China is now the second largest consumer of sneakers in the world.  With rapidly growing middle class and a population 4 times that of the USA, China is on track to one day become the world's largest consumer of sports sneakers.  To discuss the current state of the sneaker industry in China and how it may change in the future, we sat down with George Hsu, an industry insider in China who splits his time between China and the US.  

What got you into sneakers in the first place?

I’m a huge NBA fan, and when you talk about NBA fans, their greatest loves tend to be sports cards, jerseys, and the sneakers NBA players wear. Collecting sneakers has always been my greatest passion, and I especially love Air Jordans. The shoe that really got me into sneaker culture was the Air Jordan 4, which is also my all-time favorite Jordan shoe model.

Who typically buys premium/limited edition sneakers in China?

It depends, premium shoes are typically not limited by quantity; if someone wants to spend their money on quality shoes, they’ll go for the premium sneakers, so the customer base is pretty diverse. As for limited edition sneakers, usually people line up for days just to get a pair limited sneakers. The retail price of limited sneakers is actually pretty reasonable, but only if you can actually get it - it's mostly hardcore sneaker fans that buy the limited editions.

How much do they cost in China vs the West? What major brands sell the best in China?

From my personal experience, international brands like Nike and Adidas are more expensive in China when compared to the US, which is interesting because the fact is that the shoes are mostly made in China. I’d say Nike sells the best in China: they have the largest market share in China, followed by Adidas.

How do limited edition sneakers made exclusively for the Chinese market do?

Nike and Adidas recently designed a number of Chinese edition sneakers: for example, the Nike Air Foamposite One “TianJin” and the Adidas ZX Flux “Shanghai” are both exclusive to the Chinese market, and they sold quite well. I think these kinds of China only limited editions are very important for winning over Chinese consumers because it makes them feel that these Western brands are paying a lot of attention to Chinese consumers – it makes Chinese fans feel like the companies are accepting and appreciate Chinese culture.

What kinds of advertising is done to sell shoes in China? Are endorsements popular?

Most footwear advertisements are actually done through social networking sites like Weibo.  Companies advertise in some sports magazines as well. Most Chinese brands also advertise their products on sports channels and during sports games.

Endorsements are becoming more common. The growing popularity of basketball has helped many NBA players get moneymaking deals not just for sneakers, but also for beverages. One of the most well-known deals is Dwyane Wade’s deal with Chinese athletic sneaker firm Li-Ning, signed in September 2013. It’s a long-term contract worth an estimated $10 million annually.

What kind of Chinese companies are making premium sneakers in China? Will they try to sell them outside of China?

As far as I know, Li-Ning may be the only Chinese brand that has drastically altered their shoe quality, but that alteration is really only for the Way of Wade line; the rest of its shoes aren't really premium sneakers. Li-Ning actually already entered the US market a few years ago through their online shop, but their sales have been bad; they haven't done well.

Where are premium sneakers typically bought (e.g. specialty stores, department stores), and do you see that trend staying the way it is?

In China, if you want to buy a pair of premium sneakers, you absolutely need to go to a department store or the official online store. It’s the only way to get an authentic pair because other sources aren't safe; there are so many fakes floating around on Taobao (A popular Chinese eCommerce site similar to Ebay).

What do you see the sneaker industry in China looking like in 10 years? Will people mostly buy Chinese made sneakers or will they buy western brands? 

The Sneaker business in China is growing rapidly. With a population at least 4 times the size of that of the US and a fast growing middle class, China is now the second largest sneaker consumer in the world.

In my opinion, I think both Chinese brands and Western Brands will have a significant increase in sales and market share in the next 10 years thanks to China's fast growing middle class, and I believe that the trend of preferring Western brands is going to continue. However, there are many areas in China that are still developing; those areas would be good areas for Chinese brands to target, but I think Western Brands like Nike and Adidas will continue to be the most influential athletic footwear brands in the Chinese market.

Is there resale/consignment of limited edition shoes in China?

On Taobao there are thousands of resellers; it causes huge problems for real sneaker collectors trying to get a pair of limited edition sneakers.

Do you see advertising remaining the way it is, or do you see it changing in some way?

I believe footwear advertising will remain the way it is for two reasons.

First, sneaker heads in China are still a relatively small minority; for now, it isn’t cost effective to publish big advertisements all over the country. In fact, it's often not needed for raising awareness: sneaker heads in China typically independently search for information about new sneakers and often find out about them before there are any advertisements.

Second, most western brands already have a very strong reputation; any kind of serious advertising is probably going to be limited to Chinese brands looking to build a brand reputation.

What are the current platforms for Chinese Sneaker heads? How is the community and how do fans interact?

Chinese Sneaker communities are not as active as the US sneaker communities, but there are still some major Sneaker events from time to time. LongQi (L7) is the most famous sneaker event in China. The event is basically a chance for Chinese sneaker heads to show off their collection, share their thoughts, and see and learn about sneakers. LongQi is by far the biggest sneaker event in China.

Original title by Jackson : An Interview with George Hsu on China's Sneaker Industry