China Consumer

Going the distance

Marathon craze is proving lucrative for US running shoe firm New Balance

Fitness w

Singer-actress Tian Yuan uses weibo to share her passion for running

One of the more memorable moments in the lead-up to the most recent presidential election in the United States came courtesy of Rick Perry. During a Republican presidential debate in California, the Texas governor had a ‘brain freeze’, forgetting the name of a federal body that he planned to eliminate. It didn’t help that Perry made other verbal blunders on the campaign trail, like accusing the head of the Federal Reserve of treason and suggesting that Turkey was led by terrorists.

According to Double Down: Game Change 2012, a book that reviews the presidential election campaign, Perry’s cringeworthy performance in the debate, plus a number of his other bloopers, were largely a result of sleep deprivation.

Perry – a long-time insomniac – had discovered earlier in life that running helped him achieve more normal sleeping patterns. But owing to back surgery in the summer of 2011, he had to give up jogging. The result was that he became increasingly “sleepless and strung out,” according to the authors of Double Down.

But it’s not only American governors that find running therapeutic. “It helps reduce stress. It’s very obvious after running three to five times a week that sleep quality improves a lot,” a runner by the name of Hui told Oriental Morning Post.

The newspaper was exploring China’s new craze for running, a trend fuelled by the rising popularity of marathons around the country. This year Chinese cities hosted 44 of the running events, double the number held in 2011. CCTV has reported that the 35,000 places available in the Shanghai International Marathon, which took place on Sunday, were filled within days. “China’s problem is not too many marathons, it has too few,” Duan Shijie, deputy director of the State Sports General Administration, told Youth Times.

Running – in the sporting sense – has not always been popular with the Chinese. In fact, there used to be a joke that if a person was seen running in a city, people would gather to see who was chasing him. But more recently attitudes have been changing. “Runners used to risk being regarded as fitness fanatics or people who enjoy suffering,” says Global Entrepreneur, but now the sport has “become a fashion statement”.

Celebrities have helped in raising running’s profile. For instance, Pan Shiyi, chairman of property developer SOHO China, is an avid runner. Haruki Murakami – a Japanese writer with a large Chinese fan base – became another unofficial spokesperson for the sport after releasing his memoir What I Talk About When I Talk About Running. Singer-actress Tian Yuan also shares her passion for running with her followers on weibo.

Social media has been beneficial too. Nike has reported that the number of Chinese users for its Nike+ running application – by which runners share their routes and times – has surged to 2.6 million (it had less than half a million downloads a year ago).

Nike also expects to generate sizeable revenues from sales of running gear. Shoes, shorts and fitness devices like the FuelBand fitness tracker and SportWatch GPS are prominently displayed at its flagship store in Sanlitun in Beijing. The sportswear giant has also started the Nike Running Club, where people can get training advice and organise running groups, says the Economic Observer.

Last year Nike hosted ‘Lunar Runs’ in Beijing, Shanghai, Guangzhou and Wuhan to make running a social activity. The evening events featured fitness instructors, live music and celebrities to promote running as a fun activity to do after school classes or work.

“China’s passion for running is something we didn’t expect. Right now running is the biggest business for Nike, higher than basketball and football,” says Huang Xiangyan, Nike’s communications director for Greater China.

New Balance, the footwear firm, has also tried to capitalise on the craze, opening more than 300 outlets in China this year alone, and now selling its shoes at 886 locations around the country.

Agreeing that business has boomed as a result of running’s growing popularity, the company admits that it has benefited from an association with Steve Jobs, the late Apple founder (greatly admired by Chinese) who liked to wear New Balance’s 990 running shoes along with his blue jeans and black turtlenecks (China’s former prime minister, Wen Jiabao was once pictured in New Balance shoes).

To stand out from a slew of sportswear labels in the country, New Balance has made a couple of more strategic moves. For instance, it decided very early on to focus on selling footwear only (it also makes sports apparel but doesn’t sell it in China). And while domestic sportswear manufacturers have grappled with inventory problems (often a result of expanding too quickly and then ending up with too much stock), New Balance told Global Entrepreneur that it goes to great lengths to ensure that it doesn’t over-supply the stores selling its shoes in China.

New Balance says it has high hopes that its China business will see annual sales of Rmb7 billion ($1.15 billion) within the next three years. But it also claims to deliver only about half of what its Chinese distributors typically want to order, says Zhang Hongwen, the company’s China head. The goal is to generate scarcity. Taking a tactic out of Apple’s playbook, Zhang says that this keeps inventories leaner but also creates a useful sense of urgency among New Balance customers, who worry that the latest range will soon sell out.

This also avoids the bulging stock levels that often lead retailers to mark down prices – a practice that’s damaging to the brand (a problem that confounded Chinese sportswear maker Li Ning, see WiC93).

“The benchmark for ‘under-inventory’ is a product that has sold out,” proclaims Zhang.

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