various points over the last 20 years to run their summer-circuits in hope of signing the next Kobe Bryant to lucrative endorsement deals, has influenced the business of basketball arguably more than anyone ever has. The guy who saw the potential of Michael Jordan as an individual brand before anyone else did was also the guy who put Brandon Jennings and Jeremy Tyler with professional teams Europe as a way to skip college and earn money while waiting to meet the age requirement for the NBA Draft.
It’s been his role in the summer amateur basketball circuit, however, that’s cemented his legacy as one of the most important and controversial figures to ever roam the boardroom. Starting first when he signed individual coaches and then entire collegiate athletic programs to shoe deals before going down the roundball food chain to provide free travel, clothes, shoes and uniforms to high-school and AAU teams, summer basketball has developed into a unabashed meat market that is intent on getting as many promising youth ballplayers into highly organized and visible tournaments to increase the probability that a shoe company will uncover and get next to future NBA superstars. The result has been twofold: More exposure for high-school players who dream of playing in the NBA, and more opportunities for shady enterprising youth coaches and team organizers to take advantage of the large amounts of money that pour in from the sneaker companies above. Vaccaro has been called everything from a father-figure who cares solely about players’ interests to a crooked company man who has permanently torn down youth basketball into a no holds barred free-for-all for those looking to get quick, often illegal cash.
Vacarro has been out of summer basketball for the last three years, instead choosing to focus his efforts on bringing down the NCAA, who is one of those entities who view him as the latter. But if Vacarro is to hook up with Li Ning, it would put the shoe company squarely on the summer circuit map, which means all of the things the company wants: more exposure, better consumer awareness and ultimately more potential for an exciting young player to sign a professional shoe contract with them.
The effect of all of these small steps, increased investment, more advertising and an entrance into the summer basketball scene, would likely result in Li Ning being relevant in the U.S., giving the brand another source of customers and revenues. But a respectable presence abroad would also work to legitimize the company to its domestic Chinese consumers, who would view Li Ning’s ascension in America quite favorably.
The Chinese are notoriously self-deprecating when it comes to comparing Chinese brands, products, sports teams, athletes, companies or anything else to the so-called “best of the best.” If something in China isn’t number one, then it’s not good enough. It’s why Kobe Bryant and his five rings are more popular than LeBron James and his zero rings, why Nike is still the top selling athletic brand and why Michael Jordan at one point was known to more school children than anyone else in the world, other than Mao Zedong of course.
If Li Ning can develop and grow in the States, and Americans start to wear their shoes and more younger, more exciting, more marketable NBA players start endorsing their shoe, then they can expect a big boost in sales in China as a result. Getting into America, no matter how subtle, is a similar strategy that Peak and other Chinese athletic apparel companies who buy courtside advertising at NBA games have used to reach people back in the PRC watching Chinese telecasts of games. Simply, if you’re good enough to have an ad up at an NBA game, you’re more than good enough in the eyes of potential Chinese customers, who view America and the NBA in extremely high regards.
It should be noted, however, that not everyone shares Li Ning’s optimism for the future. Scared off by a variety of factors, large numbers of investors pulled out in December and Li Ning’s share price dropped 15% amid decreased sales order and growth. With increased competition from other companies like Peak and Anta and growing customer confusion about who Li Ning’s target audience is, going toe-to-toe with Nike and adidas is hardly going to be a two-handed slam dunk.
For now though, Li Ning seems content with settling for in control pull up 15-foot jumpers. And that’s just fine for a company who knows it doesn’t have the requisite bulk to challenge the globe’s footwear giants — yet.
In my two and a half years living in Beijing and Nanjing , I’ve never heard of Lu You（露友, pronounced loo-yo）brand shoes. But, then again I’m not really on the lookout for kicks in China — with size 13 feet, I’m resigned to either ordering online through American sites or bringing back boxes of new sneaks when I take trips back to the States, as even the biggest Adidas store in the nation doesn’t carry sizes past 11.5.
So, I suppose it is possible that I’m missing out on Lu You simply because I’m not looking.
With that said, however, there are some indisputable facts that contribute to my total unfamiliarity with Lu You. They don’t advertise during NBA games on CCTV-5 or BTV, nor do they run ads during CBA, FIBA, CUBA (China’s college basketball league) or any other basketball leagues or tournaments. To my knowledge, not one basketball player, domestic or international, sports their shoes and I’ve never heard or read about the company as the official outfitter of any type of team.
So was as in the dark as every other fan who was scratching their head this week when CounterKicks reported that two-time NBA MVP, Steve Nash, had signed an exclusive endorsement deal with the Chinese company.
To the casual observer, Nash’s move to Lu You could seem strange. The company’s “About Us” page does not mention the word “basketball” once and their online catalog of products offers merely two pairs of basketball shoes and exactly zero pieces of basketball clothing.
So just what is Lu You, then and why is Steve Nash going to where their shoes? According to their official website, the Jinjiang, Fujian based company was launched in 1992 and currently employs 2000 people with about 40,000 square meters of factory space. In recent years, they’ve sponsored the Women’s Chinese Volleyball League, the U-17 Women’s Ping-Pong National Team, and the China-Japan Women’s Volleyball Club Championship. In 2008, they sponsored the Tajikistan Olympic Team in Beijing and in 2009 they added the Bayi Women’s Volleyball team to their roster as well.
No wonder I’ve never heard of these guys.
Yet, despite not having widespread brand recognition in China or much experience with basketball, Nash has chosen to lace up a pair Lu Yous for the presumptive remainder of his career. Given his history with back problems, signing up to become the brand’s first ever basketball player strikes a lot of people as a particularly odd and potentially risky decision. (As Seth Pollack over at Bright Side of the Sun alerted me to, Nash will continue to wear Nikes while playing in the NBA, though we’re not sure if that’s a temporary or permanent thing seeing that Nash doesn’t really have a choice as Lu You doesn’t have a signature shoe for him yet with it being midseason and all.)
NBAers sporting Chinese shoes isn’t a new trend, though. Nash joins a growing list of NBA players who have already ditched their old Western shoe deals in favor of the Middle Kingdom. Leading the way is Peak, who according to HoopsHype has eight players under contract, including Jason Kidd, Ron Artest, Shane Battier, Andrew Bynum and Jason Richardson. Coming in second is Li Ning, who sports Baron Davis, Shaquille O’Neal, Evan Turner, Jose Calderon and Hasheem Thabeet. This past summer, Kevin Garnett signed up with Anta, as did Luis Scola.
And like all those guys listed above, it’s pretty evident what Nash trying to accomplish here. Said Brian Berger, host of Sports Business Radio (via BizJournals.com), “Most of the guys who are signing these deals are kind of in the twilight in their careers and they’re opting for a bigger paycheck and maybe they’re saying, ‘Hey, I want to do some business in China post-career,’” Berger said. “It doesn’t take a mathematician to realize if you can get into a small fraction of the market in China, you’ll do much better than you would with a bigger market share here in the United States.”
Nash should be in a good position to do just that, as he will instantly become the face of a brand that has lots of room for growth in the massive Chinese hoops market.
In addition to Nash’s ambition as a Sino-centric business man, the move to the lesser known Lu You says a lot about the changing climate for Chinese sportswear companies. For years, the dominant domestic force in China has been Li Ning, which was founded in 1990 by the Chinese gymnast of which the brand is named after. After losing their grip on China in 2003 when Nike and Adidas took over the top two spots, Li Ning re-imaged and expanded their brand to appeal to Chinese youth and regain their previous position. Since then, Li Ning has since overtaken Adidas, but still lags behind Nike.
But, as more and more people in China have money to spend on athletic apparel, more and more companies have upped their efforts to get a piece of the pie, which in turn is affecting the entire industry, Li Ning very much included. Scared off by worries of overexpansion (that store in Portland, Oregon anyone?) and increased competition from companies like Peak and Anta, investors are way down on the company, its share price in Hong Kong having decreased by 15%. (You can read The Economic Observer’s interview with Li Ning CEO, Zhang Zhiyong, about their recent struggles here.)
The word on Peak and Anta, is more encouraging than Li Ning, but investors appear to be unclear as to how they’ll be affected with the one-time booming athletic industry now experiencing a slowdown.
All that brings us to Lu You, the new guys on the China basketball block. As this is their first foray into the sport, the company and Nash obviously feel that there is only room for development and growth. And with so many potential customers in China, even a little bit of growth is worth quite a lot of money — more than remaining with Nike in the States.
Nash was also intrigued by an opportunity to become relevant in the Chinese community, as Lu You’s dedication to humanitarian work also apparently struck a cord with the charitable point guard. As the China Daily explains:
Apart from the commercial cooperation, public welfare programs also played a key part in luring Nash, who is well known for his charitable work, according to his business manager, Brandon Kou.
“Steve has a very deep affection for China and the kids are something really important him. One of the things that we looked for in a partner was to benefit the community and the kids here. That’s what we stand for,” Kou told China Daily after the announcement.
Nash has been to China a couple of times before and has even balled at the famous (and super crowded) Dong Dan basketball courts in Beijing. Now the front man for a Chinese shoe brand, you can bet that he’ll be back there again — though we can’t promise a repeat of those epic Horace Grant goggles.
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