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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].