Is China’s Peak The Next Nike?

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Just twenty years ago, would anyone have thought it conceivable that major, non-Chinese NBA stars would be sponsored by a Chinese brand? Probably not. But Chinese athletic brand Peak is going very public. In many ways.

Quanzhou-based Peak Sport Products was founded in 1988 after its founder’s deal to produce for Nike fell through. Ironic, because according to a 2008 Credit Suisse survey, Peak now ranks alongside Nike (and Li Ning) as one of the three most recognized sports shoe brands in all of China.[more]

Boosting that brand recognition are the brand’s 5,600-plus stores, 95% of them in smaller cities across the nation. The brand’s bold (and expensive) moves to sponsor major NBA stars such as Ron Artest and Dikembe Mutombo also aid its profile.

The company’s 2009 net profit is expected to approach $88 million. But Peak’s recent Hong Kong IPO was a setback: the brand’s shares closed down 17% on their first day of trading. Experts warn that Peak’s profit growth rate is unsustainable, fueled largely by recent expansion that will have to level off.

But with China’s sportswear market predicted to grow by nearly 20% annually for the next half decade, the Peak brand is well positioned for growth. The question will be whether it can manage the (sorry) feat of cracking America’s multi-billion dollar market. It’s something Chinese brands like Li Ning, the nation’s leading sports brand, have not been able to do as well as their European counterparts such as Adidas.

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