AlwaysFree: Asics Expanding Production In Indonesia and Cambodia

• Japan's shoemaker aims to cash in on jogging boom in emerging markets

According to Nikkei Asia’s article published on November 5, 2022, Asics, a major global manufacturer of running shoes, is expanding production in Indonesia and Cambodia, as it looks to tap into the growing popularity of running in Southeast Asia and to diversify its sources of supply in response to COVID lockdowns in other countries where it makes shoes.

In a recent interview with Nikkei Asia following an appearance on Nikkei CNBC television, Yasuhito Hirota, Asics' president, CEO and chief operating officer, revealed that the Japanese company is "trying to expand the production base a little more," having set up operations in Cambodia and Indonesia in recent years.

The company is struggling to deal with lockdowns trigged by outbreaks of COVID-19 in both its main markets and at production sites. Asics makes about half its running shoes in Vietnam, which benefits from a high-quality labor force and free trade agreements with many countries. But lockdowns there forced the company to cut output, denting its sales. It is revamping its supply chain by expanding output elsewhere.

The company aims to develop markets where running is catching on, such as India, Indonesia and South America, Hirota said.

In its medium-term business plan for 2030, Asics said it will place digital services at the core of its operations.

"Sports go hand in hand with digital," Hirota said, citing many runners' habit of wearing digital watches and using smartphone apps to track their pace and distance.

The company has acquired Japan's largest website aimed at runners, as well as similar digital platforms in the U.S. and Australia. Hirota envisions new services, such as offering suggestions for shoe models, training methods and races for novice runners. Other tips could include what to eat the day before a race and what kind of recovery to do afterward. The company's membership has tripled since 2019.

This summer, Asics raised its consolidated net income forecast for the fiscal year ending Dec. 31 to 18 billion yen ($120 million), up 91% from the previous fiscal year. Sales of running shoes grew faster in the U.S. and Europe -- where the economic reopening came more quickly than in Asia -- lifting the company's earnings. However, consumer prices in Europe and the U.S. are rising at 8% to 10% annually.

"We are paying attention to the economy to see how it will affect consumer sentiment," Hirota said.

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