Growing Brand Awareness of China Consumers Equals Profit

By Jennifer Yousfi
Managing Editor

China's emerging middle class is chasing after the global consumer dream: name brand products.

And the companies that make those products are profiting from China's growing desire for genuine merchandise rather than cheap knock-offs to grow their brands throughout the Asian nation.

One such company is sports apparel maker Adidas AG (OTC ADR: ADDYY). This past weekend marked the opening of the Adidas' largest retail store in Beijing, the crown jewel in the German firm's China expansion.

Adidas already has 4,000 retail shops in over 500 Chinese cities, and the sportswear maker is planning to open even more. By 2010, there will be 6,300 Adidas stores across China with an expected $1.5 billion (1 billion euro) in annual revenue.

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"Building shops in China is relatively inexpensive compared to places such as Europe. Costs are extremely reasonable," Frederic Seiller, Adidas' vice president for retail in China, told Thomson Financial News.

Costs are cheap, but Adidas products command similar prices to their European retail counterparts, Seiller said. Plus, nearly 50% of Adidas goods are produced in China, keeping down shipping costs in the region.

Adidas is hoping for a big boost in visibility in China due to its association with this summer's Olympic Games.

"The Beijing 2008 Olympic Games will serve as a platform for the Adidas brand to become the leading sports brand in China in 2008," Erica Kerner, director of Adidas' Beijing 2008 Olympic program, told BBC News.

Adidas' "Impossible is Nothing" marketing blitz surrounding the Olympics represents the company's largest marketing campaign in a single market to date and Adidas hopes it will pay off big.

China's Olympic Brand Recognition

Other well-known names round out the list of top International Olympic Committee partners including Money Morning favorites The Coca-Cola Co. (KO) and McDonald's Corp. (MCD).

With the Aug. 8 opening ceremony a little over a month away, these "Global Titans" are hitting China with a full-blown advertising assault.

McDonald's has been selected as the Official Restaurant of the Beijing 2008 Olympic Games. The fast food giant has plans to build four restaurants in Beijing that will cater to the athletes, the news media and spectators who attend the sports events. McDonald's also has a Champion Kids promotion to give 300 children a chance to attend the Olympic games.

To celebrate and promote the diversity of the Olympic Games, Coca-Cola designed multilingual labels "that feature multiple languages including those of the U.S., Bangladesh, China, Egypt, Georgia, Israel, Korea, Nepal and Sri Lanka," the company released in a statement. "Connect with the World Over a Coke" is the beverage maker's slogan for the Games.

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