Amid the US-China trade war, President Donald Trump has imposed a 10% tariff on the $300 billion of Chinese imports. But these tariffs will not affect the shoe prices says Adidas CEO, Kasper Rorsted. The US consumers will not face any kind of change in the tariffs, and the company will continue to buy their products at the right price from the US even after the second round of tariffs set on the Chinese products.
On Thursday, the Chinese Central Bank announced the official reference rate for the Chinese currency as 7.0039 Yuan per dollar. This has been the weakest rate since April 2008. The US Treasury Department called Beijing a currency manipulator after they saw the Yuan drop at 7 per dollar on Monday.
Rorsted has said that if China lowers its currency rate, it might have significant impacts on the earning of the business, as much as 25% of the company’s earnings come from the Chinese market. Thus getting into a currency war with China would put everyone in a losing situation.
“It’s been more or less stable for the last three months, but that is one where we believe nobody can win,” Rorsted said.
Adidas has reported that there could be higher quarterly earnings in the Chinese market on strong sales. The company has also predicted more growth in the second half, but with the current currency war, it would get difficult for the company’s business.
The company has although changed their manufacturing landscape in the past four years before the trade war had even started. According to these changes, what is manufactured in China is for the Chinese market is their new strategy, and that is the reason they are less exposed to the trade war, and the effects of it. But the other companies in China would see an impact on their prices.
“However, of course, the normal U.S. consumer that buys normal shoes in whichever store in the U.S. will be impacted because a lot of shoes are still being manufactured in China,” he said.
The online direct sales of Adidas grew as much as 37%, while in its different regions, only China saw double-digit growth. The closely-watched gross margin of Adidas has increased by1.2 percentage points. This currency war will slow the economy down, Kasper Rorsted, CEO of Adidas has predicted.