Nike Will Shift More Orders To China

Just like the upward sloping hook on Nike logo, under the pressure of the economic crisis, Nike's orders in China have recently risen.

Yu Yuan group, the world's largest sports shoe manufacturer (00551, HK) said yesterday that its revenue in the current fiscal year ended September 2009 will be higher than that in the previous fiscal year. Nike, one of the main customers of the company, has announced an annual increase of 6% from November to April.

Cai Qineng, chairman of the Yuyuan group, believes that the global financial crisis has led to the closure of small factories, and the group's orders have increased.

Data released earlier showed that Yuyuan group's 1~11 monthly income was $4 billion 660 million, up from $3 billion 840 million in the same period last year.

The disappointments in the US and Europe make Nike seem to be particularly interested in manufacturing in China.

Nike's second quarter earnings report released last week showed that net profit growth of 8.8% was better than analysts' expectations, but overseas sales growth was slightly weaker than expected.

Meanwhile, Nike's total future orders for shipment from December to April are $6 billion 700 million, 1% less than the same period last year.

Earlier, it was pointed out that Nike will shift more orders to China due to the closure of some of its plants in Thailand, and will increase 5 production lines in Fujian by the end of this year.

Although reporters did not receive a clear response when they interviewed Fujian authorities, Fujian's Nike foundry predicted that Nike and other sports brand orders would tend to be centralized.

For Nike's action, the industry analysis shows that China's mature production chain is one of the reasons why Nike can not afford to leave, and the large number of orders sent to a certain scale enterprise can reduce costs and increase profit margins.

Yesterday, just 20 million yuan of production orders signed by the Zhejiang garment manufacturing company responsible for "daily economic news" said that their current order has been able to enable next year's production to maintain until July, "I also outsource the work to 9 processing plants production."

In Guangdong, Zhejiang and other major export provinces, the number of export enterprises has decreased significantly this year, but the number of exports has increased year by year. This also means that a large number of large scale enterprises have mastered a large number of export orders.

Guangdong customs survey data show that in the first three quarters of this year, Guangdong exported toys 4 billion 470 million US dollars, an increase of 6.3% over the same period last year. What is particularly striking is that the number of export enterprises has decreased significantly. According to the size of shipper units, 2191 enterprises with toy export performance in Guangdong in the first half of September this year, 1391 fewer than last year, only 60% last year.

Yang Jing: editor in charge