Adidas extends sports push

People walk through an Adidas store in Huaian, Jiangsu province, Nov 30, 2014. [Photo/CFP]

Adidas AG signed an agreement with billionaire Wang Jianlin's Dalian Wanda Group Co to help develop soccer and basketball in China as the German company seeks to capitalize on increasing interest in sports and fitness in the world's most populous nation.

The sneaker maker will also sponsor two of Wanda's Ironman Triathlon events in China this year, according to a joint statement.

It is joining forces with a company that this year signed a partnership agreement with soccer's governing body FIFA, and in 2015 bought a 20 percent stake in Spanish team Atletico Madrid.

Adidas is making an increasingly rare commitment to China by a consumer brand at a time when food companies, drinks makers and luxury labels are struggling. China has pledged to build a 5 trillion-yuan ($752 billion) sports industry by 2025.

"We see more of our mass consumer segment actually wanting to buy Adidas products," said Colin Currie, Adidas's managing director for China. "Chinese consumers want to trade up and buy international sports brands like adidas and they're willing to spend on it."

Adidas on Monday opened its first worldwide dedicated soccer store, in the southern city of Guangzhou, and said it is doubling to 20 million the number of Chinese children it is training in the sport through a government partnership.

Chinese consumers with rising disposable income are increasingly shifting from local sneaker brands to the cache of adidas and main rival Nike Inc.

That comes at a time when many consumer companies and apparel brands are retrenching amid slower consumer spending and a government clampdown on excessive gift-giving by public employees that has stung apparel and alcohol makers.

"Chinese people are becoming more health-conscious and participation rates in many sports are increasing," said Cedric Rossi, an analyst at Bryan Garnier & Co. In addition to performance shoes, Adidas' fashion-oriented Originals and Neo brands are resonating. "They are fully benefiting from this athleisure trend," Rossi said.

Performance and sports-inspired shoe sales in China are forecast to grow from a combined $12.9 billion this year to $18.5 billion in 2020, according to Euromonitor International.

Greater China, which includes the mainland, Hong Kong and Taiwan, contributed more than a quarter of adidas's earnings before overhead costs last year and it is the company's most profitable market, Currie said.