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[Chinese shoes Network - Brand Dynamics] Nike recently little people do not understand: one side would like to announce the third and fourth tier cities to enter, while off the Shanghai flagship store. Even so, there is no doubt that Greater China is becoming an important market for Nike, Nike fiscal 2011 second quarter report: As of November 30, 2011, the Nike Greater China revenue of $ 482 million , an increase of 20%. From the earnings perspective, Nike Greater China region pretax profit of $ 174 million, an increase of 39%, Nike global market, an increase of six highest, the North American market with an 24% increase in second place. For the development of this important market, Nike has demonstrated its unprecedented attention: After entering the Chinese market more than thirty years, finally plans to establish a Greater China headquarters of Nike over 50,000 square meters in China. This seems to indicate a dramatic change: on the one hand, with Nike foundries and reseller model in China conquests war, a periodic task has been completed, is about to open the Nike must be personally pitched battle. On the other hand, the Chinese market is already in the pipeline to complete the transition - foundry costs, rent, labor and other costs, the first-line marketing into the bottleneck, three, four-line market potential to be tapped. has been praised Nike with a "virtual operation" light company model, focusing on brand and design, expand the charming "smile curve", tried to carry out the emotional marketing, bon voyage sailing, but for now, at least in C Cheap air jordans for sale hina, the situation We have changed. "smile curve" Nike is not unexpected worries, but potential long. Let's look at one of the well-known Nike myth: in Beaverton, four-story headquarters of Nike can not see a pair of shoes in the US state of Oregon, the employees are busy only do two things, one thing is to establish global marketing network, the other thing is to manage its worldwide company. Do not have their own production, Nike created a worldwide business empire. A pair of Nike shoes, producers can only get a few cents of revenue, by virtue of its global sales, Nike was able to get dozens or even hundreds of dollars in profits. This is Nike's famous virtual business model: All the products are not manufactured by their own, but outsourced to other manufacturers processing. Nike will own all the human, material, financial and other resources together, into product design and marketing, strengthening their product design and marketing capabilities. Nike will design drawings to the manufacturer so that they strictly follow the drawing style of production, and later tested by Nike and OEM products, the product through its own marketing network to sell out. Nike this strategy, saving a lot of productive investment and equipment acquisition cost, to outsource production of products to Southeast Asia and other places of business, take advantage of the cheap labor and raw materials, which greatly saves labor and raw material costs. Correspondingly Nike spare no effort to promote their brands and even crazy inputs: Only the 2011 fiscal year, Nike spe cheap foamposites nt on advertising and promotion costs $ 2.448 billion, accounting for Nike income ratio of 11.73%. Nike's former marketing director of Scott & middot; Bedbury once recalled the situation in 1987 he introduced the Nike founder Knight advertising budget when, when asked to Bedbury advertising budget from $ 8,000,000 to $ 34 million, in order to make this budget is passed, he was ready for anything. However, Knight has made a Bedbury never considered the question: "how do we know the budget you have raised enough to use it?" The result, Nike's advertising expenditure that year reached an unprecedented $ 48 million. Since then, the company is full of the spirit of innovation in sports marketing has been to maintain spending billions of dollars in brand marketing style. In terms of product design and brand communications, Nike has done the ultimate, which is its huge and expensive team spokesperson can see reflected, as production and sales, it is a matter foundries and agents, but problems may arise precisely In these areas. Large OEM foundries existence value lies in its ultra-low cost: cheap labor, cheap raw materials locally sourced, low rent and so on. And now, these so-called "advantage" is the obvious changes. On the one hand, Chinese cotton (21190,75.00,0.36%) as the main raw material prices, including factory rent, petroleum, rubber (27320,225.00,0.83 percent) continued to soar; on the other hand, a foundry worker against excessive overtime and ultra-low salaries do occur. In 2010, China's largest foundry country or Nike, and now, Nike foundry h cheap jordans for sale mens as been transferred to Vietnam and other lower-cost countries and regions. Annual Nike over the years, in 2001, China produced 40% of its shoes, ranking first in the world, Vietnam is only 13%; to 2005, China's share fell to 36 percent, Vietnam rose 26 percent, behind In the second place; in 2009, China and Vietnam, respectively, 36% of the share tied for first; in 2010, the share rose to 37 percent in Vietnam, more than China's 34 percent. Nike foundries in China, mainly in Fujian, Guangdong, Qingdao, Shandong, Jiangsu Taicang, Nanchang and Taiwan, most of which belong to Nike's large foundry Baocheng all. Pou Chen in 1969 in Taiwan, was founded by ??????, not only OEM Nike, also OEM Adidas, Reebok and other international sports brand, Nike and Adidas are the largest foundries. For foundries, especially like treasure to be so large foundries, the general will be faced with two major problems: First, the cost sensitivity is very high, because the supply capacity, the unit cost of a little bit of small change will impact on the final huge profits, therefore, foundries generally have the direction from the high cost of low-cost local migration characteristics in the history of the development of the foundry, which has never stopped the transfer location, from North America to South America, Japan, Korea, Taiwan, and even today the southeast coast of the mainland (soon become the past), and then Vietnam and Indonesia (foundries next stop). According to Nike's website, sneakers particularly sensitive to labor costs, companies must control labor costs 24% Retro jordans for sale less, to be competitive. Second, the requirements for the production time is quite harsh, especially sports shoes manufacturing, because the improvement of people's consumption level, shoe life cycle gradually shortened, sales of the product along with shorter reaction which foundries speed made high demands, from the previous 5 to 6 months of delivery, and now to three months or so we have to delivery. This means that the foundries have to shorten the production process and improve the response speed. In China, rising costs forced Nike foundry transfer to Vietnam, at the same time, profit margins shrink because foundries, several foundries start small orders, a direct result of some Nike shoes out (we all know that Nike perennial shortage problem exists). While some foundries require brands to price increases, in response to rising costs. For Nike, this strong brand, this threat seems to fear: you do not, people do naturally. But the face of Nike holds the majority of orders on behalf of super large business, capital Nike negotiations clearly insufficient. 2011 beginning of the year, Nike says they want to raise the price of most products. 2011 third-quarter report released by Nike, said revenue for the quarter grew 5.2%, but because of oil, cotton, rising labor costs and freight, Nike's gross margin is not high. Nike executives said, in order to ease the rising cost pressures, only raise prices. To some extent, because the did not have control of production processes, Nike indirectly by large OEM model "hostage." In addition to the prices of last cheap jordan shoes for men resort, the shortage problem has plagued Nike. In Dongguan popular with this sentence:. "Dongguan traffic jam, the global shortage" In addition, part of the cost out of control, so that Nike profits lower. Nike recently released the first quarter of the 2012 fiscal year (June 2011 to August) Performance, Greater China revenue increased by 15%, pre-tax profit increased by 4%, of which a record pre-tax profit growth in the last five Nike Greater China region the lowest since the last quarter. In addition, Nike's 2012 fiscal year as a whole the amount of inventories in the first quarter reached $ 3.107 billion, an increase of the global amount of inventory by 41%. The amount of inventories compared with the previous years, Nike amount of inventories since fiscal 2006, at the highest level. From the amount of inventories, the Nike now seems faced with from 2008 to 2009 greatly increased the amount of inventory problems, Nike paid the appropriate price for its price: the Chinese market, for example, because the Nike raised its product prices ( about 8% of the increase), prompting a significant increase in inventories. inter-related, indeed affect the whole body, increasing upstream costs as opening a curse, the chain reaction is continuing, the mirror turned to the other side, the market situation for Nike difficult to be optimistic. Great proxy If not online channels, Nike sells its products through two channels - direct sales and distribution (or authorization). Currently, Nike has 756 directly managed retail stores (nearly half in the United States) i cheap jordans online n the world, where the Nike brand stores to 487, compared with 2010 increased 42. Sub-brand of Nike acquired Cole Haan, Converse, Hurley and Umbro through each store sales, Cole Hann stores to 190, of 51 Converse, Hurley is 21. Compared with meager outlets, Nike's distribution channels spectacular exception: only in the Chinese market, as of the end of 2011, Nike has 7,500 stores (including outlets) - most of which Belle, Bao Sheng Such large agencies all. Nike set up 17 distribution centers in 170 countries, including three in the United States. When Nike first entered the Chinese market, in order to snatch the market as soon as possible, the implementation of multi-level agent system, a distributor located below the regional distributors. Currently, in addition to Belle, Baosheng two national distributors, the Shenyang Tengda Japanese, Shanghai Ruili sports, Guangzhou and Chengdu Tao Bo sports fresh wave sports are all in their respective regions formed a certain scale. This channel model is conducive to the rapid expansion of the market, but not conducive to control, can easily lead to excessive competition, the brand damage. Therefore, Nike stock crisis in 2009, began to "encounter", the channel gradually concentrated in the hands of large agencies, part of the small agency because of weak financial strength and its own collapse or be acquired. This is Nike's channel system, forming a large proxy mode. Nike in China's largest auto market, Belle, for example, in the first half of 2011, Belle 349 new stores, most of which is the sale of Nike and A didas products shop. But the problem is not just Nike Belle agents, not just agents. Belle's footwear brands include Belle (Belle), Teenmix (Teenmix), Tata (he or she), Staccato (STACCATO), FATO (cutting extension), Senda (Senda), good karma, BASTO (Basto), MILLIE'S (Millie), Jipijapa, Joy & amp; Peace (really beautiful poetry), covering different consumption levels. In addition, Belle's sports division, or international sports brand Nike, Adidas in China, one of the largest distributors and has Reebok, Puma, Mizuno, LiNing, Kappa, Converse, Levi's and other sports brand agency. to hold the hands of the many resources of Belle, the choice is not so difficult, who outperformed naturally get more resources, who perform poorly will be KILL swap. Or in 2009 stock crisis, for example, Belle earnings in the first half of 2009, Nike and Adidas revenue Belle proxy for 3.32 billion yuan, compared with the same period in 2008, an increase of only 2.5%, so, in 2008 also Belle rapid expansion in the first half of 2009 closed the 346 sportswear stores, of which 304 for the second-tier brand shops. The agent was still Daphne Nike chose to close all of the Nike store in 2009. Benefit Game Today, the stock amount again high, Nike will face what? front of the wolf, after the tiger. In the sporting goods market, consumer demand is divided into three levels: first-tier cities have become a mature market, second and third line market is the transition from the mass market to market basis, four or five lines and six lines market is basically still in consumption into the state. Thus, in early 2011, while Nike and Adidas made a decision to enter the low-tier cities. However, the channel lower-tier cities is not so simple. McKinsey in accordance with urban agglomerations (ClusterMap) method, the Chinese city is divided into 22 urban agglomerations, each city cluster around 1-2 center city development, all the satellite towns from the center of the city no more than 300 kilometers, and each Urban Agglomeration of GDP more than 1% of the total GDP of Chinese cities. This way is to show the different cities - even when separated by hundreds of kilometers of consumers' buying habits are still significant differences, such as Guangzhou and Shenzhen, driving distance of only three hours, but in the composition of the population, language and consumer preferences etc. starker. Shenzhen residents 4/5 of migrant workers over the age of 35 years old, speak Mandarin or their own dialect, like bars. The Guangzhou foreign population accounts for only a quarter of the population older, mainly speak Cantonese, used to go to the restaurant to drink tea. The difference is less than the difference between France and Germany. It is because of the different levels, different regions, different cultures are quite different cities, first-tier cities want to copy the success of "standard" format in low tier cities is almost "Mission: Impossible". survey data show that: in a second-tier city stores the type of operation for many years, is often difficult in the third and fourth tier cities flourish, average performance is typically only cheap jordans for sale 50% to 80% of the first-tier cities, and some even after years of adjustment still not profitable. If you want to enter the lower-tier cities, Nike needs to be more familiar with local distributors play. However, those agents Anta, Li Ning brand dealers, and its profit margins are generally higher than the proxy Nike about 5 percentage points. For most small-scale dealers, the same input, they prefer domestic brands proxy higher margins. also ????? about to enter a low-tier cities is good news for Nike. But the re-emergence of the problem remains to Nike stock as stuck in my throat, Belle is not the Messiah, it would not have been unconditional support for Nike. One side is being squeezed various costs of the outlets, while staring at the profit chips agents. Nike's worries, might one day become a reality. In the business world, all interests, all resource game. Strong brand, will maximize the foundry cost down to the channel Yahuo barbarism; while OEM and channel strength, will not listen to the command, maximize profits, regardless of the brand and image. In most cases, the combination is not always a honeymoon, but the game's outcome. Perhaps there is a message that can prove the Nike brand strength, allowed a last-ditch: the end of December 2011, the 11th generation Jordan engraved version listed (re deliberately classic product marketed again), as is the limited sales, Shanghai Nike flagship store on Nanjing Road every day 10:00 to open the door, but cattle and a large Nike diehard fans lined up right in front of the store. This black and white Retro jordans for sale basketball shoes, Nike is priced at around 1,200 yuan RMB per pair, but after the cattle hands, priced as high as 2,000 to 3,000 yuan. In the United States, in order to buy the shoes, some of Nike stores even riots, police had to use pepper spray in order to maintain order. Yes, is this house lined ago, Nike flagship store in Nanjing Road, Feb. 13, the news was heard about to close, which means that Nike outlets in Shanghai, leaving only one - the World Trade UBP Nike store. 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