WFSGI Handbook 2011 by World Federation of the Sporting Goods Industry

TITRE DE L’ARTICLE

OFFICIAL PUBLICATION OF THE

DEVELOP BICYCLE WORLDWIDE

A GLOBALIZING INDUSTRY BUNDLES FORCES UNDER WFSGI ROOF

retail

INDIA

How is internet affecting trade ?

Highlights of a resourceful country

HANDBOOK

WORLD FEDERATION OF THE sporting goods industry

1 WFSGI Handbook 11

Table of contents

Table of contents Main chapters & highlights

Message President

p. 2

Message Secretary General

p. 3

Corporate Responsibility – Towards collaborative efforts

p. 5

A worldwide business-driven platform Creating synergies among organizations What comes first - the sustainable retailer or the ethical consumer ?

The world of Retail – Trade on THE Internet

p. 27

Internet, social media and their impact on our business What do you think about... Past and perspectives of the Russian sporting goods market

Bike Industry – Develop bicycle worldwide p. 39

From local to global in 20 years - they have joined the WFSGI Interview with UCI President Patrick McQuaid Composites at the leading edge Electric bike trend brings drastic changes to bicycle sector

India – Highlights of a resourceful country p. 49 India Ready to score big in sports India Special Economic Zones - Engines of economic growth

Trade Cases – protectionism p. 58 Overview of global trade-restrictive measures in the footwear sector Origin-labeling in footwear, apparel and sporting goods in EU

AND GET MORE OUT OF YOUR PERFECT DAY

WFSGI Presentation

p. 66

Discover the WFSGI Services and benefits for WFSGI members Board of Directors csr Committee WFSGI Members directory Trade show calendar 2011 WFSGI National / regional organizations

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Published by : WFSGI headquarters / WFSGI / Maison du Sport International / Avenue de Rhodanie 54 / 1007 Lausanne Switzerland / Ph : +41 21 612 61 61 / Fax : +41 21 612 61 69 / www.wfsgi.org - info@wfsgi.org / Layout : Agence Pulsion / Printing : Print United / Cover : © istockphoto.com / All pictures in this hanbook are copyright protected. For more information contact WFSGI.

WFSGI Handbook 2011

MESSAGE PRESIDENT

Message Secretary General

MESSAGE PRESIDENT

Message Secretary general

By John Larsen, WFSGI President

By Robbert de Kock, WFSGI Secretary General

I am proud and pleased with the accomplishments of our board, our committees and our staff. On behalf of all members, I want to thank those who in 2010 devoted time and talent for the betterment of our industry. WFSGI is only as good as the collective work output of our members, which in turn, results in cost effective, practical solutions for industry problems. At its June meeting, the board formalized WFSGI’s Strategic Direction under an umbrella Mission Statement. To a large degree this document reflected the direction we have been on for the past several years. Even so, it has been most useful to agree on an exact set of words. These words will be used to guide the activities of the Federation over the next few years. While this document is a tool to keep us focused, it can and should be changed as the industry grows and changes. The Mission Statement summarizes our reason for being. Embodied in this three part statement, are concepts unique to WFSGI. No other organization in our industry can adopt this Mission. To be recognized as the world authoritative body and global voice for the sporting goods industry. To facilitate legally permissible communication and cooperation within the global sporting goods industry to enhance competitiveness and innovation. To promote sports participation and to facilitate access to affordable quality products which deliver improved benefits to athletes, consumers and society at large.

Our role is to build bridges, open communication lines and help solve problems. Agreeing on a Mission is one thing, executing against it is quite another thing ! We have placed a high priority on dealing with issues and opportunities relating to International Sports Federations and Sports Events. We have developed strong working relationships with many organizations, including the IOC, FIFA and UCI. Our role is to build bridges, open communication lines and help solve problems. International trade issues also have had a significant impact on our 2010 agenda. We have informally joined with the Chinese Ministry of Trade to combat questionable import trade practices adopted by the European Union, Brazil and others. Difficult global economic conditions combined with local protectionist politics establish fertile ground for these evolving barriers to trade.

We are considering hosting a session for the 2011 WTO Public Forum. Here our goal will be to advance the case for zero to zero tariffs on general sporting goods, which in turn will help make sports participation more affordable. We are focusing our Corporate Social Responsibility agenda on two of its ten components – Ethical Sourcing and Environmental Sustainability. A team of member specialists is working toward establishing a common carbon benchmarking system for the industry. Without industry agreement, we fear many different confusing and expensive systems will emerge. In a similar manner, another team is tackling the development of a unified approach to auditing factories to ensure social compliance. The goal is to improve efficiency, lower costs while maintaining or improving effectiveness. We are partnering with other trade associations and various NGOs to arrive at the best solutions for the industry. These initiatives are works in progress. We have begun efforts to eliminate duplication and expense between WFSGI and our National and Regional trade association members. We will sharpen focus on this work in 2011. We have learned through dialogue which took place at our Manufacturer’s Forum in April, that some suppliers are searching for a neutral third party approach to anonymously deal with kick back problems and other corrupt practices. These practices, where they occur, add cost and competitive challenges to the supplier base within our industry. We will lead this sensitive issue toward a satisfactory solution if consensus can be achieved. Finally, I want to warmly welcome the bicycle industry to membership in WFSGI. Applications to join WFSGI have been made by companies that account for the majority of this important segment of the sporting goods industry. We are proud that we are able to offer services that attract these companies to our membership. Best wishes to all for a healthy and prosperous 2011. ■

Dear WFSGI members, Dear readers, For the WFSGI 2010 was an important year as it was also our final phase of a three-year working plan. Today we are pleased to say that we have moved forward but we still have a long way to go. We therefore wish to thank all the WFSGI members for their trust and support in the last three years and we count on you for the coming period. With your inputs and support we have been able to bring performance to all our members, from the brands, via retailers to the manufacturers, and further efforts shall be made to improve. A special thank you goes to our Sustaining Members without whom we wouldn’t be able to perform the way we do today. A highlight in 2010 was the decision from the major bicycle brands to join the WFSGI. This situation has created a new dimension for our relations between the UCI and the industry and where a good collaboration is paying off for all stakeholders. In this handbook you will find several interesting articles around the bicycle industry and we specially thank the UCI and the new bicycle members for their openness in our cooperation.

We specially thank the UCI and the new bicycle members for their openness in our cooperation. Another focus for the WFSGI should be to bring more leadership and advice in sustainability, as companies will have more and more problems to go through the jungle of information and recommendations that is thrown at us via the different experts. What is the way forward in sustainability and where can the sporting goods industry align and focus on ? Unfortunately we are still working hard to find solutions with the Trade Committee around the anti dumping problems in Brazil and the European Union. This situation is costing our industry a lot of money but we hope that the third dimension with organizations like the IOC and

FIFA will support our actions in the aim to promote sport and physical activity. Today the prices in Brazil are so high that a footwear product is nearly double the retail price than in other regions. We thank the WTO, the national governments and the permanent missions for their support and leadership in our goal to eliminate these barriers for sporting goods products.

We are still working hard to find solutions with the Trade Committee around the anti dumping problems in Brazil and the European Union. With most of us having found the forward drive again and several companies gearing up it shall be obvious that, with our optimistic future, we should warn you to stay aware of possible back drafts that may occur from the economic crisis 2009. As the prognoses are good, that’s what we should focus on. This leaves me to wish you lots of reading pleasure and we are sure that you will enjoy the exiting contributions in our Handbook 2011. In the meantime we will continue to strengthen the WFSGI into the next level. To start that process I have the honor to wish you good health and business for 2011 and we are looking forward to seeing you at one of our meetings. With best pesonal regards, Robbert de Kock

■

WFSGI Handbook 2011

pics: salewa, maloja, zanier, indigosnow.de, hansi heckmair, michael müller

www.ispo.com

Corporate Responsibility Towards collaborative efforts

A worldwide business-driven platform By Dr. Olga Orozco, BSCI Managing Director

ispo – the international sports business network

The Business Social Compliance Initiative (BSCI) is a business-driven initiative open to retailers, importers and brand manufacturers across all sectors. Founded in 2003, the BSCI currently has 600 members. As a collaborative effort, the initiative offers companies the benefits of a common Code of Conduct and a single implementation procedure. This unique system standardises the requirements for the producers therefore avoiding duplication of efforts.

building activities for Chinese factories since 2009 and both entities continue to work on the practical compatibility of the two systems. From 2010, BSCI has furthermore been working with Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) and Social Accountability International on a public private partnership project in India. The goal of the project is to scale up CSR initiatives with the aim to converge codes of conduct and labour standards enabling local producers to implement sustainable employment systems. The project will be inclusive, involving the Indian government, international brands and other stakeholder organisations and initiatives.

The practical implementation of the Code is controlled by independent auditing companies. The results are in turn shared by the members in a common database, which prevents multiple auditing of the same supplier. Since the BSCI is based on a development approach, it aims at continuously improving the social performance of suppliers with follow-up measures such as training sessions.

Additionally we are actively discussing with other initiatives and companies (Rain Forest Alliance, GRASP, Disney, Fair Wear Foundation, Fairtrade, ETI and FLA), aiming at collaboration on different aspects, from shared training sessions to recognition of each others’ standards.

To drive critical mass on one common solution is possible.

BSCI SUPPLIERS AND MEMBERS TRAINED PER COUNTRY IN 2009

The BSCI experience shows that to drive critical mass on one common solution is possible. To achieve this, individuals and institutions need to be ready and willing to share tools and contribute for this goal, even if this may have an impact on their visibility and individual influence.

The whole BSCI process is accompanied by local and European stakeholder networks in stakeholder meetings and Round Tables, which bring their expertise to the initiative. Cooperation with governmental authorities, trade unions, NGOs and associations also facilitates social acceptance and independence of the system.

BSCI collaborates closely with other entities like the China National Textile and Apparel Council (CNTAC), who developed the CSC9000T management system for the Chinese textile industry. The BSCI and CNTAC perform common capacity

China (3109) Bangladesh (376) Vietnam (239) Europe (181)

(training to members)

Turkey India Brazil Peru

(153) (146) (14) (14) ■

Messe München GmbH, Messegelände, 81823 München, Germany, phone +49 (0)89 949-11 3 88, fax +49 (0)89 949-11 3 89, info@ispo.com, www.ispo.com, for trade visitors only

WFSGI Handbook 2011

Corporate Responsibility Towards collaborative efforts

Corporate Social Responsibility – Towards collaborative efforts

ETI’s collaborative approach to ethical trade By Martin Cooke, ETI Deputy Director

The Ethical Trading Initiative (ETI) was created in 1998 by a small group of visionaries who believed that collaborative action is essential to solving the problems that exist not only in individual workplaces, but that also affect entire industries and countries. Major issues for workers, such as low pay, long hours, harassment and abuse, denial of trade union rights and others are endemic across many countries. Developing a critical mass of companies and other organisations that can tackle these issues is essential - no individual company can effectively do so on its own. With our headquarters in London and a presence in China, ETI harnesses the buying leverage of over 70 global retailers and brands, trade union organisations representing over 160 million workers around the world, and major international development charities like Oxfam and Save the Children. Corporate members include the Pentland Group and Sportswear International, which has just joined us as a Foundation stage member. Major supermarkets including Tesco, Asda and Sainsburys – which collectively dominate the UK market for sporting goods and accessories – are also members.

Ethical Trading Initiative. - © Claudia Janke

Growing rapidly, our unique tripartite alliance is the most effective approach we know of to defining and implementing corporate responsibility for working conditions in global supply chains. Together we support our member companies to work alongside trade union and NGO members of ETI to tackle some of the thorniest issues of ethical trade. For example, we have created ground-breaking guidelines that set out corporate responsibility towards some of the most vulnerable workers

in the world, including homeworkers, smallholders and migrant workers. Many of our members are involved in a major programme of activities aimed at improving company buying practices, to make it easier for suppliers to comply with the ETI Base Code.

Collaborative action is essential to solving the problems. By working together we are able to achieve concrete gains for workers. Achievements in the last few years include creating an alliance in India focused solely on improving homeworkers’ conditions, so far benefiting over 25,000 homeworkers; successfully lobbying the London Organising Committee for the Olympic Games (LOCOG) to build an ethical legacy for the London Olympics; and training over 40,000 workers in India, China and Sri Lanka on their rights. Developing trust between companies, trade unions and campaigners – so often at loggerheads in the past – has been a slow process. But through dialogue and diplomacy, and pressure where it’s needed, we have built a movement that is far greater than the sum of our parts, and together our members have achieved tangible gains for millions of workers worldwide: last year, they reported that their suppliers had agreed nearly 125,000 separate improvements to workers’ conditions. We are confident that as ETI continues to grow and continues to embrace more companies in its membership – including, we hope, those from within the sporting goods industry - that we can continue to drive change for millions of workers around the world. ■

Corporate Responsibility Towards collaborative efforts

Sustainable all along the supply chain

Creating synergies among organisations

By Auret van Heerden, President and CEO Fair Labor Association

By Fair Wear Foundation

Managing global supply chains is a challenge at the best of time. Human rights, labour standards and environment issues are among the many things that can go wrong. There are two major challenges facing them now. The first one is the difficulty of bringing about lasting improvement in labour standards at supplier facilities while the second comes from without and concerns the raw materials. Tackling the challenge of making lasting improvements is essentially that of achieving sustainable compliance. Compliance audits always find violations and require the employer to take corrective action, but those actions are frequently short-lived and the contraventions re-occur. The road to sustainable compliance involves capacity building to ensure that the suppliers have the necessary expertise. The resources needed for this capacity building however are in short supply, particularly in some of the countries with the highest rates of non-compliance and this is something that should be addressed collectively. Many supplier facilities have the same shortcomings and buyers have two options – tackle the capacity building needs individually or collectively. Given that it is far more cost-effective to mount collective training or tool development programmes the obvious choice is for buyers to pool capacity building resources. Despite this there are surprisingly few shared programmes and we continue to face serious shortages of resources.

The attention of consumers, the media and even regulators has shifted to the raw materials used in production of brand name products, and to their eventual disposal. The second challenge is a new one and concerns the two extremes of the supply chain – the cradle and the grave. The attention of consumers, the media and even regulators has shifted to the raw materials used in production of brand name products, and to their eventual disposal. A quick survey shows that the hot issues in the last 18 months have been leather from Brazil (that may be linked to destruction of rainforest), cotton from Uzbekistan (harvested by children) and minerals from the eastern Congo that end up in electronic equipment (so-called blood minerals). These issues remind us that it is impos-

sible to separate environmental questions from human and labour rights, and that holistic and integrated responses are called for. Questions are also being asked at the other end of the chain, the end of life stage. What happens to the products when they are disposed of ? Are they re-used or recycled, or do they go to landfill ? The worst thing a brand can say when confronted with an issue at either end of the supply chain is “I had no idea”.

Fair Wear Foundation (FWF) is an independent, non-profit organisation that works with companies and factories to improve labour conditions for garment and textile workers. Founded in 1999, and open to companies that sell sewn products in Europe, FWF currently has more than 60 members based in 6 European countries. FWF joins together business associations, trade unions, and NGOs as equal partners at every level of our activities.

Our experience has shown that with the complexity of today’s global garment supply chains, there is no single way to create sustainable improvements for garment and textile workers. Rather, there are many, and they work best when combined. We call our approach the Fair Wear formula. It is only through cooperation that industry-wide improvements can be realised. This belief brought to life FWF’s multi-stakeholder structure. In addition to cooperating with a range of stake-

The bottom line is that brand-name sporting goods companies, and indeed all sporting goods buyers, can no longer rely only on factory monitoring to protect their brand against reputational damage and legal liability. They will have to look further down the supply chain to identify issues that occur at the raw materials and processing stages of the process. What does that look like in practice ? Firstly, know where your materials come from, who mined or farmed them, who processed them, and how. Secondly, it means companies must conduct expanded stakeholder engagement with groups all along the supply chain – groups from which they can learn, that they can support and with whom they can potentially partner. A final point. The raw materials, energy, land and water consumed by existing supply chains are finite resources. Some of them will be unavailable or unaffordable in the next decade. This means that the supply chain will have to be reengineered to make it more sustainable. If that is the case, let us ensure that we place ethics – human rights, labour standards, environment – in the matrix along with the availability of resources to engineer a sustainable supply chain that is ethical. It is a unique opportunity to create a supply chain that is more logical, efficient and ethical than the ones we inherited from the era of quotas. ■

The Fair Wear formula. - © Buro RuSt

WFSGI Handbook 2011

Corporate Responsibility Towards collaborative efforts

holders, we also facilitate cooperation among relevant actors – governments, business associations, trade unions, NGOs, factories and companies.

It is only through cooperation that industry-wide improvements can be realised. The scale of the challenges we face together are huge, and resources are finite. It is necessary to create synergies among organisations that share a common goal. In practical terms, FWF encourages affiliates to access the audit reports of our partner organisations rather than commissioning new ones. We also encourage companies to work together on fixing problems in factories where they have common production. This approach reduces audit fatigue and allows FWF to focus our resources on factories which need the most help and attention.

Corporate Responsibility Towards collaborative efforts

FWF also plays an active role in convening the Jo-In Platform, which brings leading international multi-stakeholder initiatives together to harmonise workplace codes and to collaborate on complex issues like living wages and hours of work. Significant challenges still need to be resolved, particularly around information sharing between companies. However, FWF believes the best way to achieve fair and safe working conditions in global supply chains is through collaborative efforts that put the strengths of different stakeholders and initiatives to the best use. While no one solution fits all brands and factories, a coordinated network of auditing, verification and remediation activities is emerging which promises real and sustainable improvement in the lives of garment workers around the world. ■

Ways to promote fair and safe working conditions in global supply chains By Frank Henke, Global Director Social & Environmental Affairs, adidas Group

Why is collaboration important ? Operating a multi-tiered supply chain we often face issues that are so large and complex that we cannot solve them alone. So, one important cornerstone of our sustainability strategy is the further extension of our engagement with stakeholders, i.e. partnering with others to embed new thinking and better ways of working within our business and along our supply chain. We value the opportunities to work in partnership with other brands, international organisations and NGOs. These partnerships help us to improve the way we conduct our business, in particular through : gaining a deeper understanding of stakeholder concerns, sharing information with each other, pooling our expertise and collaborating in the development of innovative tools and new ways of working. increasing our leverage in driving positive change.

Areas where this collaboration is important We believe that any collaboration – be it with brands, manufacturers or civil society – needs to start with sharing. This is fundamental to further harmonize standards and processes. One example of a successful implementation of a sharing platform is the Fair Factories Clearinghouse (FFC) that promotes long-term sustainability in compliance activities through more effective collaboration with other companies. The sharing platform is the result of a three-year industrywide collaboration to build efficiencies in ensuring fairer, safer and healthier workplaces by sharing compliance data from multiple sources. The key

Example for good and safe working conditions: A mechanic in a Chinese athletic footwear factory briefs the staff on correct use after maintaining the safety devices at the roughing machine. - © adidas

Any collaboration – be it with brands, manufacturers or the civil society – starts with ‘sharing’. Operating in silos is a dead-end road. benefit for companies is that having more buyers share information leads to greater effectiveness in executing supply chain remediation. There are also many benefits for the factories, including the potential reduction in code of conduct assessments (avoiding audit fatigue), more streamlined code of conduct communication from

All Trade Marks are owned by or licensed to Pentland Group plc.

WFSGI Handbook 2011

Corporate Responsibility Towards collaborative efforts

FFC member companies, and a reduction of resources needed to respond to remediation activities from multiple sources and buyers.

How can the WFSGI support collaborative approaches ? The WFSGI is well aware of its strong capabilities of supporting collective approaches that drive harmonisation and synergies and build critical mass in the industry. Accordingly, the CSR Committee has put considerable effort into building bridges between brands, manufacturers and multi-stakeholder organisations aiming at reducing the duplication of monitoring activities. This will enable brands to redirect resources to capacity building and remediation activities at the factory level. Thus, compliance collaboration will also increase leverage and lead to more effective and sustainable solutions. ■

Shoes and their lasts in an athletic footwear factory in China. - © adidas

A Collaborative Approach By Pentland’s Corporate Responsibility Team

At Pentland we believe that business should be conducted honestly, fairly and with respect for people, their dignity and their rights. As customers and creators of global supply chains, brands and retailers have a responsibility to promote fair and safe working conditions for the people who make our products. Given the many parties involved, a collaborative approach is essential to make lasting improvements. The collaborative approach is effective at several levels : Within our own business operations, as a fra mework to guide our brands and suppliers ; By membership of external alliances, for best practice sharing and thought leadership ; and At a supranational level, to guide strategy, po licy and to challenge at the highest level.

Collaborative projects or concepts already in place Some of our noteworthy partnerships and collaborations with multi-stakeholder groups are in three areas : 1. Corporate Responsibility • World Federation of the Sporting Goods Industry (WFGSI) – our participation in the CSR Committee • World Business Council for Sustainable Development (WCSBD) 2. Supply chain conditions • Fair Labor Association (FLA) • The Sustainable Compliance Leadership Initiative (SCI) • Fair Factories Clearinghouse (FFC) • ILO Better Factories Program Cambodia

• Worker Hotline services through China Labour Support Network (CLSN) 3. Environment • AFIRM Working Group • Better Cotton Initiative (BCI) • Leather Working Group of the British Leather Technology Centre (BLC) • Outdoor Industry Association (OIA) and European Outdoor Group (EOG) – member of the Sustainability Working Group.

Within our own business, Pentland’s Corporate Responsibility team works closely with each brand’s product, sourcing and buying teams and their suppliers. Pentland’s Code of Employment Standards for Suppliers acts as a framework to inform, assess, educate and track improvements. This internal collaboration ensures that fair and safe working conditions at production factories are considered as part of the sourcing decision. We and our suppliers work together to improve conditions for workers, by collaboration with local institutions in sourcing countries for advice and training, by closer application of local legis-

lation and by embedding globally recognised standards. This way of working also helps us to improve our own performance, as we learn what effects our business practices can have.

Business should be conducted honestly, fairly and with respect for people. Membership of external alliances forms the next level of our collaboration model. These enable Pentland to look at situations on a larger scale and approach difficult issues that are not easily addressed effectively by individual companies working alone. Pentland is proud to be a founder member of the Ethical Trading Initiative (ETI), a multi-stakeholder alliance of companies, NGOs and international trade union organisations working together to improve working conditions in global supply chains. ETI provides a forum for debate, enabling members to learn and share best practice principles. Most of all, participation in collaborative projects with many brands and their suppliers, coupled with guidance from unions and NGOs, gives more opportunity to achieve lasting change. At the supranational level, Pentland supports the Better Work program, a unique partnership between the International Labour Organisation (ILO) and the International Finance Corporation (IFC), an initiative that uses global tools and country-level projects born out of cooperation between governments, employers’ and workers’ organizations and international buyers. This level of collaboration helps promote the convergence of standards, practices and implementation tools, therefore gaining support from governments. There are opportunities for the World Federation of the Sporting Goods Industry to assist members to collaborate and build a consensus for further improvement at each of these levels : Providing opportunities for direct engagement between brands and suppliers ; Encouraging members to understand and agree on what, collectively, we wish to achieve ; Co-ordinating communications and challenging on behalf of the industry the root causes of poor working conditions in the countries where our products are made ; and Sharing common tools to manage risk, tackle and resolve complex supply chain issues. ■

WFSGI Handbook 2011

Corporate Responsibility Towards collaborative efforts

Magnifying the voices of our industry

Playing Collaboratively By Hannah Jones, Vice President Sustainable Business & Innovation, Nike

By Lary Brown, Corporate Compliance Manager, New Balance

Over the last few years, as more companies have sought to be socially responsible, they have discovered not only that there is much that they can and should do, but also that there are limits to what a single company can accomplish on its own. Corporate social responsibility is not an area where companies compete with each other. Consumers expect companies to do better, and companies all work to respond. Working together, they can accomplish much more than any can working individually. While many companies seek to assure adequate working conditions in their supplier factories, a single company often lacks leverage to persuade factory managers to act. Companies generally agree that their leverage is particularly weak with regard to Tier 2 and Tier 3 suppliers, many of which supply lower volume products that are nevertheless important to brands’ overall product lines. Moreover, in many regions, the strongest limiting factor to factory improvement is an overall lack of knowledge of management methods that result in better working conditions. A single company cannot change the entire environment. The same is also true in environmental sustainability and other areas. A single company can generate only a limited amount of demand for environmentally preferred materials, for instance, whereas a group of companies can provide much stronger market incentives.

One of the great areas of neglect in CSR overall is involvement of governments. While most companies recognize that they can have greater impact in collaboration with other companies and stakeholders, working together is not as easy as it appears. Various companies have different levels of commitment, different priorities, and different amounts of resources to dedicate to the effort. Collaboration requires significant amounts of time and skills from staff within companies, and not all companies have enough people with the right skills to prioritize, manage, and sell the process both internally and externally. Collaborative processes can be roughly divided into two types. Smallscale projects among two or three companies to respond to a specific problem in a specific area of the supply chain, like a single supplier factory, are relatively easy to organize and implement. They are, however, limited in scope and overall impact even when they succeed. More important in the long run are larger initiatives that strive to involve all

major players in the market to improve conditions across the industry overall. These initiatives, like the Fair Labor Association, the ETI or any of many similar organizations seek to create dialogue among companies, non-governmental organizations, labor unions and other stakeholders in order to bring about agreement about what should be done, and to mobilize resources to bring about needed change across the board. Multistakeholder organizations, by bringing together players and knowledge from all sides of the issues, hold great promise for sustainable, long-term change. Everyone involved wishes they could move faster, but bringing together diverse knowledge and viewpoints to address complex problems takes time. One of the great areas of neglect in CSR overall is involvement of governments. Companies and others are in broad general agreement about what is needed to improve working conditions and the environment, and most understand that there are problems that exist as a result of governmental failure to enforce relevant law. There has, however, been too little discussion about how to involve governments in a way that increases their ability to play a constructive role in the process. The WFSGI is well positioned to lead the industry in CSR, but it is also challenged by the same issues that all multistakeholder organizations face. The WFSGI is composed of virtually all major players in the sporting goods industry, which gives it potential to magnify the voices of its members. At the same time, the WFSGI must accommodate the varying levels of understanding, commitment, ability and resources that its members possess, and must move at a comfortable pace for all members. The area where the WFSGI has been most effective is in providing space for more advanced members to provide information and knowledge to those whose CSR programs are less advanced. The WFSGI has done well with this task. New Balance looks forward to continuing to work with the organization in the future. ■

Main Nike Focus NIKE Capabilities

Generation 1 : Presence Generation 2 : Interaction

Generation 3 : Transformation (FY09) Generation 4 : Integration

Assessment, building understanding of conditions

Monitoring conditions and corrective actions

Monitoring plus capacity building, focused Sustainable manufacturing on root-caused analysis

- Establishing a function - Fighting fires - Building a global team - Establishing partners

- Systematizing the work - Building excellence in management audits - Building a global EHS process - Creating transparency - Creating ratings

- Building excellence in remedation - Sustainable sourcing strategy - Business integration and accountability - Factory ownership of CR - Industry coalitions

Integrated management of product development, working conditions, and EHS throughout supply chain

Human resources management capacity

Lean and sustainable production

Building coalitions

Common expectations, cooperative monitoring and capacity building

Capacity to respond to brand Understand core CR/HR functions Supplier inquiries Capabilities Code of Conduct Nike publishes supplier lists Industry Collaboration

In 2005 we took the bold step of disclosing our supply chain. We anticipated this disclosure would spark collaboration between brands in the oversight of supply chains. We established a goal of increasing collaboration with other brands to cover 30 percent of Nike-contracted factories by FY11. While 30 percent may appear to be a small number, it is a realistic target given that some contract factories produce solely for Nike and many factories serve other buyers that currently lack a robust compliance program, making a mutual exchange of information or partnership in capacity building unfeasible.

interest in partnership / collaboration, and their demonstrated commitment to conduct thorough assessments of factory performance.

Capability Building Our long-term monitoring goal is to shift our efforts from repetitive auditing to coaching and training contract manufacturers to develop knowledge and skills to address specific labor and HSE compliance issues and/or systems. We believe that collaborating with other brands holds great potential to improve our auditing and capability building activities. As such, we are working with a group of brands and in partnership with the Fair Labor Association (FLA) to identify the types of supplier training that can jointly address factory needs.

Urgent Need for Efficiency

On the Horizon

In the apparel industry, where working with multiple buyers is the norm for most factories, the collective costs of monitoring activities for both brands and suppliers have become exorbitant. Not only are brands duplicating efforts through multiple audits, but we also are undermining each others’ efforts to promote compliance by providing conflicting standards and proposed remediation approaches to factories.

We share a common aim, to see that audits deliver confidence in management processes and performance. But some improvements are needed to realize the benefits of collaboration : A higher level of commitment across a wider set of players in the industry Alignment in philosophies as well as audits and remediation Improvements in measuring impact. Evaluation of the benefits of fewer audits Development of industry level master audit oversight calendars of shared suppliers Creation and application of consistent expectations for professional auditing firms Elevated focus on environment, safety and health dynamics Consolidated systems approach for sharing information. One single system across the industry. Our own role in collaborative auditing is changing, as we continue consolidation in our supply chain, however, we still believe that alignment on best practices in remediation and capability building across the industry comprises important positive steps.

Nike works to share resources with brands that share our aims of assessing management systems, have high compliance expectations for suppliers and are committed to partnership and rewarding continuous improvement. We identify opportunities for sharing by approaching brands as potential candidates based on overlaps in the supply chain, shared process, philosophy or tool,

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WFSGI Handbook 2011

Corporate Responsibility Towards collaborative efforts

Contributing to society through advancement of sporting goods and promotion of sports By Masato Mizuno, Chairman of the Board, Mizuno Corporation

Top managements must have strong sense of ethics

Corporate Responsibility Towards collaborative efforts

We have collaborative relations as follows : 1. Corporate Responsibility World Federation of the Sporting Goods Industry (WFGSI) – our participation in the CSR Committee, Code of Conduct Concerned industrial federations in Japan (Nippon Keidanren, Keizai Doyukai etc.) 2. Supply chain conditions Suppliers conference for study of our CSR principal Regular Dialogue with UI-Zensen (associated union of ITGLWF in Japan) regarding working conditions in OEM factories 3. Environment ISO14001 JASPO sub-committee (Logistic workshop incl. environmental conservations)

The person who has the right ethical and moral sense, must be appointed as top management in all our organizations. Too much focus on short-term performance often leads to unethical behavior of top persons. Deliberate cover-up, manipulation activity, or a greedy and selfish business mind, will not permit management to fulfill their social responsibility mainly through business activities.

Explanatory meeting for OEM suppliers. - © Mizuno

To fulfill our CSR and to adhere to our corporate philosophy, we consider CSR management to be our top priority.

CSR activities should be through multiple aspects of approach with balance I would emphasize that we need to do CSR activities with balance in 10 specific areas : 1. Corporate governance 2. Compliance 3. Internal control

Current collaboration activities

4. Risk management 5. Disclosure to stakeholders

6. CSR procurement 7. Conservation of the environment 8. Customer satisfaction 9. Stakeholder satisfaction 10. Social contribution As the saying goes, “You cannot see the wood from the trees” means, we should establish the standard in each area, so as to bring feasible solutions considering appropriate effort mix.

Why is collaboration important ? It is important to share ethical standard among concerned parties. So we need to have common recognition among the industry / society globally. Disclosure can show the actual situation of the organization and concerned parties should communicate to each other from their standpoints. In the case of a conflict of opinion, it is necessary to conduct calm discussions with objective judgment. It will be effective to resolve complicated issues by arbitration with International organization, such as ILO.

Explanatory meeting to suppliers : We hold the meeting for OEM suppliers who own factories, in order to avoid inappropriate labor environnment by lack of knowledge and awareness. We work and study CSR Procurement together with the suppliers regularly.

Communication with sports industry companies and non-sports companies : Mizuno participates CSR manager gathering ; it is a voluntary meeting including non-sports industry members in Japan. We exchange information regarding CSR procurement and study other industries conducts.

Factory Audit (inspection of working environment). - © Mizuno

How can the WFSGI support collaborative approaches ?

We have participated in WFSGI Environmental committee in the past. Now we participate in CSR committee and cooperate their activities together. The WFSGI has a variety of members such as suppliers, manufacturers, retailers etc. there are many issues to be investigated and discussed among the members who have a different stand point regarding resolution in supply chain issue. We expect continuous efforts to resolve the various industrial issues concerning CSR. ■

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Corporate Responsibility Towards collaborative efforts

asics.com

TSMA assists the fair and safe working conditions By Dr.George Wood, Chairman TSMA (Taiwan Sporting Goods Manufacturers Association)

anima sana in corpore sano

First of all, please let me quote the WFSGI Code of Conduct : Guiding Principles, accepted by the WFSGI General Assembly in Munich on August 5th, 2000 :

place or factory. Either to meet the domestic regulations or to reach international standards, we deeply know that only if workers are wellprotected with fair and safe working conditions, we could have stable and quality production of sporting goods.

“The ideals of the WFSGI are the ideals of sport, and the organization seeks to promote fairness, honesty, mutual understanding and high ethical standards not only on the sports field but also in the factories which make sports products. WFSGI members recognize the important role they play in the global economy and their influence on the social and economic conditions under which sporting goods are manufactured and produced.”

Apart from the WFSGI, the United Nations proclaimed “The Universal Declaration of Human Rights” in 1948; Article 23 states that everyone has the right to work, to free choice of employment, to safe and fair conditions of work. Also it adopted “International Covenant on Economic, Social and Cultural Rights” and emphasizes again in Article 7 the right of everyone to “just and favourable working conditions,” and also points out the need for “safe and healthy working conditions.” In Adam Smith’s “The Wealth of Nation”, he clearly points out that an abundance of healthy workers are the foundation of a nation’s power and social stability. We all see this evolving way of thinking that “work” is a basic economic and social right that all people have.

As the Vice Chairman of WFSGI Manufacturers Forum and the Chairman of TSMA, I fully recognize the working ethics as sporting goods manufacturers. Not only I but also Taiwan’s manufacturers also care for workers to work at a fair and safe

running cleanses the mind and body

Here in Taiwan, all people know Labor Standards Law (1984) as the most important labor law to protect labor rights. It defines the basic legal rights of workers. The law prescribes the minimum requirements for labor contracts, and makes provisions for working hours, work leave, and the employment of women and children, etc. This Law offers protections against unreasonable work hours and forced labor, and grants workers the right to receive compensation for occupational injuries and layoffs, as well as a retirement pension.

Workers in Xiamen, China producing different kind of balls. - © TSMA

Facing the global rising sense of workers rights and of corporate social responsibilities (CSR), TSMA and I proposed to hold a manufacturers forum here in Taiwan

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Today the big question is What comes first the sustainable retailer or the ethical consumer ? By Reidar Magnus, Senior Manager CSR & Supply Chain INTERSPORT International Corporation

View over the factory in Xiamen, China. - © TSMA

for bridging Asian and Taiwanese manufacturers and brands and for updating the common practices or common codes. I personally wish to update Taiwanese manufacturing leaders of the global trends and infuse the basic working ethics and the corporate social responsibilities. With the full support of the WFSGI, we organized the event, WFSGI Manufacturers Forum 2010 in Taiwan. As to the feedbacks I received, the Forum was practical and constructive.

Everyone has the right to work, to free choice of employment, to safe and fair conditions of work. A few of Taiwan leading sporting goods manufacturers and I wish to see that WFSGI could publicize good CSR practices or programs of the global retailers or brands as examples for manufacturers so as to take actions and share social responsibilities. Imagining the CSRfeatured sporting groups could be pooled and sharing experiences of CSR on the platform of the WFSGI. As the Vice Chairman of the WFSGI Manufacturers Forum, more relevant programs or workshops could be organized in the region of Europe and the experiences could be shared. For sustainable development, Taiwan major manufacturers certainly bear this responsibility to protect workers and to work on CSR and to gain more international reorganiza-

tion. Aware of this development, Taiwanese manufacturers will learn to boost competiveness and better corporate images by doing and by leading the CSR stream up to the international arena. With this promising international credit, Taiwanese manufacturers can have an equal position in the value-added channel marketing in Europe and America. Foremost, with the spirits of ‘loving mankind,’ I have deeply felt it is part of my mission and duties as the Vice Chairman of the WFSGI Manufacturers Forum to inform or to influence my members, Taiwanese manufacturers to bear this responsibility to offer workers a safe and fair workplace. All safety and health measures shall be carried out so as to prevent occupational injuries or accidents by informing, training and consulting with workers and their working leaders. It is never too old to learn and work out (sports). Moving towards a better working world is the universal wish of the people all around the world. Not only the WFSGI but also TSMA hope that the sporting goods manufacturers all bear this core value to assure the working safety, to guard workers life and to better the world by providing a safe and fair working place and sharing the social responsibilities. ■

In their function as an interface between manufacturers and sport enthusiastic consumers, and as employers of a huge number of people within our industry, the sports retailers have a special social responsibility. They are on the one hand ambassadors whose task it is to com-

municate how our industry is engaged in granting social compliance throughout our supply chain and on the other they are also reporting back the consumer’s demands concerning social engagements and environmentally friendly products. Consumers’ social engagement and demand for environmentally friendly products differs from country to country. For the time being we perceive a north-south divide concerning consumer social responsibility and corresponding engagement. How are the retailers within our industry responding to this increasing

Corporate Responsibility Towards collaborative efforts

demand for social commitment and the growing demand for ecological products? The retailers, whenever changing shop formats or developing new outlets take sustainable factors and environmentally friendly installation into consideration. Their aim is to establish a shopping environment adapted to the modern consumer – the ethical customer – and to contribute to a better world.

Consumers follow a dual concept taking care of their well-being – health and the well-being of our planet – sustainability. Firstly the retailers are involved in improving their own working environments; to become more sustainable but they are also focusing on improving the sustainability of the products they offer to the consumer. For years now we can observe an increasing demand for organic products in all product categories within the food industry. For the time being this trend is pushing its way into the sports shops. The health oriented and environmentally conscious consumer wants to protect his body by wearing items which are based on organic material and are produced without chemicals that could negatively influence his well-being. Therefore more and more brands are increasing the use of organic materials. Certain brands make it their business strategy and offer only Eco collections. A large group of consumers also frequently mentioned as “Lohas” (Lifestyle of Health and Sustainability) are buying themselves into more environmentally friendly and sustainable products and lifestyles. They follow a dual concept taking care of their well-being – health and the well-being of our planet – sustainability. Large retailers with own private labels are in general even deeper involved in the social compliance process ensuring that their own products are produced under fair working conditions in-line with the ILO (International Labour Organisation) conventions. Retailers in general are more and more focusing on the fact that the products they offer in their shops are produced by substantial brands which can prove their social and environmental engagement throughout their entire supply chains. Certain brands and their supply chains are more transparent towards consumers. Product tracking systems like “respect-code” 1 have been developed permitting the consumer to backtrack the product to single component and raw material of the product. 1 www.respect-code.org : each article of the participating brands has an individual tracking number which can be found on then sew-in label (Example of a valid code of a Switcher item = RIWX4P3).

A limited number of sports retailers are already aware of this trend and implement these kinds of products professionally into their retail concept. The retailers can promote changes as we have seen both in their own field and also by setting targets for their suppliers. Therefore the Retailers will play a greater role in improving sustainability in the supply chain, reduce the environmental footprint of products and in helping consumers to make better and more sustainable choices. They will also play an important role in the EOL (End Of Life) process of the product (implementing solutions to further process the product after use – recycling the material, donation, second hand industry, etc.). The number of NGOs and Consumer Organisations are also growing and gaining importance. They are developing internet based tools which are made available to the consumer. With these tools the consumer can easily find the most sustainable retailer 2 with organic and more environmentally friendly products – this group of sustainable consumers is here to stay and will even increase in the coming years. So for those of us who want to safeguard our future business this target group cannot be neglected. Success within the CSR field depends heavily on cooperation between trading partners and competitors and not only those within our industry. Therefore business and non-business initiatives will play an important role. Also governmental organisations (such as the EU) must improve their efforts relating to CSR harmonisation and ruling. Here WFSGI who represent the world wide sport industry can play an important role. It goes without saying that WFSGI as the common dominator of our industry (representing all categories of partner within our industry) is the natural platform for developing and promoting a harmonised approach within our business sector. As sustainable development within our trade is in an initial phase we have the unique opportunity to give WFSGI the task to steer and coordinate this development of tools to meet this new challenge. With this we can ensure a more lean and efficient development (we can avoid ending up with more than 400 labels for sustainable products unlike other industries). ■

e.g. Sustainable retailing in Germany “Nachhaltig Einkaufen” incl. Database http ://www.nachhaltig-inkaufen.de/unternehmens-check/datenbank 2

Corporate Responsibility Towards collaborative efforts

FIFA Quality Concept for Footballs By FIFA Marketing Division

Professional players and up-and-coming stars alike all need the best football to be able to perfect their skills. A football must respond in the same way every time it is struck, whether it is in the 90 th minute of play or straight from the kick-off. Even the smallest defect affects the flight of the ball, its responsiveness on the pitch and ultimately the game itself. To create the ideal conditions for magnificent performances, the ball must be of the very highest quality.

Tested, certified, played To ensure this level of quality and to make it recognisable to players all around the world, FIFA has devised the FIFA Quality Concept for Footballs. Only balls that reach FIFA’s high standards receive one of the two quality marks, FIFA INSPECTED or – the even higher standard – FIFA APPROVED. More than 90 sporting goods manufacturers share this passion for quality. Their best footballs have been tested successfully and have earned the right to bear one of the following logos :

FIFA INSPECTED A ball must pass six tests to qualify for this quality mark. The tests check the ball’s weight, circumference, roundness, rebound, water absorption and loss of pressure.

FIFA APPROVED

Tested. Certified. Played. Not only the teams have to qualify. Even match balls have to perform at the top level to be awarded the FIFA INSPECTED and FIFA APPROVED Quality labels. The rigorous testing ensures quality for your game – no matter how many fans are cheering. Tested by professionals, played by stars, made for you.

Quality for your Game

no excuses.

To gain the top quality mark, a ball must pass each of these six tests under even more demanding conditions. The shape and size retention of the ball is also scrutinised in a seventh test, during which the ball is fired against a steel plate 2 000 times at 50km per hour. The ball only passes the test if its seams and air valves

remain unscathed and any loss of pressure and changes in circumference and roundness are negligible. Apart from certifying footballs (since 1996) and futsal balls (since 2001), the FIFA Quality Concept has also developed guidelines and special tests for beach soccer balls. Only such certified balls have been used at the FIFA Beach Soccer World Cup since 2005.

More than 90 sporting goods manufacturers share this passion for quality. Platform for the heart of the game FIFA.com now has a new microsite dedicated to the ball, www.fifa.com/theball. Containing clips, videos, animations and everything you need to know about FIFA-certified balls, this microsite is a worthy platform for the object at the very heart of the game. The “Quality for your Game” campaign has also been launched together with the new microsite to draw the attention of players, fans and officials all around the world to the need for quality, and to raise the profile of the quality marks. The information on the site is brought to you by experts, VIPs and a rather eccentric professor. Make sure you also insist on quality for your game ! Quality for your Game - no excuses.

FIFA Quality Concept for Football www.fifa.com/theball - www.fifa.com/derball www.fifa.com/lebalon - www.fifa.com/lapelota www.fifa.com/abola

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The world of Retail Trade on the Internet

Internet, Social Media and their impact on our business By Marius Rovers, Retail / Wholesale Advisor

When the wind of change blows, some build walls, others build windmills.

portant to people. We are connected via these virtual networks. By this a worldwide network is growing of a borderless cooperation, creativity and communication. Consumers can easily organize themselves Menno Lanting and will become more powerful. But it also means business opportunities for those who understand the impact of social networks on organizations Imagine : A big square, in a big city full of peoand leadership. ple, even the streets around are filled with people and all of them are talking about the same. The possible impact of Social Media is very well described in this No it is not a demonstration. These people are very interesting video about the growing number of social media talking enthusiastic about a brand; they are channels and the way they are perceived in the world. fans, fans of the fashion brand H&M. There are more than half a million people together. They talk about the new collections, show each other photos, give comments about products, show each other big photos of newly opened stores. They scream the brand’s name full of passion. Is this an absurd story ? In the real world it is. But on the internet and more specific the social networks, like Facebook, LinkedIn, Youtube and Twitter, it is the real world and this happens every day. This is how the book “Connect” from Menno Lanting about social networks starts. It is not yet in English but I hope for you it will be there soon. Why ? Because it describes very well how our world of high-level marketing, from the nineties, is not working anymore as in the past. Social networks become more im-

Internet It will be no surprise for you when I state that internet is changing our lives and the way we do our business. E-mail, Skype, Explorer, we all use it and the fax, popular in the eighties, is somewhere in the corner covered with dust and just for emergency moments. But Internet is more than a replacement for our fax machines and the way we communicate. It will have big influence on the way consumers inform about and buy products.

The internet as information channel

Wikipedia is probably the best example how information is spread over the internet. Wikipedia is written collaboratively by largely anonymous internet volunteers who write without paying. Anyone with internet access can write and make changes to Wikipedia articles. This information source is as reliable as standard encyclopedia and at least more up to date as daily updates are given. You can find it easily this type of information also for business and about products, sports and any other topic you need information about on the internet. It is surprising that in a world, nowadays often described as individual, so many

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The world of Retail Trade on the Internet

people want to support a community like this. The older generation does not understand why people want to share things on the net and do not take the time to talk or listen to each other. Well, it is a new reality.

The internet as selling channel The development of sales via internet goes very rapidly. In an article elsewhere in this report it is described how successful retailers can be. Some estimates say that the share of internet sales in the Sporting Goods Industry can reach 15% on average. In some categories however it can go up to 80%. Already today internet sales have a huge impact on our industry and in my opinion this impact will continue to grow as the next generation of technology comes available. Technology, which may not exist today but will become available in the near future. Remember your first mobile phone, when you where lucky you could make a phone call but today the phone is a Smartphone and the Smartphone of today will be old fashioned in a few years. However internet sales (clicks) will take share of stationary retail (bricks), it will never take over today’s retail business but retail must become creative, surprising and better than today to keep a higher share than internet sales.

The world of Retail Trade on the Internet

That means that retailers and brands must be aware of this and have or support information on the internet. The industry must support the Wikipedia community with product information. It is in the interest of the industry and of the brands that there is a well balanced information flow. Product photos on the soccer pages of di-

Assortment 16.1%

Social media should be part of your strategy.

Staff and service 18.5%

Price 15.7%

There is a difference in the information required during the orientation phase, the inspiration phase and the final purchase of a product. The three diagrams below show these differences and it is clear that internet is important today and will become even more important in the future in the inspiration and orientation phase and that the store has chances enough in the purchase phase.

Shop 9.7%

Information needs during orientation phase of buying process Experience and judgement of other buyers Retail prices

23% 18%

Special offers

Own experience Experience of others Experience from peer sporters Connection to local club

6.5% 4.7% 2.6% 0.5%

High product quality Broad offer Deep offer Availibility of the product Offer of A-Brands Offer of a specific brand

4.2% 3.1% 2.8% 2.2% 2.0% 1.8%

Friendly staff Competent advice Helpful staff Offered services

0.8% 12.9% 2.2% 2.5%

General price level Special offers Price-quality ratio

7.1% 8.6% 25.5%

Distance to the shop Accessibility of the shop General appearance of the shop Internet information

3.3% 2.2% 1.2% 2.9%

This research was done in 2010 in the Dutch market but strongly supported in similar research in other countries.

10%

Delivery time and supply

Brands

Warranty 1% %

10%

20%

30%

The opinion from other users is the most decisive argument of consumers : “What is good for them is also good for me”.

5% 4%

25%

For retailers and brands it will be key to be visible on the internet. This asks for constant efforts as the net becomes increasingly crowded and consumers are blocking themselves technically and mentally for over information. Ambush marketing, creativity and originality is demanded to reach the costumers and to be found on the net. A fine example, made by Hi-Tec how this can be done:

14%

Trends and innovations

20%

Social media

Other information

15%

Visibility on the internet

16%

Technical product features Retail location

The internet is, for customers before they buy, an information channel. Today, when customers enter a store, they are or might be very well informed, sometimes even better than the sales staff, about the product, the alternative products, new releases, the price, etc.

Experience and local connection 14.6%

Forums on the internet are very active and widespread. On each category, product, brand there are forums where customers share each other’s experiences. You might be surprised what is said about products and brands.

Product design

The internet as orientation channel

Information needs during buying phase

vers countries can be influenced, product information can be completed as long as it is neutral.

30%

More than 75% of all costumers believe their peers and only 14% believe information coming directly from sellers. It might not surprise you, but it did me. I was of the opinion that brands and big retailers had the authority to convince the costumer. It seems that this is only true when costumers are face to face with their clients. It might also have happened to you that you, as I did, counted that your experiences were right in meeting the consumers. But how often do we see them ? You can meet them however everywhere in the virtual world. And I bet that they write more about you than you might think. Give it a try you, might be surprised !

Information needs during inspiration phase of buying process Technical product features

Mix online/offline for retailers 38%

Product design

28%

Trends and innovations

14%

Brands

13%

General information

Important for retailers will be to find the right mix between being online and offline. It is rather difficult to exploit a shop and at the same time an internet shop. For most retailers the choice will be to concentrate on their existing shop and find the right visibility on the internet. The right information on the net, in the social media, on your own website and being physically and virtually in a constant dialog with your customers will be the right strategy.

Is social media not a fad ? Maybe it is, maybe it isn’t. The only thing I experience that for the time being it should be a part of your strategy. You must be on top of it. Be aware on what is going on. You will not be able to steer and control it but at least you will be able to respond to it. Change is going on, you cannot build walls against it but you can definitely try to get something out of it.

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Today’s brand and product training at retail – it’s time to innovate ! By Christian Vogel, Founder and Managing Director of SportsPartners GmbH & Co. KG

Informed customers drive need for retail training In order to keep up with the information empowered customer base and increasingly technical products, brands and retailers need to emphasize the importance of brand and product trained staff. There is no doubt that the internet has already had profound influence on society. It has reshaped everything we do, be it in private or at work. It has also changed the purchasing routines of the consumers throughout the European sporting goods industry. According to IBM Consulting, 80% of European consumers already conduct online research and seek the opinion of others before they purchase a product from a store.

Face to face trainings are the brands’ most desired form of retail training. However, there are limiting factors for this training type : A large number of retailers across 25+ EU markets with different languages Costs of increasing the number of face to face trainings The challenge to generate the wished attendance High turnrate of sales experts The fact that retailers sell dozens of brands The fact that the brands sales force often represents different brands, limits their time for training

Retailers and brands are both facing and driving the wide availability of product, brand and pricing information over the internet. As a result, the customer who walks into a sports shop today has a higher level of product knowledge than ever before. At the same time brands are continuously innovating and products are becoming more high tech. This creates pressure on retailers and their sales staff, as well as brands. Both need to continuously drive retail staff training to meet the growing customer service requirements on the shop floor.

Challenges in training retail sales staff

The internet is creating pressure – the internet is providing the solution

Brand and product training is important and a driving factor in reaching a high service quality. The most common technique is face to face in person trainings initiated either by the retailer or the brand. There are also printed, DVD or Power Point type based trainings. B2B or B2C magazines can also be seen as means to inform or educate sales staff.

The challenges mentioned offer an opportunity for brands and retailers to be open for new concepts. The information provided through the internet is the reason why the customer is asking for more. It is creating the pressure to educate retail staff. But the internet is both, creating pressure and providing the solution. A tool barely being used in this industry today is e-learning : educating or training sales staff online over the internet. Online retail training is used regionally within the sporting goods industry (N. America), as well as in many

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The world of Retail Trade on the Internet

other industries. In the rest of the world there lies a large opportunity. Advantages in training retail staff online : easy access, multilingual and available 24/7 free of charge for retailers designed specifically for retail sales staff enables controlling content communicated educational support for lifelong learning measureable incentives motivate sales staff to use

The world of Retail Trade on the Internet

Industry advantages of a platform driven online retail training solution How are the mentioned online retail trainings to be made available to the retail sales staff? How online trainings attract the largest number of users? Remember the fact that retailers have a large amount of suppliers. Redirecting their staff to each supplier’s website to find the right place on the page where the online trainings are located has not proven to be the way to go.

About Sportcampus In early 2010, SportsPartners launched Sportcampus. Sportcampus is a multilingual online retail training platform providing sales staff with easy and free access to brand and product training. The service ensures brands a consistent brand message across different markets and enables retail to excel in service and sales. Sportcampus rewards users for their participation. Since its launch, Sportcampus has executed online retail training for brands like KTM, Head, Camelbak, MBT and others. Sportcampus has a number of active retail alliances and is seeking to grow these further. www.sportcampus.com - contact : cv@sportcampus.com

The solution is having a central internet platform that provides trainings for all brands in multiple languages. This platform has the single aim of training retail sales staff on brands and products they sell. By providing all the necessary information in one place, we make sure that a vital part of the chain is really reached – the sales staff working in retail.

what do you think about... How is internet affecting your trade and sales ? Are you benefiting from e-sales ? Have you launched your own e-store ? Are e-sales an important part of your sales ? Do you find the evolution of e-commerce in the market shares a good thing ?

Masayuki Ueno, General Manager of Corporate Planning Department of Alpen Corporation Ltd. (Japan) Our company opened E-Store about 10 years ago. The amount of E-sales was about 5 million dollars last year, which is only 0.26% of our total sales. E-sales is growing more than 10% every year, but the sales of real shops is more important to us. I believe face to face shopping is very important in sporting goods retail business.

Craig Levra, CEO of Sport Chalet (USA) Sport Chalet is benefiting from E-Sales; our first quarter E-Commerce sales were up 395% over the prior year as we re-launched our website, sportchalet.com. This new website is powered by best of breed software systems from an international array of providers. E-Commerce is certainly a growing part of our business and we see no slowdown in growth. We believe E-Commerce is a great tool, because unlike printed material, radio, or television, with our website customers are able to get into great detail of how a product or service functions and can best fit their skill levels and their needs. More importantly, our customers are able to rate our products and services and we feel this helps improve our marketing and the overall web experience. We also have a community site where customers can write about their adventures.

Alan Cheung, CEO of Sport100 International Holding Ltd. (China) Yes, we see the fast growing trend of e-sales in China Consumer Market. In the next 3 years, we target 10% of our revenue comes from e-commerce channels. Sport100 is the early adopter of the e-commerce, in 2001, and opened the first online store on ebay China (called eachnet.com before 2003). It was not well-received by the immature market back then. We are currently working at re-launching our e-commerce channel in Taobao site, which is the biggest B2C & C2C platform where Adidas, Kappa, Lining are operating their official stores. The key strategy is to reach the young consumers who prefer shopping online and to reach the smaller cities customers who cannot access to our physical stores. Overall, we see online sales and marketing channel are a healthy competition to traditional retail business that also act us as a stimulus and means for more sales !

Stefan Herzog, Managing Director and CEO, SportScheck GmbH (Germany) Online business has formed an integral part of the sales philosophy of SportScheck since as far back as 1998; it is one of the company’s main pillars alongside its catalogues and retail outlets. Today SportScheck is Germany’s leading multi-channel specialist sports retailer. The internet currently accounts for 70% of all distance sales: In addition to Germany, Austria and Switzerland, SportScheck now operates its own websites in Russia and the Netherlands as well. The www.sportscheck.com portal registers 350 million page impressions each year, offers the widest range of any of the sports specialists in Germany and is constantly undergoing improvement. The portal is also increasingly evolving into a social media platform. This development is actively encouraged by offering the opportunity to exchange ideas with like-minded enthusiasts, and by providing advisory services, tips, and travel and event offers.

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Past and perspectives of the Russian sporting goods market By Leonid Strakhov, CEO Sportmaster

Unfortunately today we possess neither official market size statistics nor principles to define its borders. Russia is still characterized by low level of people involvement into sports and outdoor activities. It leads to purchases of sports products for casual purposes and not for sport. This is the reason for the unclear border between SPORT and CASUAL markets where the latter impacts strongly the Russian sporting goods market with some development dynamics in footwear and apparel.

For sure, the growing number and quality of sports stores, as well as government and big retailers like SPORTMASTER active efforts to promote healthy lifestyle and sport contributed to the market growth. During the financial crisis the Russian market decreased by 10-15% in the national currency and at least by 30-35% in USD and in fact returned to 2006 level in USD. It was accompanied by the increase of uncivilized forms of trade. Considering the world scale, we can evaluate that the Russian market now does not exceed one third of the French market with population being 2.2 times bigger. It proves the market growth potential provided the economy will start solid growth.

Development of retail The retail development before crisis (2008 – 2009) was characterized by the active construction of malls and decrease of uncivilized trade share. Alongside we saw the processes of multibrand retailers consolidation under SPORTLANDIA and INTERSPORT banners. Number of Adidas, Columbia and Nike monobrand stores grew faster than market due to vertically integrated model (ADIDAS) and franchise model development (COLUMBIA, NIKE).

The market volume decline was not homogeneous by segment to segment. The elite segments suffered most, for example - alpine ski category (equipment was hit harder than apparel) and fitness equipment.

Geographic span of the country, customs barriers and resulting extra time for customs clearance do not let retailers work efficiently from logistics sites based in Europe.

The Russian sporting goods retail market in the world scale

Before the crisis we evaluated sporting goods market volume as USD 4.5-5 billion and not less than USD 3.5-3.8 billion as its civilized part. Russian market has been one of the most dynamic markets for the last decade with the average annual growth rate (2005 – 2008) of at least 15%, supported by the growth of households incomes and strengthening of the national currency versus USD that made imported products more attractive in price.

Suffering from the financial turmoil

Outside of a Sportmaster shop in Russia. - © Sportmaster

An important detail of the past decade is the enlargement of formats and active expansion of retail chains to the regions (SPORTMASTER, Adidas). We also saw regional retail chains emerging during this time, for example Top League (South) and Champion (Ufa). Decathlon, leader of the World sport retail, entered the Russian market several years ago. Hypermarkets chains like Auchan, Real and others also offer sports products to their customers. These value retail players cover low end segment of the market. The majority of small and medium players grew previously on borrowed funds with relatively low profitability and operational efficiency. The main hope was laid on the future market growth. Such a rapid development provoked boost of competition, yet the market was growing fast letting enough space to the players. During the crisis the major part of retailers substituted the development strategy to survival strategy. Some of them left the market.

The final consequence was a dramatic profitability fall and cash deficit. The biggest part of retailers experienced difficulties with funding to cover their cash deficit. It was a result of banks policy during crisis. Banks accepted only registered real estate mortgage as a security instrument. In addition annual interest rates sky-rocketing up to 15-20% in USD. Even first echelon players felt big difficulties. SPORTMASTER began preparation for the growing competition in advance, adjusted its assortment portfolio and extended low and middle price product offers. It helped to decrease the damaging impact of the crisis on our operations, finish 2008 and 2009 calendar years with substantial profit and continue the development program. According to our estimations the market recovery will be slow and accompanied by dramatic changes in market structure and key players policy. The first and very important signals were already created by Adidas (retailer N°2) which announced decision to decrease retail prices of substantial part of regular assortment by 40-50%.

Average item price decreased as well. During the first sharp phase of the crisis (beginning of 2009) it was forced by heavy discounts implemented by retailers to sell out excessive stocks of wellknown brands. As a result competition between the market operators and brands strengthened and became price-oriented. All “A” brands demonstrated depressed behavior. A lot of small and medium players left the market (like Sprandi) or restructured their positioning, changing for pure casual and leaving sports or outdoor markets (Baon, Finn Flare, Savage). Crisis also changed the model of consumer behavior. The consumption became much more rational and price-oriented. It was accompanied by decrease of visits and purchase frequency in regular stores. Turnovers of the major part of retailers decreased in rubles on the LFL basis that meant significant sales decrease in USD (up to 30% - 50%). The operation margin declined sharply because of additional discounts. At the same time sales decrease provoked a jump of relative share of operating expenses mostly due to fixed expenses like rent that was usually calculated in USD. In addition product stocks boosted, and stock-turnover significantly decreased.

Inside a Sportmaster shop. - © Sportmaster

Purchase habits of Russian customers Today Russian consumers still have a low level of involvement into sports ; it is 2-3 times lower than in Europe. That is why sports apparel is used for casual purposes. It can be explained both by comfort and affordability of sports apparel and footwear, strong position of sport brands and importance of sport outfit for the consumer’s self positioning. Traditions to wear and buy casual are also not well developed yet. According to the survey we made in big cities, people from our target audience regularly visit sports stores, at least 2 times a year.

Customers reaction on online sales The Internet is a promising channel. The current scale of sporting goods on-line sales is quite low and mainly focused on hard products. Because of low operating costs and a low entrance barrier this channel so far does not have signs of consolidation and provokes price wars. In some categories, for example fitness equipment, this trend is more evident.

WFSGI Handbook 2011

The world of Retail Trade on the Internet

Growth of people’s computer skills will help the channel extension, of course. However, it is necessary to mention a number of factors that limit potential growth of internet sales, namely : Logistics difficulties in operations with apparel and footwear (mainly processing of returned product that didn’t fit after trying on). Law issues, as the legislation requires an option to return the pro duct within 14 days following the purchase. Low percent of credit cards use and resulting technological diffi culties with payments. In general I can say that so far regular retail operations in Russia do not feel any serious competition from the on-line channel.

The Russian way to sell sporting goods To be successful in Russia in a long term run any player should adopt listed above competitive advantages to the market peculiarities and additional limitations namely :

to solve these issues by themselves and it requires special competencies and huge investments into creation and exploitation of logistic infrastructure. It is important to underline that geographic span of the country, customs barriers and resulting extra time for customs clearance do not let retailers work efficiently from logistics sites based in Europe. An important factor is a real absence in Russia of re-orders practice during preorders placement that is so widely spread in Europe. Even big brands are extremely careful in taking risks of orders for free stock. Usually distributors of other and smaller brands do not have financial strength for it. These factors force retailers to take all the risks and confirm 100% of preorder 7-8 months before sales.

High levels of rent for the retail space; Undeveloped overall logistic infrastructure; Huge geographical distances, severe climate; Heterogeneity of social and economy development region to re gion and resulting big heterogeneity of consumption geography ; Low level of general people involvement into sports and outdoor activities and therefore specifics of sporting goods consumption. Unfortunately, today there are practically no logistic operators who could provide retailers with picking services of requested quality and price, for continuous product replenishment. That is why retailers have

The major players on the Russian sporting goods retail SPORTMASTER chain is the leader of the Russian sporting goods market, and enjoys a high level of the unaided brand awareness (80% - first mentioning in Moscow and about 60% in the regions) and covers practically all cities with population over 300.000 people. Second retailer in scale is Adidas group with monobrand chains Adidas and Reebok. Global retailers such as Decathlon and Intersport are not very big yet, but definitely have some potential. We should also mention regional Russian chains like Top League, as well as specialized niche companies like KANT, Trial Sport, Velomir and many others.

We also have to admit the sharp deficit of skilled human resources and generally low level of labor productivity, combined with fast growth of all related costs. It is necessary to consider high sales dependence on weather that provokes either excessive stock or great shortage of ordered product apart from pure marketing factors. This brings ultimate importance to the efficient distribution and price management systems. It’s also worth to add the high level of uncertainty in the development (expansion) program implementation. It’s very difficult to predict success of the new shopping malls because during the post-crisis period the competition between shopping malls grew significantly. The major part of the old shopping malls requires re-concept because of low operations efficiency. In spite of these facts the final rent level (base rent + service fee) usually is higher than in Europe. To make a conclusion, Russian sporting goods market is a developing market that has a decent growth potential and at the same time it inherits the risks of drastic drops even in smallest economic turbulence. In these conditions successful business the “Russian-way” is more a state of art than just ordinary retail in its traditional meaning.

Bike Industry Develop bicycle worldwide

From local to global in 20 years They have joined the WFSGI By Jeroen Snijders Blok, COO, Accell Group N.V.

For many, many years the bicycle industry consisted of bigger and smaller national brands, with all part suppliers nearby, with production of major components and assembly of the bicycles in-house and with sales mainly in their respective home markets. The manufacturers had only to deal with home market regulations, which differed significantly from country to country and occasionally with international regulations, but significantly less strict than nowadays. The international cycling sport events were primarily held in Western European countries, with Western European teams, riders and sponsors. Since the beginning of the 90’s this has changed dramatically. Sourcing of all kinds of components turned into a global operation. Production of complete bicycles, in many cases, shifted from home countries to the Far East, making various import and export issues became relevant and important. Consumer and environmental protection for safety and health, corporate social responsibility and trade issues also started to have their impact on the bicycle industry. The international cycling sport events are held in more disciplines on almost all continents, with teams, riders and sponsors coming from all over the world and with a tremendous media attention.

The peloton on stage one of the Tour Down Under. - © Graham Watson

That’s where the WFSGI perfectly fits in and that’s why Accell Group decided to become a member of the WFSGI. As industry we have a strong believe in the future role of the bicycle as sporting good, as means of transport, to contribute to people’s desire and need for more exercise, as environmental friendly solution for city mobility (to fight congestion), as extended mobility for the aging people. To summarize, a product that everybody wants to use.

Nowadays the industry has to deal with a growing number of national, supranational and international laws, regulations and responsible behavior, not only enacted by governments but also by pressure groups and global sport organizations. In 20 years we turned from a local industry into a global industry. To protect everybody’s interest and get us all in the right direction we have to join forces. We have to speak with one strong voice towards the important international issues the bicycle industry has to deal with.

I believe the relationship between the Bicycle Industry and the WFSGI will be instrumental in helping resolve the current communication issues between UCI and the Bicycle and Components Manufacturers.

Denis Kelleher, VP of European Operations, SRAM

WFSGI Handbook 2011

Bike Industry Develop bicycle worldwide

Bike Industry – Develop bicycle worldwide

“We need a unified approach of the development of the sport of cycling” UCI President Patrick McQuaid was interviewed by Marius Widmer, WFSGI Communication and Marketing Manager

Marius Widmer : Thanks for taking the time right after the World Championships in Melbourne. First of all, what fascinates you at bicycle in general ?

I encouraged joining

Patrick McQuaid : I come from a cycling family. My first racing bike was given to me by my father, a racing model from Italy. I was only seven or eight years old. So I always had an interest in the bicycle, as a means of transport, at school, when racing on so on.

very beginning. WFSGI

MW : Can you inform us about the UCI goals in relation to the bicycle manufacturers ?

the WFSGI from the was a group that, could support the bicycle industry as a whole. PMQ : Our common objective is to globalize the sport. If we work close together, the industry with the UCI, we can achieve the goals better. We can help them and they can help us. We need finance, to finance the markets, to provide equipment to national associations. They can provide equipment to us and to national associations. They just need to understand that in terms of sport and regulations we have to do framework, but we have no problem when they sell different type of bicycles to poor countries for instance. MW : What do you think about the bicycle group under the WFSGI umbrella ?

Andre Greipel wins stage four of the Tour Down Under. - © Graham Watson

PMQ : We have clear and defining goals. We want a close relationship with them in the process of globalizing the sport. We try to do this on two levels. First of all we want to have a major event on the world calendar on every continent. Secondly we want to develop the calendar in each continent. MW : How can the bicycle manufacturers contribute to these goals ?

PMQ : I think it’s a very positive moment. I encouraged this with Robbert [editor’s note : Robbert de Kock, Secretary General of WFSGI] from the very beginning; the bicycle industry has been divided. WFSGI was a group that, in its composition, could support the bicycle industry as a whole. I encouraged joining the WFSGI. MW : Where can a group discussion help towards the single discussion that you have already had with several bicycle manufacturers ?

PMQ : It can help greatly. A group discussion is much better to reach the objectives. We can understand the objectives of the industry. The bicycle industry wants to create new products for the market, and we have a certain control on that because for the sport we have to maintain a certain regulatory framework. For bicycles in African countries to transport goods, they can do it themselves the way they want, but the UCI has to do regulatory work and control for the professional sport. MW : In the past, the relations between the UCI and the bicycle manufacturers have not always been very smooth. What are the ingredients that this can improve for the future ? PMQ : Cooperation of the two groups; better understanding of the aims and objectives. We need a unified approach of the development of the sport of cycling. The UCI benefits from new races and the manufacturers benefit from more markets. It’s not that the UCI should come up with all ideas ; we also want them to come up with new ideas as they have a much better understanding of the market. MW : Do you see it as a benefit when bicycle brands with relations to racing would join the WFSGI ? PMQ: Very much, I am very open-minded regarding this and I’ll encourage them. MW : What are your goals for 2011 ? PMQ : As President I hope we have the continued development in the world and we can continue in the fight against doping ; and I hope our credibility is strengthened, that UCI is doing the maximum they can. At the races like Tour de France and others that the winners are credible. MW : Thanks a lot for this interview and have nice time down under. PMQ : You’re welcome.

Profile Patrick McQuaid, UCI President Origin : Ireland Date of birth : 5 September 1949 Marital status : Married, 4 children Languages : English, French. Education : Degree Physical Education-Strawberry Hill, University of London (1973). Career : Physical Education Teacher (1973-1985) ; Cycle Race Promoter (1985-2005). Sporting career : Cycling to international level. Sports practised : Cycling, skiing, mountain walking for leisure. Career in sports administration : National Coach Irish Cycling Federation (1981-1984) ; Board Member Irish Cycling Federation (1985-1994) ; President Irish Cycling Federation (1994-1998) ; Vice-president and Member of the Council of ASOIF (2009- present) ; Member of the Executive Committee and of the Foundation Board of WADA (2009- present) ; Member of the International Olympic Committee (2010- present) Member of the UCI : Member of the Management Committee (1998-present) ; President of the UCI Road Commission (1998-2005) ; President of the UCI (2005- present).

WFSGI Handbook 2011

Bike Industry Develop bicycle worldwide

COMPOSITES AT THE LEADING EDGE By Jan-Anders Månson and Pierre-Etienne Bourban, Swiss Federal Institute of Technology, Lausanne (EPFL), Laboratory of Polymer and Composite Technology (LTC) Lausanne, Switzerland

Why Composites ? Why have a commercial aircraft gone from 5% to over 50% composites in the last 20 years ? Why is the automotive industry using more and more composites during the search for “greener” cars ? Why is an America’s Cup boat almost 100% in composites ? Why was Tour de France this year totally dominated by composites bicycles ?

This is important in moving equipment, where stiffness is needed for accuracy and energy conservation, and the low weight allows for fast movement and accelerations. Specific Stifness (rigidity/weight) A key performance parameter is therefore the ratio of stiffness to density (=specific stiffness). The figure shows the values for some common structural materials. Carbon fiber composite having a very high stiffness and a low density outperforms other materials.

By courtesy of J.A. Månson and P.E. Bourban

The answer is, increased “energy efficiency” during use. With the rapid development of composite materials and manufacturing methods, lighter and more rigid vehicles can be produced with optimal design and styling flexibility.

What is a composite ? Definition : A «composite» is made of two or more different materials combined together to create a unique material combination with superior properties, often used are Carbon fiber and Epoxy. The carbon fiber alone has double stiffness (rigidity) to steel and a quarter of the density (weight). High rigidity and low weight : For performance driven applications the key parameters are often maximum rigidity (=stiffness) and minimum weight (=density). In practical terms; how rigid and strong can I make my application at a minimum weight.

When composites are bent, they naturally snap back into place. This feature of energy retention is ideal for efficient spring effects in archery bows and pole-vault, but also main advantages when designing tennis rackets, skies or hockey sticks.

The bicycle market has gone through a phenomenal development during the last 30-40 years. While the automotive market has doubled the bicycle market has increased 4-times. Of course this increase touches all material types, but the composite bikes have a main part of this increase.

Composites and bicycles What are the main advantages and limitations of composites bicycles ? Main advantages Lightness and stiffness Directional optimised properties New design opportunities Property flexibility during design

Courtesy of J.A. Månson and P.E. Bourban

Main draw-backs Expensive in comparison to metal Complex and often labour intensive manufacturing Difficult to join and repair Sharp fractures raises security issues High energy retention may create large rebounds

The Sport Industry has a key position

Smart design and manufacturing has proven to give exceptional advantages, and there is no doubt ; some of today’s competition bicycles are on the forefront on composite design.

This implies that new materials and devices are often first seen in use on sport equipments and clothing and not on airplanes and cars. One of the earliest adapters of new materials and new designs is the manufacturer of competitions bikes. This pioneering role, has a great value for other industrial branches.

Courtesy of J.A. Månson and P.E. Bourban

Another key advantage is the excellent elastic properties of composites. When one bends metal, it will yield or dent. However, when composites are bent, they naturally snap back into place. This feature of energy retention is ideal for efficient spring effects in archery bows, pole-vault etc., but also main advantages when designing tennis rackets, skies, hockey sticks etc. The flip side of the coin with high energy retention is high rebound and recoil forces which sometimes are found as an under-laying cause for knee injuries in alpine skiing, enormous spring-back and shoot-out forces from tracks during accidents in high speed sports.

Bicycle and car production per year

Competition sport, being extremely performance driven, makes the industry a very early adapter for new innovative materials and applications.

By courtesy of J.A. Månson and P.E. Bourban

The composite and bicycle market The projection for the composite market is staggering for the coming years, due to increased use in aerospace, automotive and sport applications.

By courtesy of J.A. Månson and P.E. Bourban

WFSGI Handbook 2011

Bike Industry Develop bicycle worldwide

What’s next ?

Competition sport, being extremely performance driven, makes the industry a very early adapter for new innovative materials and applications. New materials and devices are often first seen in use on sport equipments and not on airplanes and cars.

The composites industry is still evolving, with much of the growth now focusing around renewable energy. For example, wind turbine blades are constantly pushing the limits on size and are requiring advanced materials, designs, and manufacturing. In the future, composites will utilize even better fibers and resins, many of which will incorporate nano-materials. Functional elements such as optical fibers or damping materials will be more and more integrated for performance fine tuning. Dedicated university programs and research institutions will continue to develop improved materials and ways to manufacture them into products. Furthermore, composites are on the path towards being more environmentally friendly, recycled plastics and biobased polymers are on the rise.

Is there a limit?

About the authors Jan-Anders Månson is Professor in composite at the Swiss Federal Institute of Technology (EPFL) and President of the International Academy of Sport Science and Technology (AISTS). Besides being member of Anti-Doping Swiss (ADS), he has during the last years been working close with the International Swimming Federation (FINA) and the International Cycling Union (UCI). Pierre-Etienne Bourban is Senior Lecturer in Composite Materials at the Swiss Federal Institute of Technology (EPFL). He is heading the research effort in Sport and Rehabilitation Engineering, striving for material and equipment with improved “Feel and Control” performance.

Electric Bike Trend Brings Drastic Changes to Bicycle Sector By Jack Oortwijn, Editor in Chief and Publication Manager, Bike Europe

We ain’t seen nothing yet. This is the strong belief of just about every insider in the bike business on the current trend in electric bicycles. With sales in Europe breaking the one million mark this year and expected to grow to 3 million by 2015, electric bikes are becoming a vital, integral part of the bicycle business. Moreover, it brings lots of extra turnover as electric bikes are twice to three times more expensive than a regular bicycle. Where will the electric bike trend lead to ? It will revolutionize the bike sector. Better said ; it is already revolutionizing the business. And even to such an extent that the old saying on the bike industry, that it is a “nickle and dime business”, will soon be forgotten.

Today’s drive for higher rigidity and lower weight has in some applications seemed to reach its limit. Top athletes seem to ignore some of the extreme developments. The equipment has become too stiff and too light, making the equipment having less “feel and control”, the equipment behaves “nervously”. A likely evolution goes towards a better matching of specific stiffness with the damping behavior, in order to have better harmony with the cognitive response of the athlete. This evolution is not just in bicycles but also in other sport equipment such as tennis rackets, alpine skies. It might be here, we see the next trend breaking developments, besides developments in manufacturing techniques allowing for more cost effective production. Today more than ever before, it will be important for competition sport to monitor this fast development, to support in anticipation of the evolution, to safeguard the key values of the sport and not to go out of bounds with respect to a fair and leveled playing field and to reasonable accessibility of the equipments for the athletes. The main stakeholders of sport, athletes, sport federations and manufacturers can with a joint vision maintain the attractiveness of sport innovation, hand in hand with a fair and lucrative sport evolution.

Potential One of the experts in electric bicycles – much referred to as e-Bikes – expects that electric powered two wheelers will replace about half of all normal bicycle sales worldwide. This expert ; Ed Benjamin who is Chairman of the Light Electric Vehicles Association (LEVA), said in an article recently published in “Bike Europe” ; the international trade journal for the bicycle market : “E-Bikes will replace nearly all moped, light motorcycle, and motor scooter sales. And a few cars. This will make us one of the largest industries in the world with sales of 115 million units per year – more than 100 billion dollars per year in turn over.” Do e-Bikes really possess this kind of potential ? In the fastest growing e-Bike market in Europe – the Netherlands, one can easily presume the first signs of an e-Bike revolution are already here. And when taking a closer look at the current happenings in the European bike sector then it shows that all over Europe e-Bikes have beaten the 2009 downward trend for sales of regular bicycles (see box article). In Germany, regular bike sales dropped 12%, but e-Bikes sale were up 36%, to 150,000 units. The Dutch market is THE example of how rapidly e-Bike sales can develop. Between 2006 and 2009 the market quadrupled – from 40,000 to 153,000 units last year. This means one out of every eight bicycles sold in the Netherlands is now an e-Bike, despite being, on average, three times more expensive than a regular bicycle.

Electric bicycles are becoming a vital, integral part of the bicycle business ; what was a niche product, is now headed straight for the mainstream. And with that turns the emphasis of the bike business from a sports product to a human transportation tool. - © Sparta

Thanks to their growing popularity in 2009 electric bike sales accounted for one-third of the turnover of the whole bike sector in the Netherlands, an increase of 25% related to 2008. The success of the e-Bike is also reflected in the

WFSGI Handbook 2011

Bike Industry Develop bicycle worldwide

average price of all bikes sold by dealers/retailers. This retail price has grown at the same pace as number of units – by 21.4%, from € 709 in 2007, to € 861 in 2009. On average, the Dutch dealers (roughly 2,200 shops) have a market share of 74%, but the e-Bike market is almost completely handled by the dealers. According to GfK Panel Services Benelux, they sell 97% of all e-Bikes in the Netherlands. This market research company recently noted in the Dutch dealer magazine “Tweewieler” that dealers have to sell three times the number of regular bikes to reach the same turnover with electric bikes. For 2010, GfK Panel Services Benelux counts on another year of strong e-Bikes sales, as even in the deep-freezing winter months of 2010 e-Bike sales stood firm, against totally collapsed sales of regular bikes.

European Bike Market Takes a Blow in 2009 With purchasing power under pressure and widespread uncertainty making forecasts almost impossible, 2009 was one of the most difficult years of the last decade for the European bike sector. Close to 1.3 million fewer new bikes were sold throughout the 27 EU member states compared to 2008. Total sales stood at 19.1 million units ; 6.3% down on the 20.4 million in 2008. Europe’s main bike markets (Germany, the UK, France, Italy and the Netherlands) all showed a similar pattern last year. Together they make up approximately 70% of total bike sales. In 2008, sales for these five most important markets stood at 14.2 million units. 2009 saw a 4.4% drop, to 13.6 million units. Close to 12 million bicycles were produced by the 27 EU member states last year. That’s significantly less compared to a year earlier, when 12.8 million bikes rolled off the assembly lines. The difference (971,000 units) represents 7.6% fewer bikes produced in 2009, compared to 2008.

France shows a similar picture ; a slow start after which sales accelerates every year. 23,700 e-Bikes were bought by the French last year, compared to 15,300 in 2008, 9,700 in 2007 and 6,000 in 2006. In all the other European countries electric bikes still have to secure a foothold. But, if this will happen is no longer the question. Now it’s just a question of how soon and how fast. E-Bikes are here to stay and what was a niche product, is now headed straight for the mainstream.

Newcomers With electric bicycles becoming a mainstream product many, many newcomers are attracted with of course lots of them from the Far East. However, among them also interesting ones like bike components giant Shimano, battery specialist Sanyo or automotive parts supplier Bosch. Next to Bosch, other companies from the automotive and powered two-wheeler sectors are suddenly showing an interest in bikes too. Companies like VW, Magna, Peugeot, Piaggio, Kymco, Matra, Hero and others have products linedup as well as already being sold, or are in the final planning stages for entering the electric bike sector. These newcomers have the financial backbone to put millions in innovative vehicle designs as well as effective marketing. With them entering the market e-Bike sales are expected to grow to the next level in the coming years.

Bike Europe - Trade Journal for the European Bicycle Market Think Global, Act Local; that’s what Bike Europe is all about. The difference between success and failure is often understanding that each market is different. Bike Europe brings the various bike markets in and outside Europe into perspective, splitting them up by segments. Our network of correspondents throughout Europe, Asia and the US provide unique insights in the differen t twowheeler markets. With our detailed analysis of the markets, we want to be a meeting place for professionals. Next to a monthly print publication with a circulation of 6,500 ; Bike Europe’s English eMail Newsletter is weekly mailed to close to 10,000 subscribers and a weekly Chinese Newsletter to about 2,500 subscribers. Bike Europe’s website at www.bike-eu.com attracts this year 650,000 visitors and will reach a pageview score close to 1.5 million.

In line with consumption and production the import of bicycles into the European Union’s 27 member states also dropped significantly last year. Close to 1.5 million fewer bikes were imported. In 2009, according to Eurostat data, 16.2 million bicycles were imported by the 27 member states, from countries outside the EU as well as from other EU member states ; 8.4% down on the 2008 import total. For more data on bike sales in Europe : www.bike-eu.com/facts-figures/market-reports

The electric bike trend is already revolutionizing the bike business by bringing electronics in the dealer’s workshop and by bringing in lots of extra turnover as e-Bikes are twice to three times more expensive than a regular bicycle. - © Bike Europe

Holland and Germany are not the only countries where the e-Bike trend marches on. In Italy sales quadrupled to 40,000 units in 2009. In Switzerland the market doubled, from 12,600 to 24,000 units sold. In Austria, sales are estimated at 10,000 for 2009. The country’s association Arge-Zweirad notes : “For 2010 we expect minimum sales of 15,000 units. More and more pedelec suppliers are entering the Austrian market so there are more choices for high market demand.”

The expectation expressed before in this article that this next level stands at 3 million units in 2015 could even be on the pessimistic side. In particular given the current wide interest in bicycles spurred by (among other factors like health, climate and traffic congestion) public bike hire schemes in cities all over Europe. Paris and (since July 30 also) London are the prime examples of these very popular public bikes that as the Paris’ Velib score millions of rides by tourists and locals on a yearly basis. Such Velib’s and the London Boris’ bikes (they are publicly named after the former London Mayor who instigated the scheme) as well as electric bikes are turning the bike sector around. The emphasis of the bike business is turning from a sports product to a human transportation tool.

In EU’s 27 member states 7.6% fewer bikes were produced in 2009 compared to 2008. - © Bike Europe

WFSGI Handbook 2011

India Highlights of a resourceful country

India ready to score big in sports By Tarun Dewan, Secretary, Sports Goods Export Promotion Council

At present, the size of the sports market in India is small and the countryâ&#x20AC;&#x2122;s share in the global trade in sports goods is less than one per cent. However, the sports market in India is growing rapidly with the continued growth of GDP, a young and educated population and higher disposable income. Also urbanisation, awareness and exposure to international markets, the presence of foreign brands into sports, technological developments, and high performance in international events are contributing to this growth. In the next couple of years, the country will host a series of international sporting events which is likely to boost the industry and increase sports awareness. Also, sports promotion, training and infrastructure, and exports of sports goods are now focus areas for the Indian government. In India, sport is treated as a recreational and leisure activity. As income increases, expenditure on recreational and leisure activities also increases. All new housing complexes in urban areas have club houses (health centre cum recreation area) as a standard feature. It is predicted that recreation consumption in India, which includes expenditure on sports, will grow at the rate of 8.9 per cent per annum from $1 billion in 2005 to $6 billion in 2025. Although India is not a major sporting country and neither does it win a significant number of medals in international events, it actively participates in international sporting events such as the Olympic Games, Commonwealth Games, Asian Games and Cricket World Cup. India participated in the Olympics and Commonwealth Games even before independence. It has competed in 14 of the 18 Commonwealth Games held so far, starting from the second Commonwealth Games in 1934. The first Asian Games was held at New Delhi, India, in 1951, which hosted it again in 1982.

Footwear Unit of Apache SEZ Development India Ltd., Nellore - By courtesy of EPCES

India has few strong domestic brands of its own, but it is also a manufacturing hub for sports products and many global sports brands. India has a comparative advantage in low cost skilled manpower vis-Ă -vis developed countries. All the segments of sporting goods i.e. Sports Apparels, Sports Equipment, Sports Shoes and other sports accessories are manufactured in India. The manufacturing of Sports Equipment is geographically concentrated in Northern India (Jalandhar, Meerut and Delhi). India presents a huge potential in sports business and its market size is poised for a quantum jump in the coming years due to booming economy, large middle class with disposable income and increased government spending in this sector. Exposure to sports due to high TV penetration and education in the rural areas is also driving interest of people in sports. Lately there is also rapid growth in advertising as local and international companies want to target this lucrative, underdeveloped market. The sponsorship market in sports is estimated at $ 250 million per year and TV rights worth over $ 350 million per year which are growing fast. Most of the money in sports is spent on Indiaâ&#x20AC;&#x2122;s national passion for Cricket.

WFSGI Handbook 2011

India â&#x20AC;&#x201C; Highlights of a resourceful country

Sports Equipment manufacturing industry is export oriented and more than one third production of sports equipment is exported out of India. The export of sports equipment has been growing 10% to 15% every year for last five years. Top six items of exports account for more than 70% of exports of sports equipment from India namely Inflatable balls (26%), Cricket equipment (18%), Boxing equipment (9%), Hammocks (8%), Athletic goods (7%) and Nets (3%). More than 75% of exports of sports equipment from India goes to six countries namely U.K. (27%), U.S.A. (19%), Australia (16%), South Africa (5%), France (4.5%) and Germany (4%).

India Highlights of a resourceful country

U.K U.S.A

19%

Australia

16%

South Africa France Germany

Indian Special economic zones Engines of Economic Growth

27%

By D K Mittal, Additional Secretary, Department of Commerce, Govt of India

4.5% 4%

Other Countries 24,5%

Inflatable Balls

Special Economic Zones (SEZs) are operating all over the world and are known by various names like EPZs, FTZs, Free Zones, SEZs etc. India was the first country in Asia to introduce Export Processing Zone Scheme in 1965. This Scheme was replaced with Special Economic Zone Scheme in the year 2000 and for providing long term stability and continuity, SEZ Act was enacted in 2005 and made operational from February 2006.

26%

Cricket Equipment 18% Boxing Equipment

Hammocks

Athletic Goods

Nets

Other Items

29%

â&#x2013;

Fiscal package provided under the Scheme for development of SEZs as well as for setting up of a unit in the SEZ is quite comprehensive and competitive to any such package provided elsewhere in the world. SEZ developers are entitled for duty free import of all inputs, exemption from all indirect taxes and are entitled for exemption from income tax for a period of 10 years. SEZ units are also entitled for

Eon Kharadi Free Zone. - By courtesy of EPCES

duty free inputs for setting up of a unit as well as for carrying out any activity in the SEZ unit. SEZ Units are also entitled for income tax exemption for a period of 15 years, first 5 years 100% exemption from income tax, next 10 years 50% exemption from income tax. SEZ Scheme provides single window facility for all clearances for setting up of a SEZ unit. SEZ Scheme also provide exemption

Mahindra Worldcity SEZ, Chennai. - By courtesy of EPCES

skins.net

WFSGI Handbook 2011

India Highlights of a resourceful country

New India – the amazing transformation

from state levies, though facilities relating to exemptions / refund from various state levies, varies from state to state. SEZ Scheme enables setting up of various social, commercial and industrial infrastructure in the SEZ which includes industrial plots, ready built up industrial space, hospitals, residential complex, schools, power plant, ports etc. Since implementation of SEZ Act in 2006, response to the SEZ Scheme from international investors as well as domestic investors has been quite enthusiastic. International investors include NOKIA, Motorola, Flextronix, Foxconn, Apache, Nike, Ascendas, Brandix and domestic investors includes all major players in India including Reliance, Mahindra, Tata, Infosys, Wipro, DLF, Rahejas, Essar etc.

India was the first country in Asia to introduce Export Processing Zone Scheme in 1965. After operationalization of the SEZ Act, SEZ Scheme has performed very well in increasing exports, creating employment, attracting investment and creation of world class infrastructure. In this short period of around 5 years, we have given approvals to approximately 575 SEZs and approx. 135 SEZs have actually started operating. Exports from SEZs have gone up from US$ 5,000 million in 2005-06 to US$ 47,000

By Jayesh Rambhia, Director, Premsons Plastics P Ltd, manufacturer & exporter of Sports Water Bottles

Nokia SEZ Sriperumbudur. - By courtesy of EPCES

million in 2009-10. Investments in the SEZs have gone up from US$ 613 mn in 2005-06 to US$ 3 2,000 mn in 2009-10. Presently, SEZs provide direct employment to approx. 550,000 people. India has inherent advantage in the form of Parliamentary democracy, young population, English speaking person, huge domestic market, availability of skilled and trained manpower at a very competitive price. With a very competitive fiscal package and a single window mechanism, SEZ Scheme in India provide a real opportunity to the international investors to make India as a manufacturing hub for exporting to other countries from India. Ministry of Commerce & Industry is committed to provide all assistance to international investors willing to come to SEZs. ■

The fast growing skyline of Mumbai (Bombay), the commercial capital of India. - By Courtesy of JR

Most of you must have known India through television, movies, books or travels in the past. Since the economic liberalization in 1990s, the transformation is amazing.

World’s 4th largest economy (in purchase power parity) Economy Growing at 7.4%, 2nd fastest in world 1,300 million population , 467 million strong workforce 2nd largest pool of scientists and engineers in the world

Now India is : World’s favorite provider of services World’s second favorite factory location Reliance Jamnagar SEZ by night. - By courtesy of EPCES

For further details, please visit www.sezindia.nic.in or contact D K Mittal Additional Secretary Department of Commerce Govt of India New Delhi at +91 11 23053315 or astpd-doc@nic.in

Fastest growing market for “India appropriate” brands / products / services World’s largest democracy Largest English speaking population in the world

India hardly knows “recession” the way you know it. Job loss, foreclosures are rare. There were no defaulted banks.

India as market If you visit malls in our metro cities, you will see similar brands as in your city, apart from many local brands. Just a short example: Nike, Reebok, adidas, Puma, Wilson, Butterfly, Speedo, Yonex , Babolat, New Balance, Umbro, Dunlop, Body Sculpture, TYR, K-Swiss, Head, Spalding, Converse, Gatorade Lucozade, Stag etc.

WFSGI Handbook 2011

India Highlights of a resourceful country

Planet Sports and Royal Sporting House have multi-brand stores. FMCG : Colgate, Lux, Head & Shoulder, Pantene, Ariel Fashion : Gap, Levis, Armani, Zara, Burberry, Ed Hardy Automobiles : Mercedes, BMW, Audi, Honda, Toyota, Volkswagen Gadgets : Nokia, Samsung, Sony, Dell, Mitsubishi, Hitachi, Motorola Food : Pizza Hut, McDonald’s, Dominos, Coca Cola, Pepsi, Kellogg’s, Cadbury Most of these branded goods are “Made in India.” India is a factory location or sourcing base for most Fortune 500 companies. Indian exports crossed US$ 178 billion last year. Indian ports handled nearly 62 million containers last year. India can surely handle your business too.

When you change your time zone also be prepared to change your perception, the way you look at life and world.

India Highlights of a resourceful country

5,000 years of civilization has evolved to bring you Yoga, Ayurveda (Indian medicines), Indian food, Indian art and culture. Allow it to grow on you and enrich you. India is a “Soft Superpower”. We do not need to wage war to win hearts. Welcome to New India.

India low cost destination For only 1 Euro per day, a worker can have basic breakfast, lunch and dinner. Shirts are available for 1 US$ onwards while a Coke or a Pepsi is sold for 0.22 US$. Ice cream at McDonald’s costs 0.15 US$, so buying or making goods in India is very affordable.

Indian innovations Successful sourcing tips • Jalandhar, Meerut, Delhi, Bombay (Mumbai) & Tirupur are important destinations for Sports goods sourcing in India. • “Sports Goods Export Promotion Council (SGEPC)” sponsored by Ministry of commerce, can help you with sourcing or finding right partners. They can help you with reference checks or resolve any complains. • When you source from India, do pay little more for honesty & reliability - do not be too greedy & buy from cheapest source. Check for references. Go for established manufacturer & exporters. • Our infrastructure is evolving & is quite loaded, leave couple of weeks for uncertain delays. This will give you stress free profits.

Mobile talk time costs just 0.01 US$ per minute. With 545 million cell phones it is the second largest market in world. Tata has launched the cheapest car in the world – Tata Nano at 2,500 US$. If you wish to compete in the world market, Indian innovative re-engineering can substantially reduce costs for your product.

Invisible player at World Games 134 Million Television sets make Indians a remote audience for major sports events. This jacks up sponsorships and gets more money into sports. The Indian Cricket Board is the world’s richest cricket board. In India, contracted star players are among the best paid sportsmen in the world through thanks to huge advertisement income. Do not try to judge our country in hurry.

■

The Indian Sports Goods Industry – Perspective & Prospects By Bal Krishan Kohli, former Vice Chairman of the Sports Goods Export Promotion Council (SGEPC). Assisted by Surjit Singh Jolly & Kailash Anand, former & current Vice Presidents of SGEPC.

Indian Sports Industry is one of the oldest industries which started industrial activity in India in Sialkot and had the distinction of exporting first industrial product from India as early as 1883. After independence the sports goods industry was re-established in Jalandhar and Meerut on very small scale basis.

India occupies a distinctive edge in rugby balls as it caters to nearly 75% of the world requirements in rugby.

item like hockey, soccer, cricket, badminton, rugby and athletics. India continued to concentrate on traditional items but in the last three decades or so there has been a revolutionary change as India started making sports apparels and sports shoes of international standard. Sports apparels are being sourced by almost all the international leading brand either from Tripur or Ludhiana the two textile hubs of the country, Jalandhar or Meerut. Similarly we are producing sports shoes of international standard for almost all disciplines as production infrastructure for large scale and bulk production of sports shoes are operational in a number of units who produce shoes under their own brands as well as for many well known international brands.

On the world map Indian sports products like hockey were on the world map right from fifties and well known English companies were getting their cricket equipment made in India. As production costs in the European and American countries started rising the leading international brands in those countries were trying to source their products from India, Pakistan, Taiwan, South Korea and Japan. The sixties and seventies brought the Indian sports goods industry on world map, when well known international brands started sourcing sports goods from India.

Sports shoes and clothing Sporting goods generally speaking embrace sports apparels, sports shoes, ice hockey, skating, and camping also besides the traditional

By courtesy of P C Sondhi

Serving the world to international standards Indian made sports products have been received well all over the world. Indian made bladders have been used in all World Cup soccer balls. India has been supplying soccer balls to leading brands all over the world for decades. Similarly India occupies a distinctive edge in rugby balls as it caters to nearly 75% of the world requirements in rugby. We are the biggest producers of cricket bats and cricket equipment for almost all the brands. Not only are we making cricket

WFSGI Handbook 2011

India Highlights of a resourceful country

equipment for leading brands, member of the leading player all the world are using Indian brands in countries like South Africa, West Indies, Bangladesh, Sri Lanka and New Zealand. As it is nearly 80% of the cricket equipment are made in India. Indian made athletic equipment and table tennis equipment have been used in the Olympics and international events. Even in boxing all the leading brands are sourcing their requirements from India.

BOARD of directors

The way forwards The Indian sports goods industry has not been given the status, importance and recognition due to it. With R and D facilities, modernization, mechanization and up-gradation of all products, the Indian manufactures have established their names and brands successfully in the Indian market and abroad and can meet requirement of all brands for sports apparel, shoes, athletic and other sports equipment.

By courtesy of P C Sondhi

Sports crazy nation / global brands

The foreign brands are fully aware of the segment of the population which they can target.

A huge country with diverse culture India is a huge country with diverse culture, races and religions. The people are hardworking and aspiring for better living conditions. It is one of the largest and truly democratic nations in the whole world.

■

By courtesy of P C Sondhi

India is one of the most crazy sports nations in the world and the size and potential of the market is well known and though Indian brands are well entrenched in India, with the television coverage of sports events on such a wide scale foreign brands have also entered the Indian market. Major multinational brands have surveyed the potential of Indian market and while well-established Indian brands have enjoyed confidence of the players and public, the foreign brands are fully aware of the segment of the population which they can target.

newbalance.com

. The 759 was designed for the body in motion, giving you only what you need and not a stitch more. So you can lose yourself completely and find yourself at the exact same time.

Trade Cases protectionism

The Magic Wand of Trade Protectionism By Edwin Vermulst and Juhi Sud are trade counsels to the WFSGI and practice law in Brussels, Belgium

Globalization and trade liberalization, some of the most commonly used terms in mass media, seem to grasp a lot of world attention but what inevitably follows is the never ending saga of trade protectionism that seems to be demanding more and more attention over time. One of the best examples where the magic wand of trade protectionism is used extensively is the footwear sector. At the time of writing this article, 8 countries including Argentina, Brazil, Ecuador, European Union, Mexico, Russia, Chinese Taipei and Turkey all have various types of trade restrictive measures on footwear imports in place. Trade restrictive measures by different countries, as demonstrated in the table at page 58, can be divided into unilateral trade measures and negotiated trade measures. Negotiated trade measures are less common; currently Mexico has a negotiated measure in place which involves the phased reduction of the import duties on Chinese footwear imports from 100% in 2008 to 70% by 2011. The ad valorem duty is applied on the difference between the Free On Board (FOB) price and the minimum reference price established. Unilateral measures taken by countries as a justification to protect their domestic industry from competitive footwear imports, particularly during times of economic crisis, are often in the form of anti-dumping or safeguard measures, but more esoteric excuses can also be found, as the table and the following overview shows :

The political and economic factors surrounding the investigation and the application of trade defence measures by other countries are factors that influence the decision of the investigating authorities.

Anti-dumping duties have to be paid in addition to the normal import duty and can be in the form of ad valorem duties which are calculated as a percentage of the import price (European Union and Chinese Taipei) ; a variable duty fixed by reference to a minimum import price (Argentina) ; or a fixed duty per imported pair of footwear (Brazil). These are normally country and producer specific.

Safeguard measures are also in addition to the normal import duty, but they apply to all imports. Currently Turkey has in place a Safeguard measure in the form of a fixed duty per pair on footwear imports.

Balance of Payment measures are import restrictions imposed by countries facing balance-of-payment difficulties, subject to the compliance with the provisions of the WTO Agreements governing the issue. Currently imposed by Ecuador, the measure involves an increase in the customs duty rate and the payment of an additional fixed duty per pair of imported footwear.

Minimum price for customs valuation purposes : Russia which is not a WTO Member has imposed an internal customs measure whereby it has fixed the minimum price for footwear imports from certain countries like China, the US, etc., for customs valuation purposes. It is on this minimum price that the 10% import duty is calculated and has to be paid by the importer irrespective of the actual import price of the footwear.

The most common unilateral protectionist measures such as anti-dumping and safeguard measures are imposed as a result of an administrative investigation undertaken by the domestic authorities. For instance, in case of anti-dumping measures, the domestic produc-

ers file a complaint first showing how they are affected by the allegedly dumped imports from say country X. The investigating authority sees if the complaint provides sufficient evidence of dumping and the resulting injury to the domestic complaining producers. If that is the case, a proper investigation is initiated in which the exporting producers, domestic producers and other interested parties such as importers, consumers are invited to participate and provide the necessary information. Undoubtedly the exporters, domestic producers and importers in the investigating country are the key players and to a lesser extent wholesalers, distributors, consumers etc. Exporters, domestic producers and importers have to complete detailed questionnaires and provide the information relevant for the investigating authority to assess whether there is dumping and injury so that measures can be imposed. Furthermore, often in countries like the European Union the investigating authority assesses whether the imposition of the measures will not be against the larger interests of other economic players in the country besides the producers. Should it appear that the exporting country producers are dumping the product which is resulting in injury to the domestic industry, the investigating authority may impose measures.

Taking all these aspects into account the current approaches for a mandatory “Originlabeling” can only be seen as protectionism against imports.

The discretion of the national investigating authorities is extensive. Moreover, the political and economic factors surrounding the investigation and the application of trade defence measures by other countries are factors that influence the decision of the investigating authorities.

Unilateral measures taken by countries as a justification to protect their domestic industry from competitive footwear imports. For exporters and importers it is very important to not only proactively participate in the investigatory procedure by providing the information requested by the investigating authority, but also to actively liaise with each other by forming coalitions/interest groups to oppose the measures in a united way. Often investigating authorities take advantage of conflicting statements of exporters/importers as a justification for the imposition of the measures. It is necessary for importers to encourage their suppliers to participate in the investigation, to constantly comment on the findings of the investigating authority and to demonstrate the strong as well as effective opposition to the imposition of any measures. Importers must constantly present their views to the ministries responsible for the imposition of the measures to show the negative effects of the measure concerned on the national economy. Should the measure still be imposed, exporters and importers can contest the measure before the domestic courts which unfortunately mostly tend to uphold the investigating authority’s decision. In addition, exporting countries that are members of the WTO can challenge such measures in the WTO. Therefore, only the exporting Member country and not individual exporters can bring a WTO case. For instance, China is presently contesting in the WTO, the anti-dumping measure on footwear with leather uppers imposed by the European Union in 2006 and extended on 31 December 2009 for a further period of fifteen months. However, bringing a WTO dispute involves significant costs for the complainant country and besides the economics, is a political decision at the end. Therefore, governments are not often keen on doing so unless significant national interest is at stake. Hence, the joint effort and approach of importers and exporters is necessary to propel such an action. Thus, it is only through joint pro-active advocacy that the magic wand of protectionism can be defeated and/or its harmful effects minimized. ■

WFSGI Handbook 2011

Overview of global trade-

restrictive measures in the footwear sector Update November 2010

Importing Country

Targeted countries of origin

Type of measure

Stage and date

Effect

Argentina

China

Anti-dumping & Import licensing

1. Provisional duties in place July 2009. Definitive duties from March 2010. Duties in place for 5 years

1. Definitive measure : minimum FOB value of $13.38/pair.

2. Started an origin investigation on footwear imports from Malaysia on 13 August 2010

2. Outcome pending

Brazil

China

Anti-dumping & Import licensing

Provisional measures in place since 2008. Definitive duties imposed March 2010 for 5 years

Definitive measure : fixed duty of $13.85/pair

CANADA

China

Anti Dumping Certain waterproof footwear and bottoms made of plastic or rubber

February 2010 : Conclusion of the re-investigation of the normal values and export prices. Initiation of an interim review of the order. The interim review was concluded in April 2010. The Canadian International Trade Tribunal issued a Notice of Expiry.

The CBSA will not continue to levy antidumping duties with respect to imports of fishing waders released on or after April 13, 2010. No expiry review will be initiated. The order will expire on December 6, 2010

Ecuador

All

Tariff increase (Balance of Payment measure)

Implemented January 2009 and extended June 2010

10% ad valorem plus 6 USD per pair

European Union

China Vietnam

Anti Dumping – leather upper footwear, (excluding STAF)

Prolongation of measure until March 31, 2011

China : 16.5%; Vietnam : 10%

Importing Country

Targeted countries of origin

Type of measure

Stage and date

Effect

Mexico

China

Negotiated Transitional Measure

Implemented in 2008

Elimination of AD findings. Phased reduction of duties : 2008 : 100% ; 2009 : 95% ; 2010 : 90% ; 2011 : 70%. Calculated on difference between FOB and minimum reference price.

Russia

China European Union USA Indonesia Vietnam Thailand

Risk Profiles, (customs internal measure to secure a minimum customsvaluation)

Since January 2010

For leather uppershoes (taric 6403) minimum risk price : Indonesia : 24 USD China, Vietnam, Thailand : 21 USD, regular customsduty of 10% (but not less then 1.8 USD) applied now to that level.

Chinese Taipei

China

Anti Dumping

Since July 2007

43.46 % ; price undertaking for certain suppliers

Turkey

All (excluding some development countries)

Safeguards

Since August 2006. Renewed in August 2009 for additional 3 years

Additional import duties 6402 : $1.70/pair 6403 : $2.55/pair 6404 : $1.70/pair 5 U.S. cent reduction per annum

Ukraine

All

National measure to react to the global economic crisis.

Implemented March 2009 for 6 months. Expired.

Increase of 13% applicable to all footwear and apparel imports (from 10-12% ad valorem previously to 23-25% ad valorem)

WFSGI Handbook 2011

Trade Cases protectionism

Origin-labeling in Footwear, Apparel and Sporting Goods in EU By Karl Sedlmeyer, Head of Supply Chain Services, Global Operations, adidas AG

The current status of a recurring legal initiative Coincidently with the request for implementation or extension of anti-dumping or other safeguard measures by some industry members of the European Union, the demand for mandatory origin-labeling for imported footwear, apparel and other products – mostly consumer products – is raised by the industry representations. Already in 2005, the European Commission made a proposal for legislation based on these requests. Many consumer products including footwear, apparel and many other sports equipment were listed to require a mandatory “made-in declaration” on all imports from countries outside the European Union. The proposal was refused by the majority of member states and the current voluntary marking remained in place.

The interest by consumers on information about compliance with social- and environmental standards is actively pursued by the industry. is currently under political discussion between European Parliament, European Commission and EU member states. In parallel, Italy introduced a national regulation on “Origindeclaration” mirroring the EU-wide “made-in proposal” of the fiber material content regulation, but extending it explicitly to footwear and other products. The implementation is on-hold waiting for the EU regulation.

Under political discussion

NIKE ELITE SERIES THELAST LASTSEASON. SEASON.THE THELAST LAST THE GAME.NONE NONEOF OFIT ITMATTERS. MATTERS. GAME. ALL THAT COUNTS IS NOW, COUNTS NOW, AALL NEWTHAT SEASON, A NEWIS CHANCE. A NEW A NEW CHANCE. THE START, NEW NIKE ELITE SERIES STRAPGIVES ON YOUR CTR360 MAESTRI PERFORMANCE A NEW ELITE, THE PERFECT BOOT MEANING. ENGINEERED TO BE FOR QUICK DECISIONS. SHOW LIGHT ON YOUR FEET, NEVER THEM THE TRUE MEANING OF ON YOUR OPPONENT. MASTERING CONTROL, OWN THE BALL, DOMINATE THE PITCH.

The discussion about a legislation received support by officials of the European Union and especially in EU Parliaments again since 2008, the period of the sun-set review of AD-measure against footwear. Early 2010 a different EU regulation proposal, meant to standardize the “fiber- and material-content” for textiles, was amended by the European Parliament to introduce an extensive “origin-labeling” with different “standards” for EU imports and for EU production including an open statement, that this origin-related parts can be replaced by a separate and comprehensive regulation on “origin-declaration”. A corresponding proposal re-introducing the frame as developed in 2005

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WFSGI Handbook 2011

Trade Cases protectionism

Opposition The opposition against mandatory “origin-labeling” is argued on the fact that many products carry voluntarily a “made-in declaration” and that there is no unified support by the industry in the affected sectors. Indeed, many medium-sized producers in the European Union and brands, having successfully expanded their production respectively sourcing base beyond the European Union, are still concerned about image effects with the consumers.

The consumer will not gain more transparency and correct information for his buying decision. The understandable interest by consumers on information about compliance with social and environmental standards and so on is actively and more comprehensively pursued by the industry and its partners with the various processes and communication tools on compliance.

Support The support for a mandatory scheme is driven by the argument that many other countries have similar regulations and in addition the consumer need “origin-information” to make sensible choices at pointof-sale. It builds on the simplified assumption that non-EU products are more likely to be sub-standard concerning labor, environment and even product quality and furthermore not supporting employment in the Union. This argumentation is hardly meeting the reality in our industry, as the operational business model is organized on global network with outsourced production, international material supply and multi-regional marketing-, design- and development activities. The effective value creation in these supply chains as well the corresponding support of employment especially in the European Union is not reflected with a “made-in” description. Also the additional idea as proposed for example in the “Italian regulation” to define separately the origin for fabrics and manufacturing steps is counterproductive.

Taking all these aspects into account the current approaches for a mandatory “Originlabeling” can only be seen as protectionism against imports. Taking all these aspects into account the current approaches for a mandatory “Originlabeling” can only be seen as protectionism against imports.

Solutions for the industry

Excessive complexity It adds excessive complexity and therefore costs to the labeling or the product, as most of the industry members need to invest heavily in the information systems to trace these details for their product information.

The WFSGI and its members will openly communicate these issues to the authorities and stakeholders in the European Union for avoiding ineffective regulations and either maintain the current status of a voluntary Origin-marking or support a solution compatible to the “made-in rules” as required by most of the other importing countries. It is expected that a clarifying position by the European Union will be formed during the last quarter of 2010 respectively in the first half of 2011. ■

WFSGI presentation

discover the wfsgi

Sustaining members Being a sustaining member is a complementary membership that is a choice of a company to demonstrate a specific high degree of identification with the WFSGI and its objectives.

The WFSGI wish to thanks all the sustaining members for their confidence and support !

WFSGI Board of Directors

What is the WFSGI? An independent association formed by sporting goods brands, manufacturers, suppliers, retailers, national and regional federa tions and other sporting goods industry related businesses. The world authoritative body for the sporting goods industry rec ognized as the global voice of the sporting goods industry.

Non-profit organization without any objective of economic character for its own gains.

Officially recognized by the IOC as the industry representative within the Olympic family.

What is the role of the WFSGI? How does the WFSGI work ? Structure of the WFSGI (see www.wfsgi.org for details on Committees)

Support and promote the sporting goods industry world-wide by providing the platform where our members forge the tools of their cooperation to promote fair trade in order to increase the sport participation in the world and improve the well-being of mankind through the practice of sports.

Keep our members updated on important laws and regulations like on product safety, on standardization and on working conditions.

Act as the voice of the sporting goods industry toward international organizations (ILO, WTO, UN, etc.) and international sport organizations (IOC-International Olympic Committee and IFs-International Sports Federations).

■

WFSGI Handbook 2011

WFSGI presentation

Services and benefits for WFSGI members Beside the tremendous work accomplished by the WFSGI committees (CSR, IPR, CISO, Trade, Manufacturers - see page 72 to 80), the WFSGI is proud to be able to offer the follwoing :

General NETWORKING Access to a wide network including the top executives of the major brands, retailers and manufacturers. INDUSTRY REPORTS Access to industry reports available on WFSGI E-shop. Service available to all industry but with discount price for WFSGI members. JOB MARKET Possibility to advertise vacant job positions in the “Job market” available in the News Alert (18,000 recipients) and on the website (10,000 visits a month). Free of charge for WFSGI members.

TECHNICAL DOCUMENTS ON STANDARDIZATION Access to the list on developments on restricted substances as well as updated information on REACH (Registration, Evaluation, Authorisation and Restriction of Chemical substances), CPSC (Consumer Product Safety Commission) on all national and international developments in product standardization for sports equipment (ISO or CEN standards) and other industry relevant regulation.

PRINTING SOLUTION Access to WFSGI branded suite of applications that helps to slash costs in the production of catalogues and marketing collaterals and to manage digital files through partnership with onison corporation. Discount price for WFSGI members.

IPR - Legal

SPECIALIZED NEWSLETTER Access to WFSGI newsletter (“News Alert”) with worldwide industry information and WFSGI members newsletter (“Members Only News”).

HANDBOOK WFSGI yearly Handbook gathering articles on important topics for the industry (e.g. in 2010 edition : Retail, Green Products, International trade...). Distributed to over 18,000 readers.

WORKSHOPS AND WEBINARS Participation to workshops, training and webinars on important issues like energy efficiency, waste management, product classification, product safety, Restricted Substances List (RSL), REACH, CPSC, etc.

WEB MEMBERS AREA Access to the elaborated website with a restricted member area section, with details on the herein mentioned topics, minutes, presentations, directory and others.

International Trade

TRADE HELPDESK Access to WFSGI Legal Helpdesk on International trade law ; Customs law including classification, valuation and rules of origin ; Trade regulations and policy ; Anti-dumping, anti-subsidy and safeguard investigations ; Trade barriers and counterfeit issues ; WTO dispute settlement proceedings ; WTO law and practices. Service available to all industry but with free initial advice and discount legal fee for WFSGI members.

CSR - Corporate Responsibility CSR HELPDESK Access to WFSGI Corporate Social Responsibility Helpdesk on environmental protection, health and safety, management systems according to ISO standards and sustainable development, social issues free of charge for WFSGI members.

LEGAL HELPDESK Access to WFSGI Legal Helpdesk on International Intellectual Property Coverage Management ; ProductSafety; Direct Investments (purchase or sale of assets, shares or brands, etc.); Arbitration and Mediation ; Compliance Issues and Programs. Service available to all industry but with free initial advice and discount legal fee for WFSGI members.

CISO - International Sports Organizations REPRESENTATION & CONNECTION Representation / Connection of WFSGI members with the International Sports Federations and the IOC on any subject of concern for our industry (including equipment and advertisement regulations). PRESENCE AT OLYMPIC GAMES WFSGI presence during Olympic Games to support our members in their daily work and in case of dispute and mediation with organizing committee, NOCs and / or other stakeholders. TECHNICAL ACCREDITATIONS & OLYMPIC TICKETS FOR OLYMPIC GAMES Organizing and Support for Olympic Games technical accreditations ; Privileged ordering Olympic tickets for WFSGI members for their hospitality programs. ■

For details : www.wfsgi.org

WFSGI Handbook 2011

WFSGI presentation

Board of Directors

Wish to become a WFSGI member? Apply Now!

Evaluation Scale

Company Turnover

Regional

>5 bln

Association Type

Large Medium

2.5 bln > 5 bln

Small

1 bln > 2.5 bln National

500 mln > 1 bln

Large Medium

100 mln > 500 mln 30 bln > 50 bln

Representing America Tom Cove

Director, Capital Sport, representing SCCISialkot Chamber of Commerce & Industry

Benjamin Liu

President, Poyang International Co. Ltd. and Executive Director, TSMA-Taiwan Sporting Goods Manufacturers Association

Hirotaka Miyaji

Director General, JASPO-Association of Japan Sporting Goods Industries

Liu Jun

Vice-President, CSGF-China Sporting Goods Federation-China International Sporting Goods Show

President, SGMA – Sporting Goods Manufacturers Association USA

President, Vivasport and President, KOSPAKorea Sporting Goods Industry Association

Representing Asia Masato Mizuno

Chairman, Mizuno Corp. and past President, WFSGI

You would like to be also a Sustaining member

10 mln > 30 mln

General Counsel, adidas Group

Dr. Nouman Butt

O-Sung Kwon

Small

50 mln > 100 bln

Representing Europe frank Dassler

Anil Sharma

President AKAY International, representing SGEPC-Sports Goods Export Promotion Council

(see www.wfsgi.org for Sustaining member benefits): Gold

1 mln > 2.5 mln

Silver

<1 mln

Bronze

Name of your Company or Organization : Adress :

Giancarlo Zanatta

President, The Tecnica Group

andrew rubin

CEO, Pentland Brands plc

Phone : Fax : E-mail : Webiste : If you are an Industry Supplier or Supporter, spécify your type of activitiy : Brand

Manufacturer

Retailer

Other:

Importer / distributor

Representing America

Zip Code / City : Country :

Place and Date :

Chairman & CEO Messe München GmbH

Michel Perraudin

WFSGI Past President 2004-2007 and Owner & Founder, MP Consult

Frank Zhang

Vice-President Governmental & Public Affairs, Li-Ning

Klaus Uhl

WFSGI Treasurer, Consultant and President of the Administration Board, Uhlsport

President and CEO, International Brand Partners LLC

Raul Hacker

President Speedo Brazil and President, Multisport Industrial Comercio Representcao Ltda

Gumercindo Moraes Neto Executive Secretary, MOVE

Lindsay Stewart Consultant, Nike Inc

kevin plank Name and Signature :

Klaus Dittrich

Killick Datta

Products / Trademarks / Servies : Name of President / CEO / Owner :

Elected by the Executive Committee

2.5 mln > 5 mln

Alberto Bichi

Secretary General, FESI-Federation of the European Sporting Goods Industry

Vice-CEO and Chairman of the Board of directors, Under Armour

Honorary President

5 mln > 10 bln

ex-officio

Turnover in USD

National / Regional Organization

Mr. John Larsen

President Emeritus, New Balance Athletic Shoe, Inc. & Director, New Balance UK, Ltd. Director, Gartner Sports, Srl

Representing Asia

Industry Supplier / Industry Supporter

President

(Tick your category and turnover/type):

Representing Europe

You are

Please note that the composition of the WFSGI Board of Directors will change due to elections in February 2011. At the time of printing, the list of new Directors is not known. Visit www.wfsgi.org for the update.

Vice-Presidents

WFSGI Membership fees are defined according to company turnover (if you are a company) or association size (if you are an association). If you wish to become a WFSGI member and to know your 2011 fee, fill in this form and send it back with your company profile by fax to +41216126169 or by e-mail to info@wfsgi.org. We will immediately contact you and inform you on the next steps.

(2007- JAN 2011)

Stephen Rubin

Chairman, The Pentland Group plc

Robbert de Kock WFSGI Secretary General Jochen Schaefer WFSGI Legal Counsel The WFSGI Executive Committee is composed by the persons whose name is highlighted above.

WFSGI Handbook 2011

WFSGI presentation

MEMBERS

Reidar Magnus

CSR Committee Activity Report

Ron Pietersen

Managing corporate responsibilities in the sporting goods industry requires the consideration of multiple aspects. Many of them are difficult to be solved by individual company approaches. Concerted measures, collective approaches and shared services have become critical success factors for successfully tackling global challenges, driving change in the industry and enhancing companies’ performance. In consequence, the CSR Committee focused its 2010 activities primarily on the following work streams : Enhance services to members by providing guidance and direction for managing CR issues Develop and support collective approaches that drive harmonization and synergies and build critical mass in the industry Support engagement with civil societies.

Senior Manager, CSR / Supply Chain, Intersport

Lary Brown

Corporate Compliance Manager, New Balance Vice-President & CFO, Asics Europe

Brigitte Amherd CSR Manager, Odlo

Toshiaki Mizuno

Senior Manager, Presidential General Affairs Office, Mizuno

Caitlin Morris

Director of Integration and Collaboration CR Compliance, Nike

Helen Ashton Ford

Director CR, Pentland Group

Dai Forterre

CSR Coordinator, Asics Europe

Christine Madigan

Vice President Responsible Leadership, New Balance

Gilles Dana

Corporate Social Responsibility Officer, Switcher SA

John Larsen WFSGI President Robbert de Kock WFSGI Secretary General Jochen Schaefer WFSGI Legal Counsel

Enhance services to members by providing guidance and direction for managing CR issues An environmental helpdesk was established that provides members with guidance in case of specific questions related to environmental laws, resource management and restricted substances. The helpdesk is operated by the environmental consultancy INTECHNICA, Germany. Develop and support collective approaches that drive harmonisation and synergies and build critical mass in the industry In May 2010, the CSR Committee facilitated a 2-day event in Hilversum/Netherlands, bringing together representatives from WFSGI member companies, multi-stakeholder organisations like the Fair Labour Association (FLA), the Ethical Trading Initiative (ETI), the Fair Wear Foundation (FWF), from industry initiatives like the Business Social Compliance Initiative (BSCI) and the Global Social Compliance Program (GSCP), and the Outdoor Industry Association (OIA). The primary purpose of this meeting was to : Collectively elaborate on starting points for the development of harmonised measurement, scoping and reporting practices for carbon emissions.

Discuss approaches that drive greater convergence and harmonisation in members’ social compliance strategies for their global supply chains. Experts from the CARBON TRUST and the University of Edinburgh provided in-depth lectures about trends and developments in carbon emissions reporting. The OIA gave valuable information about the Eco Index. This sophisticated index is a ground-breaking environmental assessment tool developed by the OIA with its partner for this project, the European Outdoor Group (EOG). The index enables companies to measure their environmental footprint throughout the supply chain, allowing them to identify areas for improvement. Since the Eco Index framework is both modular and an open source tool and moreover allows the implementation of the tool within the life cycle stages, it is an appropriate instrument for each company. Representatives from multi-stakeholder organisations and industry alliances provided comprehensive updates about their approaches to social compliance management. Key conclusions from the meetings were : All participants welcomed the initiative taken by the WFSGI in bringing relevant parties together and to collectively discuss issues. This has been seen as a great start for stronger engagement in future. Social Compliance • Data Sharing : WFSGI to collaborate with providers of social compliance data bases (SEDEX, FFC, BSCI) to build linkages to compliance data platforms. • Greater transparency to be built among brands / buyers and MSIs on training activities. Environment • Since several environmental indexes are already in place or under development in the sporting goods industry, it was agreed to create a sub-group that pilots the beta version of the OIA’s Eco Index to find out if the tool can be recommended to the members of the WFSGI. Support engagement with civil societies Under the lead of the adidas Group, engagement with the PLAYFAIR Alliance and local trade unions in Indonesia was continued to follow up on key agreements made during the meetings in November 2009. Central subject of the engagement was the further development of FOA protocol details.

Chair

Global Director Social & Environmental Affairs, adidas Group

Trade Committee Brad Figel

Director Governmental Affairs & International Trade Counsel, Nike

Benjamin Liu

MEMBERS

Frank Henke

ex officio

Chair

CSR Committee

President, Poyang International and Executive Director, TSMA (Taiwan Sports Manufacturers Association)

Gumercindo Moraes Neto

Owner, GMN Marketing Consulting

Hirotaka Miyaji

Frank Dassler

Director General, JASPO (Association of Japan Sporting Goods Industries)

General Counsel, adidas Group

Tom Cove

President & CEO, SGMA (Sporting Goods Manufacturers Ass. USA)

Liu Jun

Vice-President, CSGF (China Sporting Goods Federation)

Herb Spivak

Executive Vice-President, New Balance

Alberto Bichi

Secretary General, FESI (Federation of the European Sporting Goods Industry)

Leonid Strakhov

Vice-President, RASIE and CEO, Sportmaster

WFSGI Handbook 2011

WFSGI presentation

Rory Macmillan

Director, Government and Public Affairs, Nike

Karl Sedlmeyer

VP Global Government Affairs, adidas Group

Jeff Whalen

Government Affairs, South America

Patrisia Reyes de Gottschall

Legal Counsel Latin America, adidas Group

Peter Bragdon

Hamish Stewart

VP and General Counsel, Columbia

SVP International and Apparel, Brooks Sports Inc.

Jeff Tooze

Director, Global Customs & Trade, Columbia

Toshiaki Mizuno

Senior Manager, Presidential General Affairs Office, Mizuno

Kousuke Hashimoto

ex officio

General Manager Corporate Strategy Department, Asics

John Larsen WFSGI President Robbert de Kock WFSGI Secretary General EDWIN VERMULST WFSGI Trade Counsel

Trade Committee Activity Report In 2010, the purpose, function and objectives of the WFSGI Trade Committee became much more apparent as

the sporting goods industry worked collaboratively on a range of global trade issues facing the sporting goods industry. The WFSGI Trade Committee jointly challenged a variety of trade protectionist measures and advanced trade liberalizing initiatives around the world. The Trade Committee has focused its work in a variety of strategic areas including : Holding a WFSGI Trade Committee meeting at ISPO and presenting a global overview of trade protectionist mea sures facing the sporting goods industry ; Submitting two articles in the 2010 WFSGI Handbook on international trade matters and the impact trade has on the sporting goods industry ; Hiring outside counsel/expertise to advise WFSGI on international trade matters ; Coordinating the major athletic footwear brands to col laborate and align on challenging trade defense cases in Latin America and Europe. Specifically, this initiative included : • Direct WFSGI Leadership outreach (both directly and in writing) to key Government officials in China, Vietnam, Indonesia and other footwear producing countries ; • Reaching out to the private athletic and fashion foot wear sectors in key countries such as China, Vietnam and Indonesia with a view to establishing a strong “free but fair trade” coalitions ; • Several coordinated meetings with WTO and WTO Mis sion officials in Geneva to discuss trade protection cases ; and • Bi-monthly international conference calls with WFSGI member companies to coordinate on approach and align our strategy. Coordination and alignment in calling on the World Cus toms Organization (WCO) and some of its key members (USA, EU, China, Japan, Taiwan) to review and modify classifications of sporting goods products to better align with the realities of the trade today. Supporting duty elimination for key sporting goods products (zero for zero initiative). In 2011, the trade committee will hold a full meeting at ISPO where it will review its 2010 work and set the agenda for 2011. Issues in 2011 include, but are not limited to : Strengthening WFSGI as a global leader in addressing international trade matters facing the sporting goods industry ; Driving the WCO customs harmonization initiative ; Heightening the awareness and pressing for imple mentation of the zero-zero tariff initiative on sporting goods ; and Strengthening the cooperation / coordination with re gional and national member federations of WFSGI for driving the international trade agenda globally.

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WFSGI presentation

Legal (IPR) Committee Dr. Jochen M. Schaefer WFSGI Legal Counsel

Gumercindo Moraes Neto

MEMBERS

DRIVER IN GOLF.

IPR Committee Activity Report

Chair

NUMBER ONE

Owner, GMN Marketing Consulting

Frank Dassler

General Counsel, adidas Group

Mark Granger

Head of Legal Task Force, SGMA (Sporting Goods Manufacturers Association – USA)

Edward J. Haddad

Vice-President - Intellectual Property and Licensed Products, New Balance

Rory Macmillan

Director, Government and Public Affairs, Nike

Kingson Lai

Legal Counsel, TSMA (Taiwan Sporting Goods Manufacturers Association)

Ian Fullagar

Chairman, ASGA (Australian Sporting Goods Association)

Hirotaka Miyaji

taylormadegolf.eu

ex officio

Director General, JASPO (Association of Japan Sporting Goods Industries)

John Larsen WFSGI President Robbert de Kock WFSGI Secretary General

In the context of the WFSGI meetings in Munich we gave a presentation of the IPR Committee’s work on February 5, 2010, which included information on the various projects pursued by the Committee. The following two lectures were provided : • “Brand Protection through Product Serialization” by Andreas Schneider, Managing Director of GCS Consulting. • “The Threat to Sporting Brands Online” by Charlie Abrahams, Vice President MarkMonitor, Europe, Middle East & Africa.

The IPR Committee worked in the following months focused on pursuing the best practice document retention and risk management program, headed by Vice-Chairman Mark Granger from the law firm Morrison Mahoney LLP Boston. The results of a survey sent out to the WFSGI members are compiled in a first report of September 23, 2010. This report reveals that practices in this area of membership level show significant variations, up to a non-existence of any policy ! We are strongly convinced that deficiencies in this area can expose members to multiple and substantial risks and will follow up within the next months.

IPR issues have played a major role in numerous areas of the WFSGI’s work in 2010, in particular at CISO Committee level in the course of the IOC Rule 41 and 51 discussions and the various initiatives taken by the WFSGI in this respect. For 2011 it is proposed that we broaden the program and topics to be dealt with by the Committee. Intellectual prop erty-related issues remain important, but there are more areas that should be covered such as product safety and liability issues or other legal topics, which are of practical relevance for WFSGI members. Such broader approach should be reflected by a name change from “IPR Committee” to “Legal Committee” in the future. For the next meetings in February in Munich we are plan ning to open up the Committee Meeting for non-members again and inform them on current product safety and liabil ity issues in various world regions. In general we will try to remain at the pulse of the industry and our members by seeking to encourage a greater num ber of in-house legal experts at operational management level to participate in the work of our Committee.