Adidas to close only Chinese factory

Featured - July 23rd, 2012

Adidas AG is closing its only company-owned factory in China, the Wall Street Journal reports.

The German sporting-goods company was among the first to offer Western-branded apparel to China. According to a spokeswoman, Adidas will close its 160-worker factory in Suzhou as part of efforts “to restructure business in China and globally to ensure efficiency and leverage scale”. The factory will be closed by the end of October without any plan to reopen elsewhere. The company will source its products from existing suppliers and local Chinese manufacturers.

The sportswear market in China is being constricted by increasing competition. Nike Inc., which dominates the Chinese market, announced that sales fell 3.9% to $694 million in the third quarter of the fiscal year. Still, local brands are losing to Western names: Peak Sport Products Co. issued a profit warning for the first half of 2012, while Li Ning Co.’s profits fell 65% last year. Chinese sportswear brands said that climbing inventory levels and weak economic economic conditions are continuing to hurt them.