Sportswear brands unfazed by 'Qiaodan' lawsuit

(Ecns.cn)--The legal fight between retired NBA superstar Michael Jordan and Chinese sportswear company Qiaodan Sports has dominated headlines in recent weeks, yet the issue doesn't appear to be a concern for other similar companies in Jinjiang of Fujian Province, where Qiaodan Sports is headquartered.

The six-time NBA champion filed the lawsuit in February, accusing Qiaodan Sports of deliberately misleading Chinese customers about ties to him.

"Qiaodan Sports has built a business off my Chinese name, the number 23, and even attempted to use the names of my children, without authorization," Jordan told AFP, explaining "I think Chinese consumers deserve to be protected from being misled, and they should know exactly what they are buying."

"I don't know, and I don't care," Lai Hongyu, owner of a shoe store in Jinjiang, told reporters from the Southern Weekend when speaking of the case.

Lai's store is full of shoe brands which sound very similar to big names like "Adidas" and "Nike" and have attracted buyers from many countries, including Iran, Columbia, Nepal and Russia.

With the company ANTA Sports Products taking a leading role in terms of popularity and business performance, Jinjiang is home to a number of sportswear brands such as Xtep, 361 Degrees, Peak and EREK, many of which have been advertising heavily on the sports channel of state-run China Central Television (CCTV 5).

Mainly because of these companies, Jinjiang, a city of 1.6 million residents, shocked the nation with a total GDP amounting to 107 billion yuan and a GDP per capita exceeding 66,000 yuan in 2011.

Not surprisingly, the branding strategies of such successful local companies have also come under the spotlight.

The "Hitchhiking Strategy" is widely used, according to the Southern Weekend, which involves the naming of a company after a big brand. Addnice and Adivon, two local sportswear brands, have acquired reputations by sounding similar to Adidas, for example.

Celebrity charm is also a commonly used tactic.

As early as 1999, ANTA invested 800,000 yuan to name Kong Linghui, a former Olympic table tennis champion, as its advertising spokesperson, which resulted in a 13.4 percent increase in its market share in 2000.

ANTA's strategy was soon followed by many other brands, and stars from various industries have since become frequenters to Jinjiang, turning it into a veritable city of celebrities.

The companies are also willing to spend handsomely to place advertisements on TV and in magazines and newspapers.

During the World Cup in 2006, one-fourth of the ads on CCTV5 belonged to Jinjiang brands. "Out of 10 yuan in revenue, a Jinjiang company would spend six yuan on advertising," Chen Daishan, a local resident and deputy general manager of a Xiamen-based brand management company, revealed to the Southern Weekend.

And even though the ads are not as fancy as some famous international brands, they cater well to people living in third and fourth-tier cities. "Ads with too many innovations may confuse consumers in small and middle-sized cities," Chen explained.

Going public is believed to be another common way local companies raise funds.

In 2007, ANTA, Xtep and 361 Degrees went public on the Hong Kong Stock Exchange, which in 2010 respectively brought in 7.4 billion, 4.5 billion and 4.3 billion yuan in revenue, making them the top three sports brands in Jinjiang.

Statistics show that over 40 Jinjiang-based companies have gone public, with some making full use of the opportunity to gain both fame and fortune. Yet some small-sized companies only launch IPOs as a remedy for financial straits, which has sometimes resulted in bigger losses.

"Sports brands in Jinjiang are experiencing hardships and facing greater challenges now," pointed out Liu Kangjun, board chairman of an investment consultancy company.

In regard to revenue, Qiaodan Sports is still a second-class brand, but the company pocketed 1.7 billion yuan in the first half of 2011.

Though the recent lawsuit has presented a tough challenge to the company's efforts to apply for an IPO, Lu Yao, a deputy marketing director of a Quanzhou-based sports products company, still feels confident about the future of Qiaodan Sports.

"The dispute may be resolved by compensation in the end, which Qiaodan Sports will be able to afford," Lu said.