The Chinese Revolution?

If you like basketball shoes, you'll like this post...if not, no need to read on...it's pretty long.

If you're watching the Eastern Conference Finals and you grew up a sneakerhead, you've definitely noticed what I notice- there are some weird shoes on the court.

Now, Chinese brands have been trying to crack the US basketball market for around four or five years...but haven't even made waves.  The brand Li-Ning, most-notably, has dumped a ton of money into the US hardwood market.  They opened a US design facility in Portland, OR a few years ago in an effort to woo some Nike or Adidas talent or fill the void left by And1 slipping into the abyss of bargain basement footwear.

They got a lot of talented people to take the cash grab and help their effort, but in the last calendar year, Li-Ning gave up on that idea and closed down the Portland office.  They also had a consultant group out of the Northeast attempting to help them define their design language or the tough-to-crack US basketball market.  I can tell you that the designs weren't the problem, the perception was.

Li-Ning started its push by signing Baron Davis a few years ago as their guy. The problem was that Davis' best basketball was behind him, and few people want to buy a shoe based on the endorsement of a chubby point guard (as a chubby point guard, I know this). They continued by grabbing up a handful of players who were younger and cheaper than the Superstar...and during the 2012 All-star game weekend, you probably noticed a ton of guys wearing weird brands...but many weren't in the All-Star game; they were in the other activities.  The dunk contest makes sense as a way to pimp a brand; but when guys like Dominique Wilkins, Dee Brown and Michael Jordan helped brands and specific shoes break into the market while winning dunk contests, that market was much different.

If you like or dislike Nike as a brand, it really doesn't matter at this point- they simply own this market.  It seems that no matter what other players try to break in; no matter who merges with whom...the Swoosh gets stronger. In the late-90s, when I worked for Puma, we had Vince Carter under contract and a few friends of mine designed Carter's shoes.  They a bit of a splash as Carter became a player to watch by winning the dunk contest and becoming an All-Star.  This was an era in which big shoe deals were withering away; Nike, Adidas, Brooks, Converse and upstart brands alike had all spent too much cash in an effort to get the right guy in their shoes...so many players, especially young guys, were getting product-only deals.  But Puma bucked that trend in an effort to re-establish itself as a performance brand in America after about 15 years in the bargain bin.


They went after Vince Carter with a bag of cash and a signature shoe that was his.  As he grew in popularity, he decided to use a wrinkle in his contract to worm out of it- He claimed the Pumas injured him, which they did not, and started wearing every brand but Puma as litigation ensued. He ended up wearing Nike Shox...and Nike gobbled up more market share.

I believe Nike's percentage of the market share at that point hovered around 60%...and brands like Puma had smart marketing people and handsome designers (like this guy) trying to figure out how to get a crumb off of that sizable pie...but Puma couldn't do it...and really neither has anyone else been able to do it.

Reebok, Adidas and others have made runs at Nike with a product here or a product there...Nike's technology went from the air unit, to tensil or zoom air, to multi-pressure air bags, to shox, to 360 air and finally back to a combo of Nike's old, defunct patented air unit and some rubberized EVA with brilliant marketing behind it...and the Swoosh marches on.

So now, Nike sits atop the basketball market with an iron grip on it's 90-something percent share of a market that I care less-and-less about as I grow older...but that market still spends a ton of dough.  Chinese brands know that.

The trickle down of the urban fashion basketball market to the suburban performance basketball market is a continuous cycle of Nike dominance. Sure, some of their shoes are expensive, and some are kinda silly...but if you play, you know that Nike generally offers a lot in its bread-and-butter $90 product because the factories know that they'll order a ton of them as the smaller brands...even larger, smaller brands simply can't match Nike's numbers; so Nike gets better deals on materials, molds and everything in the chain than their competitors.  But, Nike doesn't own their factories...so the Chinese brands thought there was an opportunity there, especially as Nike and other brands began the exodus of China in favor of developing nations (Vietnam, Bangledesh, Korea) who were hungry to earn the shoe company's business.

The factories that might have once produced a ton of basketball shoes for Adi, Reebok, Puma, Nike, Under Armour, And1 and anyone else were making more product for the growing Chinese market and less for an American market seeking higher quality and continued lower prices.  Some of the brands that we're seeing emerge from China are little more than factory brands...others, like Li-Ning are trying to chase Nike and do what Nike does, but with a mostly-Chinese model.


Dwyane Wade wears Li-Ning shoes now...after years with Converse (Nike owned), then Jordan Brand (also Nike owned)...and some pretty lucrative contracts, Wade decided to step away from the America first market.  Wade's last contract with the Jumpman was worth around $10 million.  Nike continues to try to replace Jordan and re-capture that magic, but can't do it with just one man; as we talked about earlier, the market is too different...the toothpaste is out of the tube; and it's been done.

Wade got another lucrative deal with Li-Ning, but didn't get nearly as much cash up front (according to reports)...BUT, got a share of ownership of the brand that made its international launch at the 2008 olympiad in Beijing.  Since it's not an American company, there are no published reports of what he got; it's estimated he received between 2.5% and 5% of the brand...and based on Li-Ning's current growth, Wade's seemingly shortsighted switch (from an American sneakerhead's perspective) could make him over a half-billion dollars in the next decade...the richest endorsement deal ever.  Bigger than Tiger or MJ's deals with Nike.

Now, will Li-Ning grown like they forecast? If their lack of success in the American market is any indicator, the answer is a resounding no. But the Chinese market is booming.  The problem is, lots of the numbers in the Chinese market are still funny numbers.  That said, for a guy that's clearly on the downhill of his career, Wade's move wasn't too much of a gamble.

Sidebar note to DWade: If you don't fall after every drive, you might not get every foul called...but you might prolong your career a bit and stay off of the IR.


The main reason I wrote this piece wasn't Wade though...it was the Pacers' George Hill. Hill had a small deal with Nike prior to this February when Chinese brand, Peak offered him his own shoe.  I haven't found how much money was exchanged...but his shoes are pretty nasty (in the opinion of this old shoe designer and former sneakerhead).  But, they accomplished one thing- they got my attention.  In the sea of swooshes and stripes on an NBA court, the ugly asymmetrical design of the GH3 Peaks got my attention.

So I did some research and found a press release of Hill's new relationship with Peak Shoes...and this is a direct cut-and-paste:

'PEAK SPORTS signed George Hill from NBA INDIANA PACERS in January, 2013, and offering George Hill special PEAK professional basketball sneakers. This shoe is actually re-engraved version of the classic basketball shoes with PEAK's unique LOGO "Peak Triangle. In the first game of this season 2013 with his lucky PEAK basketball sneakers, George Hill made his career in the first three pairs of 15 points, 10 assists and 10 rebounds, rate the team to victory over the 76ers. George Hill said: "I hope Peak boots bring more luck for him, like Shane Battier, Jason Kidd who won championship."'


That kinda says it all, doesn't it?

Now, my Mandarin is pretty shaky...but the guy or gal that wrote/translated this press release should probably not pen press releases for the US market in English.

Methinks that if I represented George Hill, I'd try to get that quote expunged from the interwebnets or at minimum have it replaced with something that I actually said.

I've heard Hill speak a few times- he doesn't sound like a dumb guy...and he surely doesn't refer to himself as "him"...at least not in the interviews that I've seen.

So, will we all be wearing Chinese brands in the near future as we seek our first three pairs...errrrrrr triple double on the hardwood? Doubtful. The leap for most Americans from wearing Chinese-made product to openly-Chinese-owned brands seems like a chasm that won't be bridged in the near future.  But, if one of these brands can fool a few thousand people (give or take a million) for a year or two with clever marketing, they might be able to break in; hasn't happened yet, obviously.

As I've always said, let the best product, in a fair market win.

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