Peak builds sports brand in US

Updated: 2012-05-11 18:08

By Wang Jun in Los Angeles (China Daily)

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It takes nerve to launch a basketball brand in the United States, birthplace of the sport and its biggest outfitter, Nike.

Peak Sport Products Co of China made the jump in 2010, one of the few non-American companies to do so.

Peak builds sports brand in US
NBA player JaVale McGee and his mom Pam McGee choose Peak shoes in a shop. [Provided to China Daily] See video

Founded in southeastern China’s Fujian province in 1989, Peak spent its first two years as an original equipment manufacturer, or OEM, for various footwear brands.

In 1991 it rolled out its own eponymous mark, featuring a red triangle logo that symbolizes a mountain.

In the two decades since, Peak has grown into a major domestic sporting-goods brand in China, along with rivals Li-Ning and Anta.

The company was listed on the Hong Kong stock exchange in September 2009, six months before bringing its wares to the US market.

"We are like Nike in China," Su Jia, CEO of Peak Sports USA, said in the subsidiary’s office near Los Angeles International Airport.

"We have complete lines in every product group, such as tennis."

"Here in the US, we focus on basketball products," he said, underscoring the view that the sport invented in 1891 by Massachusetts educator James Naismith is an integral part of American culture.

Saturation in the Chinese market drove Peak to expand abroad, Su said. In recent years, domestic sports apparel and equipment companies have seen growth slow down amid rising costs for raw materials, labor and rent. In turn, some companies have cut low-performing stores from their retail lineups.

By the end of 2011, the Peak retail network totaled 7,806 outlets, according to the company’s website. This year, Peak will trim that number to around 7,000.

In contrast to Peak’s massive operation in China, company veteran Su has been cautious in establishing a US footprint for the brand. He has overseen the opening of just two bricks-andmortar stores so far — one in the Westfield Culver City mall near his office, the other on Melrose Avenue in Hollywood.

According to Su, Peak wanted to try out different store types — the mall location and the stand-alone, street-level variety. The first working prototype was opened in December last year, the second by a delegation from Fujian during Vice-President Xi Jinping’s visit to Los Angeles in February.

The evening after the Melrose store opening, Peak Sports USA’s chief operating officer Grant Zhou brought a welcome sign for Xi to the Staples Center, knowing Xi would be attending the game between the Los Angeles Lakers and the Phoenix Suns. On the court, Lakers guard Andrew Goudelock wore a pair of Peaks with "Welcome Vice-President Xi" emblazoned on them.

"We’ll evaluate the stores’performance before opening up more," said Su, the only Peak executive sent to the US from China. Other company officials have been satisfied with progress so far, he added.

Peak is also looking into online sales channels, especially those dealing with sporting goods, having recognized that these are better developed in the US than in China. (The company’s US website currently offers a limited range of T-shirts and hoodies, but no footwear.)

While US retail operations remain in development, Su is focused on Peak’s two other priorities — NBA player relationships and research and development.

Peak established ties with the National Basketball Association in 2006 by hiring Shane Battier, then with the Houston Rockets, as its global spokesman.

Peak now supports 16 NBA players from 12 teams — the Lakers, Rockets, Chicago Bulls, Denver Nuggets, Golden State Warriors, Memphis Grizzlies, Miami Heat, Milwaukee Bucks, New Jersey Nets, New Orleans Hornets, Orlando Magic and Utah Jazz.

"We have a high standard by which we select our players: ‘Play well and live with character,’" Zhou said.

As an example, the Peak executive cited Golden State forward Dorell Wright, who grew up in an underprivileged part of Los Angeles. "He has the heart to give back," Zhou said.

For 12 years, Wright has been involved with a program that serves thanksgiving dinner to homeless and disadvantaged people in Oakland, California. Without the turkeys he donated through his D Wright Way Foundation, last year’s holiday meal for more than 2,000 would have been impossible, given local government budget cuts. And Wright and his girlfriend, Mia Lee, also brought in 2,000 jackets and coats donated in a drive for the homeless.

Zhou, who is 32 and 6 feets, 3 inches tall, enjoys his job working with Wright and other NBA players. In fact, he chose his English name after NBA star Grant Hill, whom he met on a trip to Oakland from China in 2000. A year earlier, Zhou, as a college sophomore, had won second place in a TV contest sponsored by the league.

With NBA players outfitted in Peak, "the price of our product is not low", Su admitted.

"The shoes are probably 10 to 15 dollars less than Nike’s, just because we’re a new brand here."

R&D, he stressed, is a strong force to position the brand in the mainstream US market.

"All of our R&D team members have worked for major brands like Nike and New Balance before, so they know the local market very well."

Currently, about half of Peak’s products on the US market are directly from China, with no alteration. The company is working to lower that portion to around 30 percent.

"US consumers pay more attention to visible technology," explained Su, who has worked for Peak since 1993. An example is the Nike Air cushioning system, which is placed on the outside of the shoe so customers can see and interact with it. Shoes designed in China typically put the cushion inside.

Another diference, according to Su: Chinese consumers prefer only small amounts of bright color on their shoes and don’t readily accept anything other than leather. Their US counterparts don’t have a problem with synthetic materials, however.

Peak has a big advantage over its home-country competitors in that it has its own factories, five in three provinces — Fujian, Guangdong and Jiangxi. Other brands depend on OEMs.

"This allows us more freedom and efficiency to make experiments," he said. It also gives Peak a leg-up to develop basketball products specifically for US consumers.

The company aims to raise that share of its product roster to 30 percent from the current 20 percent.

Peak, barely out of its rookie season on these shores, "will grow one step at a time", Su said.