Core Insights - The core viewpoint of the article emphasizes that localization for international brands in China has shifted from being an option to a necessity for survival, as demonstrated by Adidas's successful localization strategy that focuses on talent incubation and cultural integration [1][3]. Group 1: Adidas Localization Practices - Adidas's localization is not merely about product modification but involves deep "creative localization" and "talent localization," along with channel adjustments and product innovation to reverse market decline [3]. - The core strategy focuses on "talent" and "culture" to activate local dynamics, with the A.C.E. (ADIDAS CREATOR EXPERIENCE) project serving as a key initiative to build competitiveness through talent and cultural integration [3][4]. - Talent incubation involves creating a closed-loop system for practical experience and retention, allowing young Chinese designers to participate in real product development, which aligns designs with local consumer needs [3][4]. Group 2: Cultural Integration - Cultural integration is about embedding local elements into products, making them the "soul" of the offerings rather than superficial decorations, as seen in various product designs that reflect Chinese culture and sports spirit [4][6]. - The integration of local culture into product functionality and design logic has led to successful products that resonate with consumers, such as the "Wuxia-style fencing shoes" that combine cultural themes with athletic performance [4][6]. Group 3: Market Adaptation and Performance - Adidas has optimized its channel strategy by closing underperforming stores in major cities while expanding in lower-tier cities, resulting in a 14% growth in wholesale channels and an 11% increase in DTC channels in 2024 [6]. - The proportion of locally designed products has exceeded 80%, with significant revenue growth in non-YEEZY product lines, indicating the commercial value of local design [6]. - In 2024, Adidas's Greater China revenue reached €3.46 billion, a 10.3% year-on-year increase, with Q4 revenue growing by 16.1%, showcasing a rebound in performance and improved brand perception [6]. Group 4: Lessons and Strategic Insights - The experience of Adidas provides three key takeaways for both international and local brands: the importance of local talent, the need for genuine cultural integration, and the commitment to long-term strategies rather than short-term tactics [7][8]. - Brands should focus on local creative talent to ensure products meet market demands, moving beyond superficial localization efforts that fail to resonate with consumers [9][10]. - Long-term investment in local talent and culture is essential for building a stable market presence and consumer trust, as demonstrated by Adidas's 20 years of commitment to the Chinese market [12][13].

Core Points - Adidas faces controversy over its new shoe "Oaxaca Slip-On," which is accused of cultural appropriation of traditional Mexican huarache sandals, leading to strong criticism from Mexican politicians [2] - The company has issued an apology, acknowledging the cultural significance of the Mexican indigenous community and the craftsmanship involved [2] - The shoe was developed in collaboration with Mexican designer Willy Chavarría, who also apologized for the unauthorized use of cultural elements [2] Financial Performance - Footwear contributes over half of Adidas's revenue in 2024, aiding the company in returning to profitability [3] - Adidas experienced a decline in net profit from 2021 to 2023, with 2023 marking its first loss since 1992 [4] - Key drivers for revenue growth in footwear include soccer shoes, running shoes, and the resurgence of classic models like Samba, which saw a 300% increase in sales [4] Recent Financial Results - In Q2 2025, Adidas reported global revenue of €5.952 billion, a 2.2% year-on-year increase, with net profit rising by 94.6% to €369 million [5] - Footwear revenue grew by 9%, with the ADIZERO 0 series running business increasing by over 25% [5] Impact of Tariffs - Adidas's CEO, Gulden, indicated that the company faced tens of millions of euros in impact from tariffs in Q2, with an expected increase in product costs of €200 million in the U.S. [6] - The company does not plan to pass on increased costs to other markets [6] Cultural Appropriation Context - The controversy surrounding cultural appropriation differs from simple plagiarism, as it involves unclear boundaries of original IP and adjustments made to distinguish from the original [7] - Experts suggest that brands should communicate with original IP holders before using cultural elements to avoid potential infringement [8]

Core Viewpoint - Adidas faces significant backlash in Mexico for its new shoe "Oaxaca Slip-On," which is accused of plagiarizing traditional Mexican huarache sandals, leading to allegations of cultural appropriation [1][3] Group 1: Product Details - The "Oaxaca Slip-On" was developed in collaboration with designer Chavarria, featuring woven leather and a thick rubber sole, closely resembling traditional sandals made by Zapotec artisans in Oaxaca [3] - The shoe's design has sparked controversy, with Mexican President Sinbloom and other officials accusing Adidas of stealing the creativity of indigenous communities [3] Group 2: Legal and Cultural Implications - The Oaxaca state government has initiated negotiations, and Mexico is considering legal action against Adidas for the alleged cultural appropriation [3] - Adidas issued an apology, expressing respect for the cultural heritage of Mexican indigenous communities and a willingness to engage in dialogue with local groups [3] - Designer Chavarria also apologized for the unauthorized use of cultural elements [3] - Mexico has enacted laws imposing heavy fines and imprisonment for unauthorized use of indigenous cultural expressions [3]

Core Insights - The rise of pet apparel is driven by the increasing trend of pets being viewed as family members, leading to a significant market opportunity in the "pet economy" [1][4] - Major sports brands like Adidas and Nike are entering the pet apparel market to attract younger consumers who prioritize fashion and individuality [1][4][20] Company Performance - Adidas reported a global revenue of €6 billion in Q2 2025, a 12% year-on-year increase, with operating profit rising by 58% to €546 million [2] - The overall revenue for the first half of 2025 reached €12.105 billion, reflecting a 14% growth, while operating profit surged by 70% to €1.2 billion [2] Market Trends - The pet consumption market in urban China is projected to exceed ¥300 billion in 2024, with the emotional consumption market expected to surpass ¥2 trillion [4] - Young pet owners, particularly those born in the 1990s and 2000s, are becoming the primary consumers in the pet market, with 41.2% and 25.6% ownership rates respectively [4] Product Strategy - Adidas and Nike are focusing on stylish and customizable pet apparel, such as matching outfits for pets and their owners, to cater to the demand for personalization among young consumers [9][20] - The brands are also emphasizing design and fashion in their pet products, aiming to create social currency among pet owners [9][20] Consumer Feedback - Initial consumer reactions to Adidas' pet apparel have been mixed, with some praising the aesthetics while others criticize the sizing limitations and material choices [10][11] - Concerns have been raised regarding the practicality of the products, with some consumers questioning the necessity of certain apparel for pets [17][18] Future Directions - The pet apparel industry is still in its early stages, and brands need to focus on product quality, size diversity, and intelligent design to capture more market share [21] - There is a growing demand for outdoor pet apparel as outdoor activities become more popular, indicating a potential growth area for brands [19][20]

Core Viewpoint - Adidas faces significant backlash over the design of the "Oaxaca Slip-On" shoe, which allegedly appropriates cultural elements from the traditional Mexican "huarache" sandals without authorization [1][2] Group 1: Controversy and Response - The "Oaxaca Slip-On" shoe, designed in collaboration with Mexican designer Willy Chavarría, sparked controversy for its resemblance to traditional "huarache" sandals, leading to accusations of cultural appropriation [1] - Mexican President Claudia Sheinbaum publicly criticized Adidas, accusing the company of "stealing the creativity of indigenous communities" and disregarding indigenous intellectual property [1] - In response to public pressure, Adidas issued a statement acknowledging the design's inspiration from Oaxaca's traditional craftsmanship and apologized for the lack of authorization [2] Group 2: Legal and Cultural Implications - The Mexican government has initiated negotiations with Adidas for compensation to the indigenous community and is prepared to take legal action due to the unauthorized use of cultural elements [1][2] - Mexico has strict laws protecting indigenous culture, with high fines and imprisonment for unauthorized use of indigenous cultural expressions [2] - The designer Willy Chavarría also issued a bilingual apology, admitting the design's unauthorized appropriation and emphasizing the intention to honor Oaxaca's culture [2]

Group 1 - Adidas recently faced backlash in Mexico over its new shoe "Oaxaca Slip-On," which is accused of copying the traditional "huarache" sandals of indigenous communities [1][2] - Mexican President López Obrador and other officials publicly criticized Adidas, claiming the company "stole the creativity of indigenous communities" and demanded compensation for the affected communities [1] - The controversy highlights a broader issue in the fashion industry regarding cultural appropriation, as brands often draw inspiration from diverse cultures without a deep understanding of their origins [3] Group 2 - Adidas acknowledged the cultural significance of the indigenous communities and expressed a commitment to engage in dialogue and collaboration with them [2] - The "Oaxaca Slip-On" was designed in collaboration with Mexican designer Willy Chavarría, featuring a woven leather upper and thick rubber sole, closely resembling traditional "huarache" sandals [2] - In its latest financial report, Adidas reported a revenue of €12.105 billion for the first half of 2025, a 14% year-on-year increase, with a notable performance in the Greater China region, achieving €1.827 billion in revenue, up 13% [3]

Core Viewpoint - Adidas faces backlash in Mexico for its new shoe "Oaxaca Slip-On," which is accused of cultural appropriation of the traditional Mexican "huarache" sandals, leading to demands for compensation from the Mexican government and public apologies from the company and the designer [1][5][6]. Group 1: Product Details - The "Oaxaca Slip-On" is a collaboration between Adidas and designer Chavarria, featuring woven leather and a thick rubber sole, resembling traditional sandals made by artisans in Oaxaca, Mexico [2][3]. - The shoe's design was inspired by a traditional design from Oaxaca, which has led to accusations of unauthorized appropriation of cultural elements [5]. Group 2: Reactions and Apologies - Adidas issued an apology acknowledging the cultural significance of the Mexican indigenous community and expressed a commitment to engage with local communities respectfully [5]. - Designer Chavarria, who has Mexican-American heritage, also apologized for not establishing deeper collaboration with the local indigenous community before the shoe's design [5]. Group 3: Legal and Political Context - Following the shoe's release, Mexican President Sheinbaum accused Adidas of "stealing the creativity" of indigenous communities and announced negotiations for compensation [6]. - The Mexican government has a history of defending traditional designs and has enacted laws imposing fines and imprisonment for unauthorized use of indigenous cultural expressions [7].

Core Viewpoint - Adidas faces backlash in Mexico over its new shoe "Oaxaca Slip-On," which is accused of cultural appropriation from traditional Mexican "huarache" sandals, leading to demands for compensation from the Mexican government [1][6]. Group 1: Product Details - The "Oaxaca Slip-On" is a collaboration between Adidas and designer Chavarria, featuring woven leather and a thick rubber sole [3]. - The shoe's black woven upper resembles traditional sandals made by artisans in Oaxaca, Mexico [3]. Group 2: Reactions and Apologies - Adidas issued an apology, acknowledging the cultural significance of the Mexican indigenous community and the importance of their craftsmanship [5]. - Chavarria, the shoe's designer, expressed regret for not obtaining authorization to use elements of Oaxaca's culture and emphasized his intention to honor the community's culture and art [5]. Group 3: Government Response - Mexican President Sheinbaum accused Adidas of "stealing the creativity" of indigenous communities and announced negotiations for compensation [6]. - The Mexican government is prepared to take legal action against Adidas for cultural appropriation, reflecting a broader effort to protect traditional designs from unauthorized use [7]. Group 4: Legal Context - Mexico has enacted laws imposing heavy fines and imprisonment for unauthorized use of indigenous cultural expressions, indicating a strong stance against cultural appropriation [7]. - Previous companies, including Zara and Anthropologie, have faced similar backlash for designs perceived as too similar to traditional Mexican culture [7].

Investment Rating - The industry investment rating is "Positive" [2][54] Core Viewpoints - Adidas reported its Q2 and H1 2025 financial results, with brand revenue of €5.952 billion, a year-on-year increase of 2.2%, and a 12% increase when adjusted for currency (excluding Yeezy) [3][11] - Operating profit reached €546 million, up 58% year-on-year, while net profit attributable to shareholders was €369 million, reflecting a 94.6% increase [3][11] - In the Greater China region, revenue reached €798 million, a year-on-year growth of 11%, marking nine consecutive quarters of growth [3][11] - The ending inventory was €5.26 billion, a 16% increase year-on-year, indicating a healthy inventory level in line with revenue growth [3][11] - It is anticipated that product costs in the U.S. will increase by €200 million in the second half of the year due to tariff impacts, but prices in other markets will remain unaffected [3][11] Market Performance - The textile and apparel industry declined by 2.14%, while light industry manufacturing fell by 1.59% during the week [5][13] - The Shanghai Composite Index decreased by 0.94%, and the Shenzhen Component Index fell by 1.58% [5][13] - The top five performing companies in the textile and apparel sector included Anzheng Fashion (+29.43%) and Jinchun Co. (+18.56%) [15][22] Industry Overview - The textile and apparel industry consists of 263 listed companies, with a total market value of ¥1,651.138 billion and a circulating market value of ¥1,468.415 billion [6] - The average price-to-earnings ratio for the industry is 50.64 [6]

Investment Rating - The report maintains a "Positive" investment rating for the textile, apparel, and luxury goods industry [11]. Core Insights - Revenue performance in Q1 2025 shows divergence among brands, with On (+40%) and Adidas (+13%) performing well, while Nike (-7%) and Under Armour (-11%) face revenue declines due to weak demand and inventory adjustments [6][20]. - The cautious revenue guidance from key companies indicates a continuation of this divergent performance in upcoming quarters, with some brands canceling their full-year guidance [7][25]. - The industry is entering a replenishment phase, but weak end-consumer demand necessitates close monitoring of recovery trends [9][34]. Revenue Performance - In Q1 2025, On and Adidas exhibited strong revenue growth, while Nike and UA struggled with declines [6][18]. - The overall revenue growth rates varied significantly across regions, with North America and Greater China showing relative weakness [20][22]. Inventory Dynamics - The apparel industry has returned to a healthy inventory level but is now entering a replenishment phase, with some brands beginning to accumulate stock [8][9]. - Retailers' inventory-to-sales ratios are normal, but certain brands are still in a destocking phase, particularly Nike and VF [8][9]. Future Outlook - The report emphasizes the need to monitor the pace of consumer demand recovery, especially as the industry faces challenges from weak demand and inflationary pressures [9][34]. - Nike's gradual operational improvement may alleviate some negative pressures on the industry, suggesting potential for a rebound in the manufacturing sector [9][34].