Throughout the small economic blips of the last 10-12 years (the mini recession in ‘99, SARS in 2003), it has been generally accepted that the sporting goods industry has been recession proof.  And the logic is easy:  no matter what disposal income one has, they still need to continue to do their sports, running, basketball, etc.  It’s important for mental as well as physical health, particularly during stressful economic times.

It would seem that the current Great Recession has certainly bucked that trend.  Nike’s Q210 results show the sportswear giant down 4% from last year, and adidas group earnings are down 7% from its previous year.   Granted, these drops are not as large as many other companies, but with financial targets usually exceeding 10%, such a drop is very damaging.  The sports brands are progressively becoming healthier, though, with Nike reducing their inventory by 10% and adidas reducing by 8%, putting them in a healthy position to introduce new and interesting product through 2010 and 2011.

The US, though, is still having difficulty recovering, as the 14.8 million unemployed can attest to, but other key markets around the world, while not out of the recession, seem to be getting out quicker.  Asia has a particular amount of potential, with two of the world’s leading economies, China and Japan.  China’s expected GDP for 2010 is up 46% from 2009 to 9.5%  Japan is planning to be back in the black this year with a 1.1% GDP, after being down last year by more than 15%.

The question is:  when will consumer trends get back up to pace, or, even more importantly, simply improve a little bit?  The answer may be:  in the US? Not for a while.  But Asia, after only a small blip, is still cruising.

The fact is that brands in the US export products that Asia desires:  basketball is China’s number one participation and spectator sport (except when the World Cup is on), running is positively enormous, as you can see from participation numbers for the 2009 Singapore (over 50,000), Hong Kong (over 24,000), Tokyo and Beijing (over 30,000) marathons, and snowboarding in Korea and Japan is unsurpassed – and they draw tourists from all over Asia.

As Americans, it’s time to open up our eyes a little bit, understand the needs of consumers overseas.  In the short term, it will kick start our economy.  In the long term…we might learn something.

Last week, while waiting for a Portland State University men’s basketball game to start, I surveyed the court, very interested in which Player Edition footwear Nike had bestowed upon my alma mater’s team.  From a sports marketing point of view, a company says a lot about themselves and the players and teams they sponsor by the shoes supplied.  In this case, it was a bit of a mish-mash:  2009 models, 2008 models, team shoes, customized iconic shoes, shoes with different technologies and heights.  I tried to figure out who the superstars on the team were by what they were wearing (I couldn’t).

My friend, Terry, and I started discussing global marketing strategy, specifically U.S. companies operating in other countries, until we landed on Li Ning, the industry-anointed “Nike of China.”

Li Ning was a gymnast who won six medals (three gold) in the 1984 Summer Olympic Games, then went on to start his namesake footwear and apparel company in 1990.  They are the largest competitor to the foreign brands (Nike, adidas, Reebok, New Balance, although in their internal market share computations, they call it the “Luxery Sports Market”, effectively eliminating the local brands, such as Li Ning).  Li Ning dominates the poorer Tier 3-6 cities in China, their quality is notably poorer than the foreign brands, and they operate on essentially a copycat marketing strategy, in terms of design, corporate logo (it looks a lot like a swoosh) but also in terms of office placement.

Looking for brain drain from Nike and adidas, Li Ning has had a design office here in Portland, Oregon for about two years (officially, they opened the office in January 2008, but they have been hiring designers away from adidas and have had teams from Beijing visiting the city for over two years now).

Last week, Li Ning opened their flagship retail store next door to their Portland office, a Badminton Store – their first in the U.S., their third globally (after Hong Kong and Singapore).  I dropped by yesterday just for a look, and two things struck me:  First:  the Pearl District is a trendy area of converted warehouses to upscale lofts and apartments, scattered with bars, restaurants, as well as high-priced law and real estate offices, and not much of a shopping destination.  Is this really the right place for a badminton store?  Second:  I have been to many of Li Ning’s retail doors in Shanghai, Beijing, Wuhan and Guangzhou, and the quality of the product in the store seemed to be much improved. Maybe there is some hope for them yet to break out of that “cheap brand” image.  Not if they don’t fix a few of their major problems first.

First of all, I get that it’s cheaper to operate a purely experimental retail store right out of the U.S. office – it’s cheaper.  And I also get that it’s very important to hold true to brand positioning and open a Badminton Store (they sponsor numerous International Badminton teams).  But did they not do their research?  I bet I could count on one hand the number of badminton players who live in the Pearl.  Within 10 blocks are two major gyms, a 24 Hour Fitness and an L.A. Fitness – neither has badminton courts, but both have basketball courts.  They also sponsor national basketball teams Argentina (’04 Olympic Gold Medal winners) and Spain (’06 World Champions).  The front page of Li Ning’s English website highlights their NBA sponsored athletes, Baron Davis, Shaquille O’Neal and Jose Calderon.  Their message seems to be somewhat disjointed.  It seems that as a company, Li Ning has invested quite a bit to be associated with basketball (the most popular sport in China).  They couldn’t leverage this as they entered the U.S. market?  Is Badminton going to be the hot sport of 2010?  I don’t quite think so…..

Aside from this, the layout looks like a sporting goods store – not cool, not trendy, not a destination.

So, how should Li Ning enter the U.S. market?  The consumers in China and the U.S. are very, very different.  The perception of Chinese goods do not have the same stature as, say, Italian brands would have in the eyes of Americans.  And there is such a high number of competitors facing Li Ning in the US on the price-sensitive level, such as Vans, Puma, LA Gear, private label brands, that whatever they do will require long (long, long) term planning.

I know from talking with company employees from Beijing that Li Ning doesn’t actually believe they can walk into the U.S. and make a serious dent.  It would seem, though, that someone didn’t tell that to those who opened the Portland Badminton store.  It looks like Li Ning’s first public step in entering the U.S. market may prove to be their last.

Basketball is arguably my first love.  I love playing ball, watching ball, and now, I’m coaching ball – the 5^th Grade Lions of Laurelhurst Elementary School.

I only played basketball recreationally, so I never received proper coaching.  But once I started playing in organized leagues in Hong Kong, I started reading, watching and practicing in an attempt to improve.  My play was initially ugly and unrefined.  Over time, though, I did improve.  I got to learn my spots on the floor and where I belonged.  I also developed a solid free throw line jumper and how to be a strong defender.   My teams won a few championships, and I averaged 20/10 on some teams.

I believe that a person shows their true colors on the basketball court.  Are they leaders?  Supporting cast?  Complainers?  Blue collar workers?  Dirty players?  Watch someone play ball, and you will know the kind of person they are after only a few minutes.

However, this rule doesn’t apply to ten year olds….or does it?  Our first game was Saturday, and we lost.  Bad.  38-6 bad.  There were a variety of reactions.  Some cried, some giggled among themselves, some didn’t seem to notice.  Others, on the other hand, furrowed their brows, trying to analyze why the other team was superior.   One particularly gifted kid started talking strategy at half time.  Amazing.

So maybe the “true colors” hypothesis does apply to all levels of the game.  But this can apply to something else:  that this basketball team of young players can also be reflective of any group in any organization.  There are those who are knowledgeable, those who are driven, those who are there for the paycheck and those who are there, but should not be.    And whenever we’re in an organization, we don’t always get to select who we work with/for or who works for us.  The trick there is to understand everyone’s level at any particular game, their motivation for being there, how to make them better, and how to get them to do what you want.

Working in Asia, it was extremely rewarding working across global, regional and local colleagues and counterparts to execute projects and strategize.  It’s essential to get the support of key stakeholders.  But it’s also a challenge to understand what makes those people tick.  And if one cannot attain their support, it can be a challenge to yourself to produce a better proposal or business plan, even if, in the process, it’s understood that there may be other priorities more important for the team.

So, am I smarter than a 5^th Grader?  Well, I’d like to think so.  But I’m still learning from them.  They are teaching me how to become a better coach and a better manager.  They are teaching me how to understand different people, personalities and egos.  I’m looking forward to seeing how they develop by the time the season ends in February, as they face both wins and losses.  More than anything, though, I want them to learn (and love?) the game that has given me so very, very much.

I feel like a foreigner here.  Don’t get me wrong, I was born and raised here, where I am currently sitting, in the cold Portland, Oregon November (well, it’s cold to me).  But I haven’t lived here in years.  Fourteen years, to be exact.  I’ve spent a bulk of that time living in Hong Kong, with some stints in Shanghai, China and Ueda, Japan.  And, working for one of the major sporting goods companies in the area, I would come back for work every few months.  So, I am aware of my surroundings, but at the same time, it’s all brand new.  Portland has changed.   The United States has changed.  For a while, I would come back and it would feel like the twilight zone:  your life continues, develops, progresses, but the place you left doesn’t.  It remains stagnant.  But that was an illusion.

Living in Asia was great, though.  Once there, we all felt like we were accomplishing something; the fastest growing economic region in the world.  We focused on results, and were not bogged down by politics, as I’ve heard so many companies in the U.S. are.  You could make a decision and see it executed on the street the next day.  It was very, very rewarding.

It also helped that I was working with a sport I loved – basketball.  Market research was sneaker shopping in Harajuku or joining a pickup game in Sathorn Playground.  But that’s the key, isn’t it?  Doing something you love, work isn’t hard.

But even since I left China almost 8 months ago, China has changed.  I hear it from my friends, I see it in the news.  The youth in China are growing up with a sort of pride that has never been seen before.   My opinion is that Chinese are in a struggle with each other.  This was a necessity, stemming through Mao’s China, the Cultural Revolution, but there are also issues with those from different regions (understandable, we Oregonians can’t stand Washingtonians – sorry Washingtonians!).

The insecurity can be seen every time China is criticized.   If the U.S. government is criticized, they would either ignore it, or say something to the effect of “they have the right to say what they want.”  The Chinese government, on the other hand, will demand an apology and that so-and-so be fired.  Somewhat like a petulant child.

It could also be seen during the Beijing Olympic Games.  It was so imperative that China be better than everyone else, to show how great they were (insinuating that they had this inferiority complex previously).  And granted, they did a fantastic job.  I was in Beijing during that time, and it was probably my most enjoyable trip.  However, I’m sure that Great Britain will approach their motivation for executing their version of the Olympic games in quite a different fashion.

However, during President Obama’s recent trip to Asia, I heard mentioned on NPR that during the town hall meeting, that the youth in attendance were not the shy, quiet students of generations past.  It seems that they are beginning to feel their entitlement, understanding their place on the current world stage, and their place in history.   It seems that China is finally coming of age.  I suppose, the question is, who is next?  North Korea?  India?  But that’s speculation for another time.

All right, enough of politics for now.  I’m used to the short, crisp prose of corporate email, but it certainly is a nice change.