It’s a matter of simple mathematics: 1.3 billion > 300 million. Forget earning power, forget marketing, forget the rest. There are 1.3 billion people in China, and 300 million people here. That means they need a whole lot more sneakers.
What do you know about China and sneakers? The average sneakerhead has no doubt noticed the highly coveted annual LeBron China exclusives and the “Year of the...” Air Forces and Air Jordans. The average NBA fan no doubt noticed Reebok signing Yao Ming, and the proliferation of seemingly new brands — Peak, Anta, Li-Ning — on the feet of journeymen, rookies, and aging stars alike. The slightly more advanced sneakerhead or NBA fan may have sought out some of these shoes, only finding them on the web. The logical conclusion may be that these are small, upstart brands, trying to challenge the global leaders. The logical conclusion—in this case, anyway—is wrong.
When you have 1.3 billion potential consumers at home, it doesn’t matter whether you can reach 300 million more people on a different continent. There’s a reason Li-Ning and Peak have roughly 7,000 stand-alone stores each in China, and barely any market presence in the U.S. of A.. But here’s the thing: The mathematics work both ways. Those 1.3 billion potential customers haven’t escaped the notice of the big fish in the U.S., hence the China tours and China exclusives (and Hypebeast’s very recently launched China edition). And China’s sneakerhead counterparts see what we see, read what we read. Some are no doubt reading this. And let’s be honest — no matter where you’re from, would you rather emulate LeBron James or Shane Battier?
Which brings us to Li-Ning’s signing of Dwyane Wade. As you have no doubt heard by now, when Wade’s Jordan contract expired at the end of September, Li-Ning was waiting, pen in hand. Former
When you have 1.3 billion potential consumers at home, it doesn’t matter whether you can reach 300 million more people on a different continent.
gymnast Li Ning’s eponymous brand had already made forays into the NBA, signing former All-Star guard Baron Davis and 2010 No. 2 overall pick Evan Turner. Davis had been a star, and the hope was that Turner would one day become one. But Wade is something else—a superstar in his prime, coming off his second NBA title and his eighth All-Star appearance. This could be, if you’ll pardon the phrase, a game-changer.
“The U.S. does half the world’s business in athletic footwear,” says Matt Powell of performance sports retailer Sports One. “Then Europe does another third. China is going to be the second biggest market after the U.S. very shortly if it isn’t already, but it’s still dramatically smaller than the U.S. On the flip though, they have four times the people we do, so as the economy continues to improve there, at some point China could be the biggest marketplace. But not in my lifetime.”
Up until now, most Chinese sneaker brands have been content to stay on the periphery. There has been the occasional high-profile signing—Jason Kidd to Peak, Kevin Garnett to Anta—but like Davis, they were past their prime (er, sorry KG). Thus while the sneakers Garnett and Kidd wore on-court sparked interest in a “WTF are those?” sense, there was never really any demand for them at retail. Wade’s signing could change all that. The fact that they brought on noted fashion designer Alejandro Ingelmo to work on Wade’s off-court product implies that they’re serious.
The question is how? With a planned Q1 US release, the Way of Wade should hit the U.S. market in
If the product is right, Li Ning could do $5 million here with Wade. Hey, look, that’s not chump change, but it pales in comparison to the $2 billion that Jordan did.
early 2013. And while Wade’s checks will cash regardless, the true measure of a signature shoe’s success is how many people wear it in the U.S. of A. Wade’s previous shoes were readily available nationwide, getting primo shelf space thanks to Converse and Jordan. However Li-Ning has yet to stake their claim amongst the big national retailers who, if anything, have too many SKUs as it is. And while e-tailing may be the way of the future, how many people are willing to spend $120 on a shoe — let alone a brand — that they’ve never even tried on?
“The [Li-Ning] shoe needs to be seen at retail in order to give it more validity,” says Powell. “So I think you’ll see them try to sell some product into Foot Locker, Finish Line, Foot Action. They’ll probably buy a moderate amount with some guarantees that if the shoes don’t sell they’ll be returned, that sort of thing. But I don’t expect a major breakthrough here where anybody is in serious jeopardy on their market share.”
So will the Wade deal make any real impact in the U.S.? Are Chinese sneakers about to take over? “If the product is right, Li Ning could do $5 million here with Wade,” says Powell. “Hey, look, that’s not chump change, but it pales in comparison to the $2 billion that Jordan did.
“Li-Ning’s primary interest in Wade and even in trying to sell sneakers in the U.S. market is to sell to the Chinese kid. They want to be legitimate to the Chinese kid and for them to be there, they need to be able to say ‘we have American players, we sell our stuff in America, we have an office in America.’ I think all of that is to prove validity to the Chinese consumer who of course is their core consumer. I don’t think they have high expectations for making a big footprint in the U.S. Which is not to say they’re not going to attempt to do business here, but I think the primary motive is validity with the Chinese consumer as opposed to really try and take a significant share in the U.S. market.”
Wade should be able to give them that. But regardless of Li-Ning’s presumed goals, Wade framed his decision in different terms: “I knew that the popular choice, the easy choice that everybody would say is ‘go back with Brand Jordan,’” he said when the deal became official.“That was the popular choice in the States. But that’s just not who I am. And for me, I felt that I had this opportunity to leave my own legacy that I’ve never had before, that I’d never had the opportunity to do before with Converse or Jordan. And I’m just going in a different direction. Anybody know anything about me they know I’m all about making that change.”
The biggest change is that Wade becomes the de facto Jordan of his own brand. Signature shoes? Been there, done that. If Wade just wanted a signature shoe, he could have simply re-signed with Jordan. Wade wanted more, and Li-Ning was willing to give it. “They really made sure that I felt that this was not just another endorsement, that this was a partnership. And really building out the Wade brand was something that was very important to me because I wanted this to be a deal that lasts beyond basketball.”
To be fair, athletes always say this sort of thing when they switch teams or brands. Here’s what Wade said in the summer of 2009 when he moved from Converse to Jordan: “For me, the move to Jordan Brand is a dream come true. As a kid, I grew up on the Southside of Chicago idolizing Michael Jordan and have worked hard to achieve the same success that he’s had on the court. I have enormous respect for this brand and all that it stands for. I’m humbled to be a part of the Team Jordan family and I’m looking forward to a great future.”
That was typical press release boilerplate, presumably crafted to within an inch of its life. Wade’s remarks on the Li Ning deal were more off-the-cuff, not to mention having three more years of
The fact is that most high-end basketball footwear, regardless of brand, is produced in China already.
experience behind them. “[I don’t want this to be] just another three-four year deal and move on to something else,” he said. “I do things in threes; this is my third brand and this is it.” He laughed at that last bit, but more in a “I realize this has been ridiculous” sense rather than an “I’m just kidding” one. Wade isn’t unaware of how so many endorsement moves can affect a player’s own brand.
All that said, though, this doesn’t appear to be a terribly risky move for anyone involved. On the most basic of levels, Li-Ning gets their superstar and Wade gets his money. And just because his shoes are the product of a Chinese brand doesn’t mean they’ll be any less viable on the court. Li-Ning’s primary basketball designer, Eric Miller, had actually worked on Wade product at Converse, and did a stint in Nike’s famed Innovation Kitchen. And the fact is that most high-end basketball footwear, regardless of brand, is produced in China already (look inside whatever you’re wearing right now if you have any doubts). So having the brand and the factories in the same country should streamline the operation and make changes on the fly much simpler to pull off.
But at the same time, with the global giants making inroads everywhere, the big Chinese brands have even struggled at home. “There’s no question that adidas and Nike have expanded the market totally and Li-Ning’s share has gone down dramatically,” says Powell of Sports One. “No one really has any hard numbers on that. There’s some speculation out there, people have done some estimates, but nobody is doing like what we do here and measuring retail point-of-sale data or even wholesale numbers. But Li-Ning has lost share in the Chinese market.”
Reversing that trend is going to be a costly proposition, but most importantly the product has to be right. “The consumer today is so smart and so on top of what the next shoe and the next trend is,” says Powell. “They came out and bought Starburys back in the day but it was mostly because people wanted to say ‘Hey, I bought a pair of Starburys on the first day.’ It wasn’t that those were the greatest looking shoes in the world or that kids planned to wear them to school. The lines were all about collectors wanting to have a cash receipt stamped with the first day of the launch. You’ll see
This whole D.Wade / Li Ning alliance could turn out to be a uniquely historic referendum on what really sells a shoe — the brand, the player, or the design?
some of that with Li-Ning I’m sure, but you’ve gotta be so on point in today’s market. The kid knows what’s right and what’s not right, he’s willing for pay for what’s right, and you can’t sell him what’s wrong. It’s remarkable.”
All three major sneaker Chinese brands—Peak, Anta and Li-Ning—have traditionally been modestly priced. “Li Ning is known for their better technical shoes for sports that are important for the Chinese consumer like badminton and ping-pong,” says Powell. “I’m not putting those sports down—they’re not important here but they’re very important there. Li-Ning make a highly technical product for those activities, but the bulk of their business is very moderately priced foot covering. And the Chinese kid, as he has access to the internet and as his economic situation gets better, he’s saying ‘I want premium product, I don’t want the moderate product anymore.’” Signing Wade allows Li-Ning to enter that rarefied air.
This whole D.Wade / Li Ning alliance could turn out to be a uniquely historic referendum on what really sells a shoe — the brand, the player, or the design? Brands like Under Armour have already shown that there’s room in the basketball market, and that’s with strictly B-list talent (apologies, Brandon and Kemba). What will Li Ning be able to do with a genuine superstar — one whom Michael Jordan himself hand-picked to be his successor — at the forefront? That will be the real story.