Adidas Greater China's first Chinese president, Xiao Jiale: Let the world recognize the charm of Chinese culture.

In the elevator after the interview, Xiao Jiale suddenly realized and slapped his thigh. "Just now you asked what ultimately made me return to Adidas. Now I can tell you the most important answer, (because) we want to regain the trust of Chinese consumers."

Under the leadership of this first Chinese Managing Director, Adidas China has achieved continuous growth for six quarters. If we go back to two years ago, few people could have predicted this transformation. At that time, as a new leader, the challenges in front of Xiao Jiale were clear: regain the market and rebuild trust.

Adidas Greater China Managing Director Xiao Jiale

"When it's your turn to play, the game has already started"

One day in October 2021, Xiao Jiale received a message from Adidas, inviting him to lead Adidas Greater China. Xiao Jiale said, "My first reaction was what contribution could I make if I returned?"

Xiao Jiale first became associated with Adidas in 2002. At the Beijing Summer Olympics six years later, Adidas became an official sponsor, and Xiao Jiale witnessed the brand's most glorious moment in China. While reminiscing, he also said that it is most normal for a brand to experience ups and downs, just like all athletes and clubs.

Was it a difficult decision to take on the responsibility in a difficult period? Xiao Jiale gave us a very practical answer: "I simply didn't have time to worry."

Before the epidemic, China was Adidas' most important and fastest-growing market. For Xiao Jiale, the adaptation after his return is not even the top priority. Time is tight, and he must implement the recovery strategy as quickly as possible, "because when it's your turn to play, the game has already started."

In March 2022, Xiao Jiale moved from Hong Kong to Shanghai. For the next three months, he lived in the same hotel every day. Like many Shanghai residents at that time, Xiao Jiale was trying to find a balance between remote work and daily life. In addition, as the "big family head", he also had to take care of the physical and mental health of his colleagues and maintain the team's original intention and fighting spirit.

"Some friends asked me what I was thinking during the most difficult months. I carefully recalled, and actually, there was nothing special. If I had to say, I was just thinking about how to bring the company back on track."

Within half a year, the practical Xiao Jiale quickly completed the team building while adapting to the new role. By the end of 2022, Adidas China had been fully prepared in product design, marketing, channel expansion, and supply chain.

Xiao Jiale likes playing football. When being interviewed, he often unconsciously uses football terms as metaphors. He described this return as "like Zidane returning to Real Madrid" and "the role changing from a player to a coach", and he described the position of Managing Director of Greater China as "a coach of a team."

Xiao Jiale playing football with colleagues

"(As a coach) You need to have the talent and leadership to inspire and influence the entire team. There are many outstanding players in this team, and they have rich experience. And my task is to use my passion, belief, and unwavering attitude to influence the entire team, and to deploy strategies and tactics."

Xiao Jiale's philosophy influences everyone in the team, but what is most well-known to the outside world is his "China for China" strategy.

80% and 50%

Shortly after Xiao Jiale became the Managing Director of Greater China, it was reported that Adidas' internal meetings began to be conducted in Chinese instead of English. At that time, many insiders regarded this as a signal that Adidas was reattaching importance to local business.

Adidas is a global brand, but Adidas CEO Bjørn Gulden does not believe in a "global consumer". Adidas originated in Europe and thrived in football culture, which is very different from the habits of consumers in China, South Korea, India, Japan, or the United States. He believes that the company has ignored this point for a long time in the past.

Xiao Jiale loves sports. In his opinion, Chinese people regard sports more as a lifestyle rather than mainly for competition. "Just like our new brand proposition 'YOU GOT THIS', we hope everyone can enjoy the pure pleasure that sports bring". Young consumers' love for niche sports such as mountain climbing, skiing, and diving is increasing, and they also have high requirements for the professionalism and fashion sense of the corresponding products.

YOU GOT THIS

If we further subdivide, consumers in third- and fourth-tier cities are also very different from those in first- and second-tier cities. Adidas used to focus on the latter.

However, in recent years, in addition to opening brand centers and flagship stores in first- and second-tier cities, Adidas has also increased its efforts to expand sales channels in emerging cities in China's third-tier and below. For example, it has joined hands with HLA to launch the Future City Concept store. These stores comprehensively consider the needs of local consumers and provide high-quality and cost-effective products suitable for the local market. Within this year, Adidas has opened nearly 400 new stores.

In December 2024, Adidas' eighth brand center in China - the Chengdu Taikoo Li Brand Center - opened

In the post-epidemic era, the value of offline stores is being rediscovered. Relying on brand centers and flagship stores located in the core business districts of first- and second-tier cities, as well as diversified stores in cooperation with a large number of distributors, Adidas has formed a pyramid matrix store layout, which can reach more consumers more directly and widely.

"Now more than 80% of our products in China are made in China, and more than half of the products are designed in China," Xiao Jiale revealed. This proportion has seen a leapfrog improvement compared to two years ago.

In the past two years, Adidas has frequently collaborated with Chinese designers, including trendsetters such as Edison Chen, Dingyun Zhang, SAMUELGUÌYANG Yang Guidong, and Caroline Hu. In addition, Xiao Jiale himself led the cooperation with the China Literature and Art Foundation. "I think there is still a lot to be explored in Chinese design. In the past, the value of Chinese design and Chinese designers has been seriously underestimated." One of Adidas' "Search for Roots of All Things" series is inspired by China's intangible cultural heritage. Xiao Jiale revealed that so far, these locally designed products have received a good response in the market.

The首发 series of adidas Originals in collaboration with Edison Chen was unveiled at the CLOT 2024 Spring/Summer Fashion Show during Shanghai Fashion Week

"From shoes to clothing, from fabric selection, functional improvement, design innovation, to the pattern, size, and how we tell stories, how we interact and resonate with local consumers, these are all things that the team has spent a lot of time and effort to transform and change. This is also the most important point that I think in the past one or two years, especially after I came back."

The Shanghai Creative Center, which "has really started to exert influence in the past two years", has a 35-person designer team and more than 100 creative personnel. With the support of Adidas' upgraded supply chain, the design center can turn the tastes of Chinese consumers into products within a time period of "several weeks to three months".

"Before the supply chain upgrade, once our popular products were sold out, they were sold out, and we could only miss these opportunities. Today, for many of our products, once the market response is good, we quickly replenish the order. (We can do it) within one month, six weeks, and there will be another batch of supplies to the stores. For the third batch of products, we can modify some details and put them back on the market." Xiao Jiale told us.

Shenzhou International has 10%-20% of its ready-to-wear orders from Adidas. In the past two years, Adidas has invited this textile giant to visit factories around the world. The two have jointly developed a more digital, refined, and automated production line. Now Shenzhou International can produce products in the "fastest 24 hours". Ma Jianrong, Chairman of the Board of Directors of Shenzhou International, said, "Sports, after all, are about enthusiasm."

In this way, Xiao Jiale negotiates cooperation with distributors, discusses orders with factories to temper his patience; communicates product details with designers, decides on the cooperation styles for each time, and determines whether to mass-produce and when to mass-produce; observes the specific sales volume of products, when to replenish goods, and when to launch new products... Such "meticulous management" is precisely what Adidas needs most at present.

Timing is still everything

Bjørn Gulden likes to expose the analysts' careful thoughts of "asking one more question" at the earnings conference. More often, he will predict the direction of investors' questions in his statements. At the earnings conference for the third quarter, Gulden revealed a number that surprised investors: The annual gross profit margin is maintained at 51%-52%, and this number will continue to increase next year.

This number is crucial for Adidas. This not only means that the discount rate caused by high inventory is controlled, but also means that the company is producing more popular products in the market - mainly light sports outdoor and lifestyle products with higher gross profit margins (that is, the "fashion category" in the usual sense), and these products are mostly sold at full price.

Of course, Adidas is not Zara, it is difficult to get inspiration from the runway shows of each season to "predict" the fashion trend, and it cannot complete the performance by frequent discounts and promotions. But Adidas has a wealth that no fast fashion brand can compare to - a rich professional sports product library.

"We have always been a brand that designs with athletes as the core," Xiao Jiale described the gene of Adidas, "only the best for the athlete". This gene has been planted since the brand was founded - the prototype of Adidas' iconic three stripes comes from the shape of the football shoelace tying method, which can improve the fit between the shoes and the feet, thereby improving the performance of athletes.

In September 2023, Ethiopian female marathon star Tigist Assefa broke the women's marathon world record at that time wearing Adidas' lightest racing shoes in the brand's history, ADIZERO ADIOS PRO EVO 1

How to turn the brand's sports gene into a popular style is another question worth millions, and it is also a question that Adidas must handle carefully.

In today's sports market, interest, fashion, and professionalism can all become consumer decisions, and the usage scenarios of a product are also infinitely extended. Externally, although Adidas divides products by professional sports and trendy fashion, Xiao Jiale believes that the complete cycle of "born on the field, shining on the runway, and popular on the street" is the ideal product life cycle. "I believe we are the only brand that can bring sports to the street, but also bring street trends to the sports field."

After Xiao Jiale took office, this vision is gradually becoming a reality.

In November this year, with outstanding capabilities and outstanding performance in brand strategic planning, business management, etc., Adidas Greater China Managing Director Xiao Jiale was awarded the "Annual High-End Brand Influential Figure"

Adidas is implementing localization strategies in various regions around the world. So far, the Chinese market is still the market with the greatest autonomy. People close to Adidas told 36Kr that Xiao Jiale and the team "have almost real-time conversations with the German headquarters, just like we chat with office software."

Timely communication ensures the accurate timing of product launch and discontinuation. Adidas does not lack professional sports products and also has strong fashion resources. Timely balancing the market supply ratio of trendy and sports products to keep consumers "always have the greatest interest in our products" is crucial for Adidas in transition. Xiao Jiale took the special shoes designed for Olympic épée athletes as an example, "It is definitely professional, but we have not yet seen the timing for it to become popular (in China)."

Such precise inventory management is reflected in the warming of the second-hand market transaction. In the first half of 2024, Adidas' share on STOCK X increased by 68%, and the transaction volume of sports shoes increased by 88%.

With in-depth local consumer insights, a fast and flexible supply structure, and real-time information communication, after the rapid return of Adidas China's business to the right track under the leadership of Xiao Jiale, it is continuing to move towards the next goal.

"If the products designed in China can go out of the Chinese market, to Asia, and even to Europe and the United States, that would be the happiest thing for me."

This Hong Konger who has spent the most youthful 20 years of his life at Adidas, has a shining light on his face at this moment, "This is a thing that we should all be truly proud of - to let the world recognize the charm of Chinese culture."