By Donny Kwok and Adam Jourdan, Reuters
HONG KONG/SHANGHAI — China’s biggest sportswear brand, Li Ning Co. Ltd., launched its newest brand at a gala event in Texas last month with U.S. basketball star Dwayne Wade, resplendent in gold bow tie and plaid suit, showing off sports shoes he helped design. But his fans can’t buy them yet. Li Ning, founded by the Chinese Olympic gymnast of the same name, has no stores in the United States and recently shut the e-commerce section of its U.S. website. While luring Wade from rival Nike Inc. last year in a sponsorship deal worth an estimated US$100 million over 10 years is a major coup for the Chinese firm, it has left analysts puzzling the logic of splashing out on an expensive NBA superstar with no apparent U.S. retail strategy in place. Sports industry analysts said the Wade signing was more about marketing to Chinese consumers than trying to build brand recognition in the United States, where Nike and its Jordan brand control 90 percent of the basketball shoe market. “The primary idea here is to say to the Chinese consumer, ‘One of the best players in the NBA is wearing our shoes and you should too,’” said Matt Powell, an analyst with Boulder, Colorado-based sporting goods research group SportsOneSource. The Chinese firm is paying top dollar for an elite athlete just as Nike and other established sportswear brands are scaling back on big-name endorsements because of disappointing returns.
A decade ago, Nike reportedly paid Wade’s superstar teammate LeBron James more than US$90 million for a 7-year contract, but high-potential rookie players now command shoe contracts worth just US$1-US$2 million a year, Powell said. James is the world’s fourth highest-paid athlete with endorsements bringing in US$40 million a year, according to a Forbes ranking as of June 2012. Wade ranked 35th, with US$12 million a year in endorsements. “It (the Wade deal) has a positive effect in boosting Li Ning’s image … but it doesn’t necessarily generate more sales,” said Elyse Wang, an analyst at Haitong International Research in Shenzhen. “The deal is not justified as for sure it’s offering a very high price.” Li Ning declined to comment on details of the Wade deal. Nike declined to comment on Li Ning’s strategy.