Foreigners in business: adidas Japan

August 15th, 2011By Category: Work Tips

When Nadeshiko Japan won the Women’s World Cup in Germany last month, there were plenty of cheering adidas staff watching the game in the early hours of the morning at Shibuya. As one of the team’s sponsors, the German sportswear maker could share the thrill as it regains its power in the Japanese market after the events of March 11.

Heading up adidas’ operations in Japan is Paul Hardisty. Originally from Melbourne, the affable Aussie joined adidas in 1999 when he went to Indonesia. He spent five years there, followed by a brief stint in India, and then South Korea, where he was from 2004 until 2010.

He took up his current assignment in Japan in January 2010. As president of adidas Group in Japan, Hardisty also oversees Reebok.

GaijinPot sister site Japan Today editor Chris Betros visits Hardisty at the adidas offices in Tokyo’s Shinjuku Ward to hear more about the business.

How big a market is Japan for adidas?

If we don’t think of markets in clusters, but as countries, then I’d say Japan is the 3rd biggest market after the U.S. and China. It’s a very important market for the adidas Group.

How much autonomy do you get from HQ in Germany?

For the last few years, the group centralized many functions, but now we see a move toward more autonomy with defined guidelines. That being said, we have always had brand guidelines. Generally, though, the more success you have in a market, the more autonomy you get.

How many brands does adidas have?

The adidas Group has numerous brands that cover a broad spectrum of sports and lifestyle pursuits. The group’s largest brand is adidas, of course. Within adidas, we have the three sub-brands of Sport Performance, Originals and Sport Style. Along with Y-3, high-end casual wear designed by long-time adidas partner Yohji Yamamoto, this enables the adidas brand to appeal to a vast array of consumers both on and off the pitch. Reebok (which includes Reebok CCM Hockey) is our “Fitness & Training” brand. “Fit for Life” to put the fun back into training. Although handled separately within our organizational structure, Rockport and the global leader in golf, Taylor Made-adidas Golf (which includes adidas Golf and Ashworth) round off a very strong portfolio of brands within our group.

Do your branding campaigns overlap?

Over the years, our adidas branding campaigns have been kept separate. This year, for the first time ever, we launched our “One-Brand” campaign. The group felt it was time to bring the sports performance and sports style together. Now you’ll see our current campaign, “adidas is all in.” It’s the largest brand campaign in adidas’ history. It was due to launch in March but we delayed it because of the disaster. But since we already had the media booked, we started with an initiative which we called “We are all together.” That was a TV campaign carrying messages of hope from global & local athletes and was received very well. Then in April, we launched the one-brand campaign, which is basically an integrated campaign, covering in-store and online marketing.

How was business before and after the earthquake?

January, February and the first two weeks of March were fantastic for us. Our sales were well up on the previous year. After the quake, we were lucky that we could start delivering by the following Tuesday. April was a very settling month. After Golden Week, we started to see some recovery.

How did adidas respond to the disaster?

I mentioned the “We are all together” campaign earlier. In addition to that, the adidas Group donated 500 million yen worth of products to people in need. Donation boxes were placed in our retail stores to encourage people to donate money which will also be used for people in the greatest need. Besides that, the entire sales proceeds from Charity T-shirts were donated to the relief activities for the victims, undertaken by Save the Children Japan, an international non-government humanitarian organization established to help children.

As things get back to normal, what are some unique characteristics of the Japanese market?

The Japanese consumer for our product want a bigger selection of items, whereas in other countries, consumers are a bit more focused. We have our own design center here which services a big part our apparel range requirements. That is now moving into our global range – they want more and more of what’s going on in Japan. When I was in Korea, for example, we were always tapping into the Japan range. Currently, we have seven concepts going into the global range.

Color preferences change more quickly in Japan than overseas. If you look at the European range, the color block can be very simple, maybe one or two-tone. If you go to the Imperial Palace and watch joggers, they are wearing multi-colored compression wear. Their shoes match their shorts which match their tops. It’s a style. Sometimes in Australia, you’ll see joggers wearing their favorite ripped T-shirts and shorts they’ve had for 20 years.

What are the challenges of doing business in Japan?

For me, the Japanese market is huge in comparison to what I have experienced in the past. That being said, it is not as dynamic because it has been relatively flat for sometime. The “game” changes in a market like Japan. It is a market share game and for me, doing things differently and better than our competitors will give us that edge we need to still grow. The Japanese consumer is much more demanding when it comes to service standards and the “finish” of the product. Historically, they were prepared to pay whatever it costs but in many sectors of the market this is shifting and consumers are looking for more value for money and actually spending less.

Japan’s population is aging much faster than any other country. For many industries this is an issue, but I personally think is opens up opportunities. We need to tap into these opportunities first or better still create them. Japanese culture is group oriented and people tend to work together rather than exert their individuality. In an office environment, this is not ideal as I am sure there are many who have new and creative ideas and management styles but are reluctant to express them.

Where do you see opportunities?

We need to tap into the 30-plus demographic and the even younger market, which in Japan is shrinking. Hence, we have our new brand NEO for the 14-19-year-olds. We need to connect with younger consumers better, and that’s where our digital and online campaigns come in.

How knowledgeable are your customers?

I’m positive that some of the consumers who come into our stores know more about our products and our competitors’ products than our retail staff do. They do all their research online and they know exactly what they are looking for when they come in. Our challenge is to meet those needs.

A common complaint among foreigners is that they can’t get big sizes in shoes.

We are always having this discussion with our product guys, and we are offering a wider size range for certain categories. You can go into our Shibuya store now and get an adidas made to order with your name on it and preferred color. It takes about three weeks to deliver and you can have a lot of fun designing your own in the process.

How much of your business is footwear?

Footwear is still the biggest business and the rest is apparel and accessories but less than the other markets. In Japan, it used to be a bigger sneaker market than it is now.

Where are your products made?

We buy some of our range from adidas global and those are made in various countries such as China, Indonesia, Vietnam and Turkey. In China, we have domestic trading companies – Japanese owned and run companies in China – and they maintain strict quality control and double check the process.

How many stores do you have in Japan?

Currently 69. We have several more planned for his year and more to come over the next four years.

How do you decide locations?

It’s a science. I use external companies that specialize in choosing locations for stores. They can actually estimate sales plus or minus 5% and they are very good. We know roughly what areas we want to go to and we leave the recommendations to them.

How many staff do you have in Japan?

We have about 1,650 staff under adidas/Reebok and there are another 500 or so between Rockport and TaylorMade adidas (for golf wear).

Is adidas a popular company to work for?

Every year, we receive many applications. We have a program that takes a handful of graduates and we try and place them around the company. For senior level people, we use recruiting firms or promote within where possible.

What is your management philosophy?

Very simple: “Do unto others as you would have them do unto you” – treat people how you want to be treated. I also like to challenge the status quo of everything. The world is changing constantly and if business is to keep up with this, business needs to change also. For me, management and leadership are different. Managers manage resources. Leaders lead people and get results through others. A leader can set a vision and people will follow. A leader wants others to develop and succeed. This is what I personally aspire too.

Are you a hands-on boss?

I don’t delegate a task, but a responsibility and I empower staff to do what they need to do. I just make sure that we are all aligned and on track.

Do you often visit stores?

I like to visit stores and should do more because I like to see what’s happening. Maybe I spend too much time in my office.

Do you encourage a work-life balance in the company?

Well, we have regulations on turning lights off to get people out of here, more so now while we try to conserve power. I’m trying to simplify the organization and eliminate unnecessary functions and activities. I try to get out between 6 and 7 each evening.

How do you like to relax?

I used to play a lot of cricket, tennis and golf, but my hobbies now are fitness activities. I do personal training in the park 3 mornings a week, some boxing and cardio. Relaxing is sitting in front of the TV or on a beach/by the pool when on holidays.

How many pairs of adidas shoes do you own?

You don’t want to know. I continually have to clean out the closet because I have so many adidas & Reebok shoes. It’s because there is so much cool stuff coming out and I see it every day. You always want to have that new color or style. The marketing guys expect me, as the head of adidas, to not be wearing a pair of worn-out shoes from 1974.


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