PEAK: We Are Willing To Make TOYOTA In Shoemaking Industry.

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

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

They started with brand subcontracting such as Nike (Nike) and Adidas (Adidas), and then sold their own brand sneakers in two or three line cities and were successful - they were collectively referred to as "Fujian tiger" (Fujian Tigers).

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

This principle is no longer applicable.

Peak Sport Products, one of the leading companies in the Fujian tiger, is now among the most famous sneakers in China. It is Sport.

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 the major 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 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 so.

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 PEAK's local competition, the most mature ones are Lining (Li Ning) and Anta (Anta).

The competition from China Dongxiang is becoming more and more intense. The company owns the sales license of Italy sports brand Kappa in China.

With extraordinary growth, China's current market value is higher than that of Lining, though Lining has a higher profit margin and a market share of two times the former.

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.

PEAK is unlikely to turn to shoes with the best quality and best performance in the future.

Xu Zhihua, chief executive of PEAK, said it would be nice to become a parity brand.

He asked, "what else do you want?

Is it the product that produces the most advanced technology or the biggest profit making enterprise?

We are willing to make TOYOTA (Toyota) in the shoemaking industry. "