Thursday, April 29, 2010

Asia's sporting goods industry converges on Taipei

Treadmills, elliptical bikes, foosball tables and even baseball caps with magnetic sunglasses are on display at the Taipei World Trade Centre Nangang Exhibition Hall.

The April 29-May 2 TaiSPO -- Taipei International Sporting Goods Show -- has drawn 385 manufacturers, including 147 in the lucrative fitness equipment sector.

Taiwan counted more than $1 billion of exports in sporting goods in 2009, including $405.25 million in exercise and fitness equipment. Brands like Johnson Health and SportsArtFitness are exhibiting the latest in treadmills with screens that transform the exercise machine into a virtual reality tool. Johnson’s products include a screen that offers images of the Olympic National Forest in Washington State, for example.

The Lausanne, Switzerland-based World Federation for the Sporting Goods Industry used the occasion to stage its first manufacturers’ forum in Taiwan.

One foot in front of the other

Former Adidas executive vice-president and director Michel Perraudin pinch-hit for Frank Dassler, the general counsel for Adidas and part of the famed German sporting goods clan. Perraudin was the World Federation for the Sporting Goods Industry president from 2004-2007. Now a private consultant, he serves on the board of the Lausanne, Switzerland-based WFSGI.

Here's what he had to tell the media at the Taipei International Sporting Goods Show April 29 about how the industry is evolving.

“There is a shift now from working conditions to environment, to green products. This is something that is going to stay with us. Puma announced a couple of weeks ago that they would get rid of the outdoor boxes and replace the boxes with bags that are totally recyclable.

“You now have the bio-cotton which is coming, natural fibres which are evolving. However it is interesting, if you make an ecological balance between natural fibres and synthetic fibre, the synthetic fibre has strangely enough a better ecological balance than the natural fibre.

"If you were to decide tomorrow to replace all the synthetic fibres through wool or cotton, it could not happen. Our world would not have enough surface to generate all this and feed the population.

“Recyclable material is used for outsoles, to do sporting surfaces, playgrounds, it is obviously something where innovations will continue to evolve.

“However, there is one truth which is inescapable, the consumer at the end of the day until now in the vast majority of the cases is not buying because it’s ecological, but is buying because of the price, because of the look or the perceived quality of the product. It’s only up to now a minority of consumers that are making a buying decision which is based on ecological considerations.

“What is driving the industry is style and innovation, innovation on the hardware side. When we talk about footwear, it’s more innovation in the fabrics than it is innovation in technology. The footwear industry has not seen many technological innovations in the last 20 years. Nike is still using air, Asics still using gel. No real revolution in the footwear side of things. Much more development on the fibre side, the fabrics of the apparel side.”

Towards a no-sweat world

While it took western countries took two centuries to go through an industrial revolution, former Adidas executive vice-president Michel Perraudin says China is amid a 20-year industrial revolution.

Low wages and high productivity are China's hallmark and the reason why the biggest brands source their goods from mainland factories. Many of those factories can trace their heritage to Taiwan, where Asia’s top sporting goods companies are exhibiting their wares at the Taipei World Trade Centre through May 2 at TaiSPO -- the Taipei International Sporting Goods Show.

The convention kicked off April 29 with the World Federation for the Sporting Goods Industry’s 2010 manufacturers’ forum.
Executives from major retailers and brands spoke to an audience of manufacturers representing companies from Taiwan, Hong Kong and mainland China.

The world may be a long way from being sweatshop-free, but the international campaigns by various non-governmental organizations have made the issue of working conditions in sportswear factories top-of-mind among both consumers and the WFSGI.

Here's what two executives had to tell the manufacturers.

Intersport International Corp. business unit manager Markus Rist:

“No matter the size of the brand, it’s a requirement of the market that you have to fulfill. It’s not only a trend, it’s an absolute given fact. We are forced to comply with those unique regulations... the EU, the U.S., every market has more and more regulations. The sole objective of those regulations is to protect the consumer. This is nowadays so sensitive that nobody wants to burn his fingers. If you want to be a supplier to any of us, it’s a minimum requirement that you have to be able to fulfill and guarantee.

Vice-president of sourcing, quality and logistics New Balance Jim Sciabarrasi:

“The biggest issue that we have seen in the small manufacturer is a reluctance to embrace the compliance requirements. The requirements are not costly. For example, many small manufacturers believe the best scenario is to work many, many hours a week, but a very basic compliance requirement is to limit the amount of hours a week. When that happens, productivity goes up because quality goes up and there’s less retraining of workers who leave the small factory because they don’t like the life of working every single day, so many hours... The productivity more than makes up for the other requirements.”

* * * * *
One of the world’s biggest athletic footwear makers is Taichung, Taiwan-headquartered Pou Chen Group. The 1969-founded company uses its home base for research and development. It’s forecasting production of 250 million pairs of shoes in 2010, up 50 million from 2009, for brands like Adidas, Nike, Reebok, New Balance, Rockport, Asics, Timberland and Puma. PCG and subsidiary Yue Yuen Industrial Holdings have a workforce of 400,000 people at factories in China, Indonesia, Vietnam, Bangladesh, Mexico and the U.S. PCG claims it makes one-in-seven pairs of branded shoes in the world.

PCG, by its sheer size, has been criticized by various non-governmental organizations for treatment of workers. Corporate social responsibility executive Eric Chi claimed the company has made progress with ventilation fans and air conditioning in factories, daycare centres and “spiritual consulting centres”, birthday parties for employees and ergonomic furniture “to reduce the fatigue and exhaustion of employees.”

Friday, April 16, 2010

Peacock plucked in Vancouver

Speaking of NBC, the Peacock network lost $223 million on its Vancouver 2010 coverage, according to the April 16-released quarterly report.

That’s $27 million better than the worst-case scenario, but $23 million worse than the original $200 million estimate of GE CEO Jeff Immelt.

NBC paid $2.2 billion for the Vancouver/London package in 2003 when the advertising market was rosier. A not-so-funny thing happened on the way to Vancouver, called the recession. The last time the Olympics were in a North American time zone was Salt
Lake 2002 when NBC made a $70 million profit.

The Games did bring $800 million in revenue to GE and the ratings were 14% higher than Turin 2006.

ESPN/ABC and FOX are readying to bid for Sochi 2014 and Rio de Janeiro 2016. Will NBC match their offers? s

Scranton 2010

I don’t know how much it costs to get your product mentioned on The Office.

That's because the going rate was censored from a document obtained under Freedom of Information. But it did reveal the cost of the British Columbia Olympic tourism campaign on NBC was $17.255 million.

The You Gotta Be Here campaign starred Michael J. Fox, Sarah McLachlan and Steve Nash. I revealed that it also included a product placement on The Office.

The Feb. 11 episode began with Michael Scott calling a Vancouver hotel to confirm a reservation for the Olympics. The Office also produced a web-exclusive video with a special song about Canada in general and B.C. in particular.

This is the new normal, folks. Because of digital video recorders, commercials are being skipped and advertisers’ money is being wasted. The only way to ensure bang for the buck is by being inside the content.

No peeking: VANOC hiding finances until the fall

VANOC has stopped issuing quarterly reports, which is contrary to the pledge made in November 2002’s Multiparty
Agreement. It said, should Vancouver win the Games, the organizing committee “will provide the parties with quarterly updates to the business plan within 60 days after the end of each quarter of each fiscal year, including forecasts of revenues and expenses."

CEO John Furlong said the rapidly shrinking VANOC workforce has no time to do reports anymore. Its last was for the quarter ended Oct. 31, 2009. The next and final report is coming in October.

“We’re in a completely different frame of mind, we’re trying to reconcile everything, we don’t have the time for that now,” he said after an April 16 Vancouver Board of Trade speech. “We need to get everything sorted out, you’ll get a full final report.

“We’re down to the smallest team we can have, we need to get out of business so that we have the best financial legacy that we can. Our team is infinitely smaller, we don’t have the resources we had through the Games to do that.”

The Games were a creative success that looked spectacular on TV. Even Mother Nature allowed the sun to shine for several days. But VANOC isn’t willing to let the sun shine on its financial figures until the fall. Until then, we can only speculate on the size of the International Olympic Committee and British Columbia government bailouts to make the books balance.

When we peel back the curtain, we’ll find that the recession made this the least successful Games since Montreal 1976.

Saturday, April 3, 2010

Coming atcha in 3-D!

Why did I not line-up with the masses at the VANOC asset sale in Delta?

The 200,000 items were bought by the provincial government as part of its bailout of VANOC and Games-used high definition TVs were listed at $199 for Sharp 19-inch and $499 for Panasonic 40-inch.

HD TV is a relatively new innovation in North America and it will already be obsolete by this Christmas when 3-D high definition TVs will be among the must-have items.

In fact, 3-D is the next revolution in movie and TV experience. You can thank Fox and its Avatar. We've come along way from Dr. Tongue's 3-D House of Stewardesses.

NCAA Final Four games are being offered in select movie theatres around the United States in 3-D.

An April 3 match between Manchester United and Chelsea was shown in 1,000 pubs around the United Kingdom in 3-D. Sky TV, which is owned by Fox, will offer a 3-D channel with English Premier League soccer matches to 2 million homes this fall.

Coming this June - in time for the FIFA World Cup - is ESPN's 3-D network. Only in the United States? Pity.

Broadcasters and film producers have solved two problems with 3-D. It'll allow them to generate new revenue with premium ticket and subscription prices from viewers who want a better experience. 3-D also gets them one step ahead of counterfeiters. Hardware makers like Panasonic, Sony, LG and Samsung are also salivating at the potential for the next generation of the boob tube.

Panasonic's pavilion at the Vancouver 2010 Winter Olympics showcased Olympic ceremony footage in 3-D. Vancouver's Olympics were the first Winter Games in full high definition from the source. Sadly, they will also be remembered as the last of the 2-D broadcast era.