In China, Reebok banking on Yao factor
BEIJING - The sneaker wars have spread to China, and Reebok, having neglected the market for years, is playing a furious game of catch-up with the help of the world's tallest marketing weapon.
That would be Yao Ming, the 7-foot-6 center for the Houston Rockets and the towering hope of the Chinese Olympic basketball team.
The question for Canton-based Reebok is whether even Yao, the most recognizable star in his home country's most popular sport, is big enough to overcome the head start
Reebok will soon find out. Days after Yao returned home to China last month, Reebok erected a 40-foot-tall statue of the superstar next to one of its massive billboards overlooking Beijing's busiest shopping district. On Tuesday, at some of its 800 stores in China, Reebok will unveil a limited-edition Yao Ming sneaker, ratcheting up a series of promotions in the brand's largest campaign ever - a campaign that includes billboards and TV commercials, a fan website dedicat ed to the perennial NBA All-Star, and the distribution, by visiting Reebok officials, of Yao merchandise to universities across the country.
And in several weeks, five fans will get coveted seats to see Yao - who said he has recovered from a foot injury that kept him on the bench the last few months of the most recent NBA season - in the Olympic Games as part of a sweepstakes Reebok sponsored.
"With a huge global event like the Olympics, and with Yao as such a huge figure for the country, this is a once-in-a-lifetime opportunity as we make our charge into China," said Todd Krinsky, Reebok's vice president of sports and entertainment marketing.
While rivals Nike and Adidas spent heavily in recent years to woo the country's shoe-buyers, Reebok had instead focused on the United Kingdom and North America for growth. And though Reebok took Yao's sponsorship from Nike in 2003, the sneaker company did little to exploit the relationship and many assumed he was still with Nike. But Adidas, which bought Reebok in 2006, has pushed the brand as it sets its eyes on the Far East.
Reebok sees capitalizing on the return of the center for the Olympic Games as its best opportunity to position itself as a popular premium brand in a market of huge potential. While the US apparel and shoe market is expected to gradually increase to $323 billion by 2011 - up 7.3 percent from 2006 - China's is expected to jump 95 percent to $184 billion, according to Euromonitor International, a global market research firm. By 2012, retail analysts are projecting that China will surpass Japan to become the second-largest retail market behind the United States.
Reebok has struggled for years in the mature US market, but in China, the company, whose trade name in Chinese means "swift step," is opening a store every two days and the business plan calls for more than 1,300 shops over the next four years. Now, Reebok is dedicating about 14 percent of its revenue to marketing in China, above the 10 percent industry average.
Still, the Chinese market has not been easy. Until last year, licensed distributors ran Reebok in China with little regard for the brand. They operated unprofitable and run-down shops and positioned Reebok as more of a discount sneaker.
On Wangfujing Street, the busy Beijing shopping district where the statue of Yao towers over the mall, a nearby Nike ad featuring Liu Xiang, a Chinese track star on the Olympic team, spans nearly an entire block. Adidas, meanwhile, has plastered billboards everywhere promoting its Chinese athletes and its coveted status as one of the official sponsors of this summer's Olympics. Earlier this month, Adidas opened its largest store in the world in Beijing.
At one of the sporting goods shopping plazas on Wangfujing Street, Li Chao Chen, 14, recently checked out the first of two Yao limited-edition sneakers, this one featuring a splashy black-and-white dragon design. But the small Reebok shop did not have his size, so the teenager went across the mall to Nike, where he bought a $130 pair of white basketball shoes.
Reebok officials grudgingly accept that they face an uphill battle as they kick their Yao blitz into high gear. While spending $130 for sneakers is still a big extravagance for most Chinese families, the country's growing middle class and its increasing disposable income has made indulging such luxuries a reality in recent years, a trend other sneaker makers noticed early on.
"Adidas and Nike are far ahead. We're trying to just get some real clear ownership in the second tier of brands," said Dave Mischler, vice president of Reebok Asia Pacific.
For Yao, whose 10-year contract with Reebok is estimated to earn him $7 to $10 million a year, making it one of the most lucrative in sports, the latest campaign "represents my pride in my home country of China," he said.
"As the centerpiece to the Reebok China campaign, Reebok is helping motivate and providing a platform for the Chinese people to support me on my road to success," he wrote in an e-mail.
Reebok also hopes the campaign taps China's pride in Yao. Its main slogan, "Fuel Yao's Unlimited Power," suggests that all Chinese people can be a part of the success of their most famous sportsman. The ads depict Chinese people rising and morphing into Yao. Reebok officials believe national pride in Yao's prominence will help connect consumers to the brand and get them to buy their shoes.
"He is a national treasure, someone who has gone out and succeeded but stayed tied to his roots. He is truly someone whose power goes beyond the court," Mischler said. "For us, he's bringing the brand to life."
The validity of that approach, and the difficulties Reebok faces, were apparent when Fang Wang, 26, a Beijing police officer, spotted a pair of Yao dragon sneakers at a local shop. Wang was wearing Nike sneakers, and when asked about Yao, he immediately identified the big man as a spokesman for Coke. But he approved of the idea of Yao as an icon for Reebok.
"Yao is more representative of our own Chinese people, very authentic. Yao is basketball," Fang said, as he bought two red "Fuel Yao" shirts.
After Adidas acquired Reebok in 2006, the German sporting-goods company took over Reebok's licensing agreement with the National Basketball Association and briefly debated poaching Yao as well for its own endorsements. But Reebok pushed to keep the Houston center with its brand to help build awareness as it made its first serious push into China.
Adidas has pressured Reebok to improve its performance in China.
Under Adidas's direction, Reebok took its brand back from distributors and closed about 400 underperforming shops. Adidas has also pushed Reebok to trim its large roster of athletes and build its advertising around a few key figures, including Red Sox slugger David Ortiz and soccer star Thierry Henry.
Many analysts say the acquisition of Reebok has not been as smooth as expected and the company's struggles continued in the most recent quarter, when sales declined 6 percent.
But so far, Reebok says its efforts in China are paying off. Its Yao website exceeded projections, getting more than 5 million hits. After Yao's injury, Reebok promoted its website as a place for fans to leave get-well wishes, turning an unexpected snag into marketing gold.
Sales at stores that opened in China at least one year ago are up double digits, and 18 percent of Chinese consumers now associate Yao with the Reebok brand, up from 14 percent earlier this year, according to the company's latest survey.
Some sports marketing analysts say creating a strong brand around Yao is more difficult now because he already endorses so many other businesses, including Coke and Visa.
"Other brands have put a lot more money and media buying behind Yao and Reebok is somewhat late to the game," said Frank Sha, a senior consultant at Zou Marketing, a Shanghai sports marketing firm.
There might be one more flaw in concentrating a campaign on Yao. In basketball-crazy China, other NBA stars are getting just as well known, and in some cases, more popular.
At the Grand Gateway Plaza in Shanghai last week, where Nike, Adidas, and Reebok all have billboards plastered across the intersection, Xu Jia Hua, 16, checked out the Yao merchandise at Reebok, but had his mind set on someone else: Laker guard Kobe Bryant, the NBA's most valuable player for the 2007-2008 season.
"I like Yao but Kobe plays games very well and he is the best player in the NBA," said Hua, as he left to buy the Kobe sneakers at the Nike store.
Jenn Abelson can be reached at abelson@globe.com.
