Why Can PEAK Shoes Become Popular?

A small known city in Fujian province is famous for its three things: China's oldest seagoing ship, a large mosque and a group of exotic sports shoes enterprises.

At least 10 companies in Quanzhou produce sports shoes, 4 of which are listed overseas.

They started from the brand foundry for Nike and Adidas, and then sold their own brand sneakers in the two or three tier cities and were successful - they were collectively referred to as the "Fujian tiger".

Their abrupt rise has broken a generally accepted principle: in China, brand goods can only be reliably sold in the first tier cities.

The Fujian tiger is second to none in the Peak Sport Products Co Limited. The family business is now among the most famous sneakers in China.

The company was listed in Hongkong in September last year, and its market value is now $1 billion 400 million, with recurrent revenue growth of 60% or more per year, and sales are expected to exceed $500 million in 2011.

When the company made such a phenomenal growth, most of its foreign brands were in a difficult position, of which Adidas's sales fell by two digits.

The story of PEAK highlights two points. First, the importance of the Chinese consumer class is increasing. Two, a number of competitive domestic brands have come to the fore.

If you want to know how PEAK developed into a powerful sports shoe enterprise, the key is to see where to buy PEAK shoes.

In big cities like Beijing, Shanghai and Guangzhou, you probably can't find a PEAK store.

On the contrary, PEAK is expanding rapidly in the two or three tier cities and even the county seat.

In these markets, China's biggest sports shoe companies, as well as Nike and Adidas, are afraid to set foot in it.

PEAK is fighting guerrilla warfare, giving big cities to powerful foreign competitors, instead of occupying the inland market - where income has already broken through an important juncture.

People in these poor areas now have the resources to go on holiday, buy home audio and video systems and brand shoes - and they also have the desire to do this kind of consumption.

PEAK currently has more than 6000 retail outlets and is expanding at 3 new stores a day.

In contrast, Nike and Adidas each have about 3500 stores in China.

PEAK's goal is to get the first mover advantage by opening sports shoe shops in the main commercial areas across the country.

Most of the other domestic brands also take this strategy and expand at a similar speed.

In the hands of PEAK's local rivals, Lining and Anta are the most mature.

Most observers believe that the two or three tier city market will be saturated within 5 years.

This will lead to a major reshuffle, and the most powerful and most rational companies will win.

PEAK and other companies believe that they will be ready to enter these top markets in Beijing and Shanghai.