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China: Adidas Plans to Open 3,000 New Stores

It seems Adidas the Germany based sportswear and athletic shoemaker has had some confidence instilled following its Thursday earnings report that provided additional evidence of a comeback.

On Friday, the company announced that it is planning to open as many as 3,000 stores in China before 2020. It is apparently undeterred by worries over the slowdown of the economy in China, which in 2015 recorded the slowest growth in a quarter century.

The company’s costly expansion that failed in Russia does not seem to worry them in the announcement of its huge expansion plans for China.

The new Adidas stores will add to the company’s locations in China increasing them from a current 9,000 to over 12,000. It will increase the number of cities the company will have a presence in China to over 2,200, said an international news agency.

While the huge number of new locations might puzzle observers on the outside, Adidas mentioned some important factors that can justify its big expansion in China.

The first and likely the foremost, said Adidas is that it saw a sales increase of 18% in China, Taiwan and Hong Kong last year. During just the fourth quarter, sales increased 16%. Adidas said that it recorded sales of over $2.75 billion last year in China, which was the highest total to date in the world’s most populous nation.

The region is the second largest market and the company still see a huge amount of potential, said a spokesperson from the company.

The government of China has introduced a new set of policies that are aimed at reforming the soccer industry.

Adidas is not the only company in the apparel industry that does not seem worried about the economy in China.

H&M the fast fashion retailer said in January that it had opened 54 stores during just the fourth quarter of last year.

It said it was expecting China to become one of its largest markets in 2016 for expansion.

One of the big differences amongst H&M and Adidas and other companies from the west that are struggling in China is the segment they serve within the market. Luxury goods groups such as Prada and Burberry have struggled due to a crackdown by the government on conspicuous consumption.

However, demand for everyday products has remained strong with the growth in retail sales reaching 11% through December of last year.

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