Core Viewpoint - The article discusses the outsourcing model of Adidas, highlighting consumer reactions to the revelation that their products are manufactured by third-party factories like Xuezhongfei, which has sparked discussions about brand transparency and consumer awareness [4][12][23]. Group 1: Adidas Outsourcing Model - Adidas has largely outsourced its production to third-party factories, focusing on design, research, and marketing to maximize profits [4][8]. - The company has no significant production lines of its own, with only a small percentage of high-end products manufactured in Germany [8][12]. - The outsourcing model allows Adidas to maintain a "light asset" operation, reducing fixed asset investments and risks while enabling quick adjustments to production based on market changes [18][20]. Group 2: Consumer Reactions and Market Dynamics - Consumers have expressed dissatisfaction upon discovering that Adidas products are made by Xuezhongfei, leading to discussions about the price differences between branded and unbranded products [6][24]. - The price comparison shows that Adidas's down jacket, priced at 867.71 yuan with 70% down content, is significantly more expensive than a similar product from Xuezhongfei, which costs 569 yuan with 85% down content [6][8]. - The article notes a shift in consumer awareness, with a growing demand for transparency regarding product origins and manufacturing processes [23][24]. Group 3: Global Production Strategy - Adidas's production strategy has evolved, with a significant shift of manufacturing bases from China to Southeast Asia, particularly Cambodia and Vietnam, driven by cost considerations and supply chain optimization [16][20]. - In 2021, Cambodia became the largest manufacturing country for Adidas apparel, accounting for 21% of total production, while China's share dropped to 20% [16]. - Recent strategic adjustments have seen an increase in locally produced goods in China, with 95% of products sold in the Chinese market being "Made in China" [17]. Group 4: Quality Control and Challenges - The outsourcing model presents challenges in quality control, with reports of product quality issues arising from factories in Vietnam and Cambodia [20][22]. - The relationship between brands and their manufacturing partners is complex, balancing the need for production capacity with the risk of competition from the manufacturers themselves [22]. - The article emphasizes the importance of maintaining brand image and consumer trust, suggesting that brands should enhance supply chain transparency to meet evolving consumer expectations [23].

Core Viewpoint - The article discusses the outsourcing model of Adidas, highlighting consumer reactions to the revelation that their products are manufactured by third-party factories like Xuezhongfei, leading to discussions about brand transparency and consumer awareness [4][5][8]. Group 1: Adidas Outsourcing Model - Adidas has largely outsourced its production to third-party factories, focusing on design, research, and marketing to maximize profits [4][8]. - The company has no significant production lines of its own, with most of its manufacturing done by factories in regions like Guangdong and Fujian, China [8][9]. - The outsourcing strategy allows Adidas to maintain flexibility in production and cost management, enabling quick adjustments to market changes [15][16]. Group 2: Consumer Reactions and Market Dynamics - Consumers expressed dissatisfaction upon discovering that high-priced Adidas products were made by Xuezhongfei, prompting discussions about the value of brand versus actual product quality [5][19]. - A comparison of prices revealed that similar products from Xuezhongfei were significantly cheaper, raising questions about the pricing strategies of major brands like Adidas [5][19]. - The article notes a shift in consumer awareness, with buyers increasingly interested in the actual manufacturing details rather than just the brand name [18][19]. Group 3: Strategic Adjustments and Market Performance - Adidas has been adjusting its production strategy, with a notable increase in locally produced items in China, reflecting a shift back towards domestic manufacturing [12][14]. - The company aims to regain consumer trust through deeper localization and responsiveness to market demands, as evidenced by its plans to establish a new headquarters in Shanghai [14]. - Recent financial performance indicates a positive trend, with Adidas's revenue in the Greater China region growing by 10% year-on-year in 2024, showcasing the effectiveness of its strategic adjustments [15].

Core Insights - The controversy surrounding Adidas down jackets produced by Xuezhongfei highlights consumer concerns over brand value versus price-performance ratio [2][3][7] - Xuezhongfei, a mid-range down jacket brand under Bosideng, is experiencing significant growth, with a projected revenue of approximately 2.206 billion yuan for the 2024/25 fiscal year, accounting for 10% of Bosideng's total down jacket sales [2][8] - Adidas is facing challenges in maintaining its market position in China, with its market share declining below that of competitors like Nike and Anta [10][11] Company Performance - Bosideng's OEM business has seen a revenue increase of 26.4% year-on-year, reaching approximately 3.373 billion yuan, contributing 13% to the overall revenue [2][8] - Xuezhongfei's revenue for the 2023/24 fiscal year grew by 65.3% year-on-year, reaching 2.02 billion yuan, with its revenue share in the group increasing from 5.4% in 2022 to 10% in 2024 [8] - Adidas reported a revenue of 794 million euros (approximately 5.94 billion yuan) for the fourth quarter of 2024 in the Greater China region, reflecting a year-on-year growth of 16.1% [10] Brand Positioning - Adidas has shifted towards localization in China, with about 50% of its products designed locally and 80% manufactured in China, aiming to cater to local consumer preferences [4] - Xuezhongfei positions itself as a cost-effective brand, with products generally priced below 1,000 yuan, contrasting with Bosideng's main brand, which targets the high-end market with products priced between 1,000 and 3,000 yuan [5][6] - The growing consumer sensitivity to price and value is evident, with the percentage of consumers prioritizing low prices rising from 20% to 35% [7]

Core Viewpoint - Adidas has become the "old fourth" in the Chinese market, trailing behind Nike, Anta, and Li Ning, and is now in a clear expansion phase in China [1][2]. Group 1: Market Position and Challenges - Adidas's decline in market share is attributed to the fallout from the Yeezy partnership with Kanye West, which accounted for 8% of total revenue and 40% of profits before the partnership ended in October 2022 [2][3]. - The company's market share in China dropped from 15% in 2021 to 8.7% in 2024, while Nike's share decreased from 18.1% to 16.2% [3]. - Domestic brands are rising, with Anta's market share increasing from 9.8% to 10.5% and Li Ning's from 9.3% to 9.4% during the same period [4]. Group 2: Strategic Changes - Adidas is shifting its strategy in China, with 95% of products sold in the market being "made in China" and a focus on original designs [5]. - The influence of the Chinese team within Adidas is increasing, and the CEO has made multiple visits to China to strengthen relationships [6]. Group 3: Financial Performance - In Q2 2023, Adidas's revenue in Greater China grew by 11% to €798 million (approximately ¥6.65 billion), contrasting with Nike's 10% decline in the same region [8]. - Despite the growth, Nike's sales base is significantly larger, making direct comparisons challenging [8]. Group 4: Future Outlook - The path to a successful turnaround for Adidas in China is fraught with challenges, including competition from domestic brands and ongoing market fluctuations [9][10].

Core Viewpoint - Adidas has become the "old fourth" in the Chinese market, trailing behind Nike, Anta, and Li Ning, and is currently in a phase of clear expansion in China [1][2]. Group 1: Market Position and Challenges - Adidas's decline in market share is significantly attributed to the fallout from the Yeezy partnership with Kanye West, which accounted for 8% of total revenue and 40% of profits before the partnership ended in October 2022 [1]. - The company's market share in China dropped from 15% in 2021 to 8.7% in 2024, while Nike's share decreased from 18.1% to 16.2% during the same period [1][2]. - Domestic brands have risen, with Anta's market share increasing from 9.8% to 10.5% and Li Ning's from 9.3% to 9.4% [2]. Group 2: Strategic Changes - Adidas is adapting its strategy in China, with 95% of products sold in the market being "made in China" and a focus on original designs [2]. - The CEO of Adidas, Bjørn Gulden, has made multiple visits to China to strengthen relationships, contrasting with Nike's more subdued approach [2][3]. Group 3: Financial Performance - In Q2 2023, Adidas's revenue in Greater China grew by 11% year-on-year to €798 million (approximately ¥6.65 billion), while Nike's revenue in the same region fell by 10% to $1.512 billion (approximately ¥10.78 billion) [4]. - Despite the growth, the comparison of growth rates is complicated due to Nike's larger sales base [4]. Group 4: Future Prospects - The path for Adidas to reclaim its position in the market is challenging, with Nike also empowering its local team and domestic brands like Anta thriving [5]. - The overall market is volatile, with companies like Peak facing significant losses and implementing salary cuts of up to 50% [5].

Core Viewpoint - The article discusses the reliance of major global brands like Adidas on contract manufacturing, highlighting the cost advantages and strategic shifts in production locations, particularly in response to market dynamics and consumer awareness [6][9][13]. Group 1: Adidas' Manufacturing Strategy - Adidas has largely separated its brand from manufacturing, relying on third-party factories for production, with only a small percentage of high-end products made in-house [9][10]. - The company has shifted its production base from China to Southeast Asia, particularly Cambodia and Vietnam, due to cost considerations and supply chain optimization [16][19]. - Recent trends indicate a potential return to increased production in China, with 95% of products sold in China being locally manufactured as of October 2023 [19][20]. Group 2: Contract Manufacturing Dynamics - The contract manufacturing model allows Adidas to operate with lower fixed asset investments and risks, focusing on design, research, and marketing [20][21]. - The article notes that while this model provides flexibility in production, it also poses challenges in quality control, with past issues of product quality arising from overseas manufacturing [22][24]. - The relationship between brands and contract manufacturers is complex, balancing the need for production capacity with the risk of competition from manufacturers [24][25]. Group 3: Consumer Awareness and Market Response - There is a growing consumer awareness regarding the origins of products, leading to increased scrutiny of manufacturing practices and transparency in supply chains [25]. - The article suggests that brands should embrace this shift by enhancing supply chain transparency and focusing on the actual value of products rather than solely on brand prestige [25]. - The case of Snow Zhongfei, a contract manufacturer for Adidas, illustrates the impact of consumer knowledge on purchasing decisions, as consumers are now more aware of price differences between branded products and their manufacturers [25].

Core Viewpoint - Adidas has become the "old fourth" in the Chinese market, ranking behind Nike, Anta, and Li Ning in market share after years of struggle [1][5]. Group 1: Market Position and Challenges - Adidas's market share in China has significantly declined from 15% in 2021 to 8.7% in 2024, while Nike's market share decreased from 18.1% to 16.2% [5]. - The Yeezy controversy, stemming from Kanye West's remarks, led to Adidas terminating its partnership, which accounted for 8% of its total revenue and 40% of its profits as of October 2022 [3][5]. - Domestic brands have gained traction, with Anta's market share increasing from 9.8% in 2021 to 10.5%, and Li Ning's from 9.3% to 9.4% [7]. Group 2: Strategic Changes and Initiatives - Adidas is in an expansion phase in China, with 95% of its products sold in the market being "made in China" and a focus on local design [8]. - The company's CEO, Bjørn Gulden, has increased the influence of the Chinese team and has made multiple visits to China to strengthen relationships [9][11]. - In Q2 2023, Adidas's revenue in the Greater China region grew by 11% to €798 million (approximately ¥6.65 billion), contrasting with Nike's 10% revenue decline in the same region [14][15]. Group 3: Competitive Landscape - Nike is also empowering its Chinese team, with its Greater China CEO holding additional global responsibilities [18]. - Domestic competitors like Anta are thriving, while some brands like Peak are facing challenges, including significant salary cuts due to losses [19]. - The competitive environment remains tough, with Adidas's path to recovery being fraught with difficulties [20].

Core Insights - Consumers have raised concerns about the authenticity of Adidas products, specifically regarding a down jacket purchased through a live-streaming platform, which was allegedly produced by a third-party manufacturer, Xuezhongfei [2] - Adidas customer service stated that they do not have information on whether products are outsourced or the details of the manufacturing facilities, emphasizing that all products are shipped directly from warehouses [2] - The incident highlights a growing consumer skepticism towards brand value versus product quality, with many feeling that they are paying for a brand label rather than the actual product quality [3] Company Analysis - The incident reflects a broader trend in the apparel industry where outsourcing production to qualified manufacturers is common, allowing brands to focus on design and marketing while reducing manufacturing costs [2] - The pricing comparison between Adidas and Xuezhongfei shows that while both brands have similar price points, Xuezhongfei's products offer higher fill power in their down jackets, raising questions about the value proposition of Adidas products [2] - The ongoing debate about brand premium versus product quality suggests that Adidas may need to better align its brand image with consumer expectations to avoid future controversies [3]

Group 1 - Investment bank TD COWEN raised the target price for Adidas from €190 to €201 [1]

Core Viewpoint - Adidas has shown a recovery trend in performance despite global economic challenges, with a 12% revenue growth in Q3, leading to an upward revision of its annual performance forecast [1][2]. Group 1: Financial Performance - Adidas reported a Q3 revenue of €6.63 billion, up from €6.44 billion in the same period last year, marking a 12% increase after excluding currency effects [1]. - The company’s gross margin improved by 0.5 percentage points to 51.8%, and operating profit surged to €736 million, up from €598 million year-on-year, with the operating margin increasing from 9.3% to 11.1% [1]. - For the full year, Adidas now expects operating profit to reach approximately €2 billion, up from previous estimates of €1.7 billion to €1.8 billion [1]. Group 2: Market Strategy and Adaptation - In response to increased costs from U.S. tariff hikes, Adidas has implemented price increases across its product lines, with the Samba sneaker's price rising from $90 to $100 [2]. - The company has refocused on its core brand values and product innovation, revitalizing classic shoe models and expanding retro product lines [2]. - Adidas showcased its brand innovation at Shanghai Fashion Week, emphasizing three dimensions: speed in sports, rhythm of the East, and self-expression in street culture [2]. Group 3: Manufacturing and Supply Chain - Adidas has shifted to a model where 95% of its products sold in China are locally manufactured, reflecting a strategic focus on local production and design [4]. - The company has faced scrutiny over its use of OEM partners, such as Snow Flying, for producing down jackets, which has sparked consumer discussions about brand value versus manufacturing practices [4][5]. - The use of OEM models allows Adidas to concentrate on brand building and marketing while leveraging specialized manufacturers for production [5][6].