The Adidas Group has struck a wide-ranging deal with the Wanda group, the largest real estate conglomerate in China, to support the development of football and basketball as well as the Adidas brand's retail business in the country.
The Wanda group has been increasingly investing in the sports market in the last years. Last year it acquired a majority stake in Infront Sports and Media, a leading Swiss-based sports marketing company that holds some broadcasting rights for the World Cup. It became one of the top sponsors for Fifa, the international football organization, and it bought a 20 percent stake in Atletico Madrid, which went on to reach the finals of the Uefa Champions League. Earlier this month Infront signed a long-term partnership with Fiba, the international basketball federation.
The investments come after the government publicized a target to turn sports into an industry worth about 5 trillion yuan renminbi (€135.2bn-$150.0m) in China and last year it went ahead with its strategy to develop football in China, separating the Chinese football association from other sports organizations. The country's president is notoriously eager for China to organize the World Cup.
Adidas and Wanda did not say in what way exactly they intend to push football and basketball in the country, but Adidas said that it was expanding its own grassroots activities in China. A three-year partnership launched with the Chinese Ministry of Education last year aims to reach about 20 million students in 20,000 primary and middle schools.
David Beckham was in China last week for a kick-about with students at a primary school in Guangzhou and to open the Adidas brand's first football store in Teemall, in the same Chinese city. Adidas describes itself as the overall market leader for the football category in China, which remains far less influential in the country than basketball. Nike is the sponsor of the national football team as well as the 16 teams in the Chinese Super League. Anta, the leading Chinese sports brand, has announced plans to invest substantially in football as well, focusing on grassroots development and affordable price ranges.
The Wanda group also bought the Ironman brand along with its parent company, the World Triathlon Corporation (WTC) in August 2015. Another part of the latest agreement is that Adidas will be the sole sports brand sponsor of two Ironman events in China, in Hefei and Xiamen.
At the same time, Wanda will apparently help Adidas to open Sportswear Collective and other large-format stores through its shopping malls and other commercial properties. The German company says that the deal will help it to expand into smaller cities, which is a major part of its objectives for China as part of the Creating the New strategy. It aims to raise the number of Adidas and Neo stores to between 11,000 and 12,000 by 2020, up from 9,000 in 2015, and to spread its retail presence to 2,200 cities.
More broadly, the company aims to deliver Chinese sales growth of at least 50 percent in the same interval, with a broader target to become market leader. Greater China generated a turnover of €2,469 million for the Adidas and Reebok brands last year, up by 18 percent in constant currencies, with an operating profit margin amounting to 35.1 percent.
The deal with Wanda was announced on June 28 after talks between Herbert Hainer, chief executive of the Adidas group; Colin Currie, managing director for Greater China; Wang Jianlin, president of the Wanda group, who is known as China's richest man; and Lincoln Zhang, president of Beijing Wanda Cultural Investment Group.