Nike had quite a significant share in the Chinese market. The company announced its plan to increase its sales considerably in 2012. However, it has started losing the competition to other brands (such as Adidas). Nike is now trying to enter the market of Greater China. The company is using strategies employed in Europe and the USA as well as new approaches to fit the Chinese market. The problems of Nike are especially vivid as the Chinese market of apparel is still booming due to the development of the Chinese economy. It is possible to identify a number of major problems that have led to Nike’s losses in China.
The Use of Old Approaches
One of the major problems of Nike is the use of strategies utilized in the USA and Europe. Nike seems to fail to understand the peculiarities of the market. Thus, the company’s main product is running and basketball footwear. Nike earned its share in the US and European markets by providing sponsorships to large-scale leagues. This enabled the company to get a considerable market share, as leagues are quite a significant force that often helps in popularizing brands. However, in China, leagues are not as commercialized and big as they are in the western world. The focus on sponsorships will not bring the same results in this country.
Another strategy employed in Europe and the US is also unsuccessful in China. Thus, Nike focuses on running and training categories, which are very popular in western countries. However, in China, sports clubs are seen as a pastime for rich people and, hence, products for training and running are not as popular. Products for biking that Nike sells in the western world are also unlikely to be popular in China as, although Chinese people ride bikes a lot, they do it in their casual clothes.
Apart from that, Nike has always put a great emphasis on celebrities. Thus, iconic athletes use Nike products, and millions of young people tend to buy the same products to associate themselves with the stars or to achieve similar results. However, in China, there is no such great focus on sports. Young people tend to focus on academic achievements. Therefore, this strategy is also likely to fail in the country.
Nike is now trying to increase sponsorships of leagues as well as various sports programs in Chinese schools. Nike collaborates with sporting clubs and numerous educational establishments. This approach is quite successful, but it does not bring the expected results. The company also opens new stores and uses the latest technology to attract customers. However, it is losing to such brands as Adidas. The latter has used a very successful strategy. Adidas focuses on fashion rather than sport, and this seems to work in the Chinese market.
On balance, it is possible to note that Nike is using ineffective strategies in China. The company fails to respond to the needs of Chinese customers. Nike is using the strategies it utilizes in Europe and the USA. Nonetheless, these approaches are not very effective due to the peculiarities of the country. To solve the existing problems, Nike has to implement serious research to understand the trends existing in the Chinese market. The company will have to shape its strategies to respond to the needs of Chinese customers.