The equipment manufacturer Adidas sees the health restrictions in China as “the biggest challenge” for its activities in this major country and is waiting to see if Nancy Pelosi’s visit to Taiwan will turn consumers away from its brand.
“In our eyes, the biggest challenge we currently have in China is the containment linked to Covid-19”, explained the boss of the brand, Kaspar Rorsted, during a conference call on Thursday. “We are still seeing very cautious consumer behavior with the imminent risk of further lockdowns.”
After a catastrophic first half in the Middle Kingdom, where Adidas sales fell 35% year on year in local currency, July recorded another 21% decline in directly owned stores and a similar trend among franchisees, he continued. In question, the fact that around 80 cities in China “are at least partially affected by the confinements”.
China applies a strict health policy with regard to Covid-19, with very regular screenings, compulsory quarantines for people who test positive and confinements as soon as cases appear.
The problems encountered in China are also the result of a “very large exposure” in this country where Adidas achieves “3 billion euros in sales” over one year, added Kaspar Rorsted.
Given the importance of the Chinese market – nearly 16% of total sales in the first half – the group lowered its annual forecasts from the end of July. It is only counting on a growth of 5 to 10% of its global sales, once morest 11 to 13% previously.
On the other hand, “it is too early to say whether the current increase in tensions between West and East due to (Nancy) Pelosi’s visit to Taiwan will have an impact on the Chinese consumer”, he said. he thinks.
The Chinese army begins Thursday the most important military maneuvers in its history around Taiwan, a muscular response to the visit of the leader of the American representatives Nancy Pelosi on the island.
Adidas remains “optimistic” regarding its brand image and “long-term growth prospects” in China, Rorsted said.
The three-stripe brand has already had to suffer a boycott by local consumers in 2021 following the German pledged in 2020, along with other brands, not to buy Xinjiang cotton amid labor allegations forced from Uyghurs.