Anticipating Nike, Wieden goes to China

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Wieden & Kennedy will just do it in China.

Even without a commitment from its cornerstone client, the creative hot shop is opening an office in Shanghai. The move plants the agency in an exploding market and sets up a rumble with Nike's roster shop there, WPP Group's J. Walter Thompson.

"Certainly, we have a goal to work with Nike in that marketplace," said Dave Luhr, Wieden's chief operating officer. But, he said, "My goal is not to oust JWT. There are certain projects in China [Wieden & Kennedy] can work on."

Frank Pan, Nike's Shangahi-based marketing director for China, said the apparel marketer is "exploring the opportunity [of working with Wieden], but JWT is doing a good job in China so there are no plans yet to move the account.

"We have to wait and see how their organization develops," he said of Wieden's new office. "This is not a hurried decision for Nike."

Wieden Shanghai hired as director of corporate development: Richard Hsu, a retail-design veteran and protege of John C. Jay, a Wieden partner and co-executive creative director of the agency's Tokyo office. Mr. Luhr is recruiting a creative team and managing director, and expects to have 10 employees by year-end.

Wieden will also chase local clients, and is expected to announce in the coming weeks that it has been hired by two Chinese brands.

Luis Da Rosa, JWT group account director in Shanghai, said, "We are trying to do our best work for Nike, but frankly there isn't any intention to move the account, at least according to the client here."

Nike considers China a key growth market. The athletic-apparel and footwear segment there is expected to triple to $1.5 billion in four years.

Charles D. Denson, president, Nike brand, told analysts in March that as the Chinese economy grows at rapid clip, "our brand is becoming more accessible to a growing middle class. The retail landscape is beginning to expand with dedicated athletic-specialty space. ... Our brand is being embraced and accessed by a growing part of the population, and our business for the quarter was up over 70%."

At the moment, Nike faces an uphill race. Reliable market share data in China are hard to come by, but a local company founded by a former Chinese Olympian Li Ning dominates sales among all sports brands, with an estimated 20% market share, with both Nike and Adidas hovering around 10%.

competition intense

Nike spent $18.7 million on advertising in mainland China last year while Adidas spent $16.6 million, according to Nielsen Media Research.

Reebok, taking a page from Nike's playbook, signed the Houston Rockets' Yao Ming, after his Nike contract ran out.

Wieden's China challenge also is formidable. The advertising market consists of 80,000 widespread agencies, most small and offering basic services. Chinese companies generally view marketing as a minor sales department function centered on price promotion. Competition from multinational agencies is intense, and the few marketers that embrace branding tend to work with various agencies.

But Mr. Luhr professes Wieden's stoicism when it comes to building out its global independent network, currently with 500 employees and billings of $875 million in its Portland, Ore., headquarters and offices in New York, London, Amsterdam and Tokyo. "Shanghai won't be our last office," said Mr. Luhr.

contributing: rich thomaselli

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